Precooked and specially packed of ready to eat food products such as puli-inji, sambar curry, avial curry, kadala curry, kappa puzuhukku, thenga varutharachatu, etc, will attract 18 per cent GST, Kerala’s Authority for Advance Ruling (KAAR) has ruled. Same rate will be applicable for tomato rice, coconut rice, masala rice etc.
“These items are not, as such vegetables or mixtures of vegetables, but are food preparations made using vegetables and can be subject to direct use, or may be, after heating,” AAR held while disposing application by Alappuzha (Kerala) based HIC-ABG Special Foods Private Limited.
The applicant approached AAR to seek advance rulings on 26 types of ready to eat and one ready to cook food. He argued that ready to eat food items are prepared without addition of preservatives and using RETORT technology from Japan which ensures a shelf life of 18 months.
In the process, food and containers are made commercially sterile, precooked food items are packed in a special multilayer pouch, vacuum sealed and made bacteria free by retort processing. Such products are ready to eat once the pouch is opened and no further cooking is required. However, in case they are to be served hot, these required to be heated.
After going through all the arguments and facts presented, AAR observed that items such as Kerala Chicken Curry, Chettinadu Chicken Curry, Chicken Biryani, Mutton Curry, Mutton Roast, Beef Fry, Beef Roast, etc. constitutes ‘ready to eat packaged food’ more specifically than ‘prepared or preserved meat.’ Talking about Soya Coconut Fry, Masala Rice, Coconut Rice, Vegetable Pulao and Tomato Rice, AAR said that these can be placed under the category ‘food preparations not elsewhere specified or included, other,’
According to Harpreet Singh, Partner (Indirect Tax) with Deloitte, this ruling analysed various products of the applicant and concluded them to be ready for consumption liable to tax at 18 per cent. The conclusion arrived based on the fact that the products were ready to eat once the pouch is opened and products are heated.
It was also observed that no further cooking was required on these products. “The classification of products as ready for consumption requires analysis on case-to-case basis depending on the nature of products and the subsequent activities involved prior to its consumption,” he added.
Correct categorization of food products always been a contentions and advance rulings have been sought. In one such matter, it was said that papad and frymes are not same, while former will not attar GST, but latter will. In another matter, it was said that food & beverages prepared in a restaurant will attract GST at the rate of 5 per cent whether consumed inside the restaurant or part of takeaway.
Another interest matter was related with Malabar Parotta where AAR and AAAR ruled 18 per cent. However, these rulings were turned down by the Kerla High Court which said that this popular flatbread will attract GST at 5 per cent.
It may be noted that AAR rulings are applicable only on applicant and jurisdictional tax officer. However, they can be relied upon in similar matter. Also, many such rulings have become base for policy change.
