Ready-to-cook powder mixes for dosa, idli, tiffin and porridge will be chargeable at 18% GST

Last updated: 11 August 2021

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The Tamil Nadu Authority for Advance Rulings has determined that ready-to-cook powder mixes for dosa, idli, tiffin, and porridge will be subject to an 18% Goods and Services Tax (GST). This ruling distinguishes these dry powder mixes from wet batters, classifying them under a higher tax bracket. The decision contrasts with a previous ruling that applied a 5% GST rate to similar flour mixes.

Court :
Tamil Nadu AAR

Brief :
In Re: Raja Radesh [Order No. 24/ARA/2021 dated June 18, 2021] the Raja Radesh ('the Applicant') of Krishna Bhawan Foods and Sweets approached Tamil Nadu Authority for Advance Rulings ('AAR') to seek advance ruling of 49 of its ready-to-cook products under the brand name of name of ‘KRISHNA'.

Citation :
Order No. 24/ARA/2021 dated June 18, 2021

In Re: Raja Radesh [Order No. 24/ARA/2021 dated June 18, 2021] the Raja Radesh ('the Applicant') of Krishna Bhawan Foods and Sweets approached Tamil Nadu Authority for Advance Rulings ('AAR') to seek advance ruling of 49 of its ready-to-cook products under the brand name of name of ‘KRISHNA'.

The Applicant is a maker of ready-to-cook foods, and the ingredients are added by mere blending/mixing some portion of salt, rice and rice flour. These mixes are same as the mixture of flour of vegetable plants. The Applicant stated that their application for registration of trademark is pending from 2018.

The Applicant relied upon the ruling of Gujarat AAR [AAR No. GUJ/GAAR/R/43/2020 dated July 30, 2020] which stated that mix flour for khaman, gota, handwa, dahi vada, meduvada, pudla, moong bhajiya, chorafali, bhajiya, dhokla, idli and dosa will be liable to Goods and Services Tax ('GST') @ 5%.

The Hon'ble Tamil Nadu AAR ('the TN AAR') has drawn a distinction between dry branded mixes and wet batter and held that the mixes for dosa, idli, health, tiffin and porridge are packed and sold as mixes which are to be mixed with water/boiled water/curd to make it as batter and the product sold is a powder and not batter and will attract GST @ 18% under Entry No. 23 of Schedule II of the Notification No. 1/2017- Central Tax (Rate) dated June 28, 2017 ('Goods Rate Notification') and not @ 5%.

FAQ :

These ready-to-cook powder mixes are chargeable at 18% GST.

The Tamil Nadu Authority for Advance Rulings ruled that as the products are sold as dry powder mixes requiring the addition of water or curd to form a batter, they attract the 18% GST rate.

The ruling specifically distinguishes between dry powder mixes and wet batters, indicating that wet batters may be treated differently.

A previous ruling by the Gujarat AAR applied a 5% GST rate to various flour mixes for items like khaman, gota, and idli dosa.

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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