A bag of ready-to-eat popcorn will attract 18 percent Goods and Services Tax (GST), clarified the Gujarat Authority of Advanced Ruling recently. Recently, Jay Jalaram Enterprises, a Surat-based puffed corn manufacturer, approached AAR for clarity on the GST rate for ready-to-eat popcorn. While the manufacturer said its products should not attract GST more than 5 percent, the AAR disagreed with Jay Jalaram Enterprises and said ready-to-eat popcorn will continue to attract 18 percent GST.
According to a report published in The Times of India, the company manufactured ready-to-eat popcorn under the brand name ‘JJ Popcorn’. The popcorn packets that will attract 18 percent GST are ready-to-eat, unlike microwave popcorn packets that have to be heated before eating. 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.
The applicant, therefore, claimed that it should not attract more than 5 percent GST. It also gave a reference of a ruling by the 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.
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. Recently, a tribunal court ruled that ready-to-eat frozen parotta or paratha will attract 18 percent GST and that it is not a staple food.
Government sources later clarified to India Today TV that the decision was taken by the Karnataka bench of AAR. The Karnataka AAR bench held that frozen and preserved wheat parotta and Malabar parotta a south Indian delicacy was a distinct product and not a plain roti. Sources further said that frozen parotta, which is preserved, sealed, branded and is usually sold at higher prices, cannot be considered as staple food for poor and added that it is rather consumed by a class that could afford to pay taxes.