18% GST on Ready-to-eat popcorn : Gujarat AAR

18% gst

GST : Goods and Service Tax on food is levied at the rate of 5%, the popcorn packet will be charged at the 18 % tax slab, with tax authorities ruling it is not just a standard cereal. A packet of corn, which needs to be heated before eating, would attract 5% GST, however, the ready-to  eat popcorn bag is oiled and seasoned, thus attracting 18% GST as ruled by the Gujarat Advance Rulings Authority (AAR).

Jay Jalaram Enterprises, a Surat-based manufacturer of puffed popcorns, appealed to AAR that its product should be taxed at 5% because it contains corn, which is a  cereal, but the AAR denied the appeal and levied 18% GST on puffed popcorn claiming that after heating it with oil and seasoning, it does not remain grain.

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The ruling added that the popcorn packets of JJ Enterprise are ready to consume, unlike the popcorn packets of microwave that need heating to make them edible.

The applicant said that its popcorn product fell under Entry 50, tariff item 1005 of Schedule 1 of Notification 1/2017. This essentially means it is sold as maize (corn) in a unit container and bearing a registered brand name.

Therefore, the applicant claimed that it should not attract more than 5 per cent GST. It also gave a reference of a ruling by Supreme Court, where it said parched rice is the same as puffed rice. Jay Jalaram Enterprises contended that the same logic should be applied to its product.

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However, the AAR said the process of manufacturing ready-to-eat popcorns involved heating of corn kernels, the addition of oil and seasonings. AAR, therefore, concluded that the product does not remain a grain after the popcorn manufacturing process.

Similar news surfaced earlier this month when the Karnataka government ruled differentiating paratha or parota from roti, which are essentially two types of Indian breads. It clarified that paratha must be taxed at more than triple the GST tax rate on roti, therefore, the Authority for Advance Rulings (Karnataka bench) said that parathas must attract 18% GST, while roti will be taxed at the concessional GST tax slab rate of 5 per cent.  

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