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Saturday, February 8, 2025

City firm loses appeal for lower GST on instant mixes | Ahmedabad News


Ahmedabad: There will not be any reduction in prices of instant mix for gota, idli, dosa, khaman etc., as an appellate authority determined that its sale would attract 18% GST rather than 5%, which was demanded by the manufacturers.
The manufacturers argued that their product was not ‘ready to eat’ but ‘ready to cook’, and the end consumers have to process it further to make it consumable. This argument did not convince the authorities for the reduction of the goods and services tax (GST) currently levied on it.
A city-based enterprise approached the Gujarat Authority for Advance Ruling (GAAR) challenging the imposition of 18% GST on 14 different products of pre-mix flours.
The products comprise mix flour for gota, handvo, idli, dalwada, dhokla, khaman, dahi wada, upma, dosa, khichu etc.
The firm asserted that they procure pulses and grains from the market, grind them, and blend the flours, which is commercially known as instant mix flour. The product ought to be classified under the chapter headings of 1102 or 1106 under the Customs Tariff Act, attracting 5% GST.
GAAR, however, decreed in 2021 that instant mix flours are categorised under tariff heading 2106. Spices and other ingredients blended in the flour range between 5% and 37%, and these constituents contained in the products exclude them from the headings 1102 and 1106.
This prompted the firm to approach the appellate body — Gujarat Appellate Authority for Advance Ruling Goods & Services Tax.
Their principal argument was that the instant mix is not a ‘ready to eat’ product, but rather a ‘ready to cook’ item sold in raw form, requiring further cooking to become consumable.
A mere amalgamation of flour with spices and condiments does not alter the fundamental characteristic of the product, the makers added.
Recently, the appellate authority dismissed the firm’s appeal on various grounds, including that the incorporation of spices and other ingredients is not minimal, but their proportion is sufficient to exclude it from the category attracting 5% GST.
Certain products contain wheat flour as well.
The appellate authority also rejected the argument of ‘ready to cook’ status of the product to warrant lesser GST.
It stated, “Merely because the end consumer of the instant mix flours is required to follow certain food preparation processes before such products can be consumed is no ground to take these products out of chapter heading 2106 of the Customs Tariff Act, 1975.”





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