Page 54 - GSTL_2nd July 2020 _Vol 38_Part 1

news

news
desk

desk

Munch on it : GST ruling puts popcorn in 18% tax bracket
A bag of popcorn is typically associated with fun times, be it at a movie
or the beach. But for manufacturers of popcorn, it can be a different story in the
realm of indirect taxes. A plethora of classification norms under the Goods and
Services Tax provisions continue to confound taxpayers. Thus, Jay Jalaram
Enterprises, a Surat-based manufacturer of puffed corn (aka popcorn), ap-
proached the Authority for Advance Rulings (AAR) to seek clarity.
While the manufacturer contended that its products should be taxed at
5%, the AAR did not agree and held that GST of 18% should be applied. ‘JJ’s
Popcorn’ was the brand name under which the enterprise manufactured and
sold puffed popcorn, suitably seasoned with oil, spices and turmeric. In other
words, its popcorn packets were ready to consume, unlike microwave popcorn
packets that required customers to heat and pop the kernels.
According to the applicant, its products fell under ‘Entry 50, Tariff Item
1005 of Schedule-I of Notification 1/2017’. To translate it into GST classification
terms : ‘It was maize (corn) put up in a unit container and bearing a registered
brand name’. Thus, the GST should be 5%, it stated. It submitted to the AAR that
the Supreme Court, in another judgment, had held ‘Atukulu’, or parched rice, to
be the same as ‘Muramaralu’, or puffed rice. The same logic should also extend
to its product - which was nothing but puffed corn. However, given the process
of manufacture involved, which entailed heating of corn kernels, and later addi-
tion of oil and seasonings, the AAR held that the product “does not remain
grain”.
The AAR, in turn, relied on other judicial decisions, including those of
the Supreme Court.
The AAR held that JJ’s Popcorn fitted the description of ‘Prepared foods
obtained by the roasting of cereal’ and would be taxed at 18 %. It would be cov-
ered by ‘Serial No. 15 of Schedule-III of Notification 1/2017’. Incidentally, the
Maharashtra AAR had held earlier in a case of popcorn premixes (which re-
quired heating by the customers) that the GST be 18%, albeit under a different
category.
[Source : The Times of India, New Delhi, dated 25-6-2020]

GST LAW TIMES  2nd July 2020  54