Unbranded namkeen products to attract 12% GST, not 5%

Last updated: 05 April 2023

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Quick Summary

The Gujarat Authority for Advance Ruling (AAR) has determined that unbranded namkeen products, including potato chips, sev, and chivda, will attract a 12% Goods and Services Tax (GST). This is because the products are supplied pre-packaged and labelled, making them ineligible for the lower 5% GST rate. The ruling also confirmed that dry potato starch powder, a by-product, is subject to the 12% GST rate.

Court :
Gujarat Authority for Advance Ruling

Brief :
The Gujarat Authority for Advance Ruling (AAR) has observed that 12% GST is applicable on salted and flavouring potato chips, chivda, sev, and hing bhujiya.

Citation :
Advance Ruling No. GUJ/GAAR/R/2022/54

Case Details

Case Name : In re - Prajapati Keval Dineshbhai
(GST AAR Gujarat)
Appeal Number: Advance Ruling No. GUJ/GAAR/R/2022/54
Date of Judgement/Order : 30/12/2022

One Prjajapati Keval Dineshbhai, who intended to make such snacks, submitted before the AAR that the products are unbranded and hence should be taxed at five per cent.

The GST rate for various products is set on the basis of the harmonised system nomenclature (HSN) code. The applicant said that namkeens fall under the code 210690 and hence would draw the five per cent GST.

The AAR observed that the term “namkeen” isn't defined under the CGST Act. Further, the applicant intends to supply the food products in packages, so they would be considered as pre-packaged and labelled.

The notification had amended the rates on July 18 last year and excluded pre-packaged and labelled products from the levy of five per cent GST, following a decision to this effect by the GST Council.The said products would attract a 12 per cent rate since.

The AAR, Gujarat has held that

Thesupply of un-branded packaged namkeens and potato products such as chips/sev etc., according to pre-determined weights, will attract GST at 12%.
Further held that, the supply of dry potato starch powder as a bye product has a specific entry, attracting GST rate of 12%.
Because the applicant's food supply is pre-packaged and labelled, it is ineligible for the 5% GST tax rate.

The Gujarat Authority for Advance Ruling (AAR) has observed that 12% GST is applicable on salted and flavouring potato chips, chivda, sev, and hing bhujiya.

FAQ :

Unbranded namkeen products, when supplied pre-packaged and labelled, attract a 12% GST rate according to the Gujarat AAR.

A recent amendment to GST rates excludes pre-packaged and labelled products from the 5% GST levy, following a GST Council decision. Therefore, these items fall under the 12% tax bracket.

The ruling specifically mentions salted and flavouring potato chips, chivda, sev, and hing bhujiya as attracting 12% GST when pre-packaged and labelled.

The Gujarat AAR has held that dry potato starch powder, as a by-product, also attracts a 12% GST rate.

The applicant argued that their unbranded namkeen products should be taxed at 5% GST, as they believed they fell under HSN code 210690.