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Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

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GST Update on Ready to eat popcorn to attract 18% GST- AAR Gujarat 77/2020-21

GST Update on Ready to eat popcorn to attract 18% GST- AAR Gujarat 77/2020-21
The classification dispute in GST has not even spared the food items as after the dispute of “Paratha being a roti or not”, now comes the dispute as to “Popcorn is a maize or not”. Our GST update on why paratha is not a roti-AAR Karnataka can be referred as GST Update No. 69/2020-21 on our website. As we all know that there is lower GST rate of 5% on cereals, the dispute cropped as to whether popcorn is to be considered as maize attracting 5% GST rate or to be considered as Ready to Eat food attracting 18% GST? The classification of popcorn and the applicable GST rate was considered in the recent Advance Ruling pronounced in the case of M/s Jay Jalaram Enterprises.
The applicant, claimed that the popcorn manufactured by it shouldattract 5 per cent GST under serial no. 50 of the Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 covering “Maize (Corn) put up in unit container and bearing a registered brand name”. It was contended that popcorn is maize and so the GST rate of 5% should be applicable on it. The applicant also placed reliance on a judgment delivered by Apex Court in the case of M/s AlladiVenkateshwaralu and Others v. Govt. of A.P wherein it was held that the term parched rice and puffed rice are Rice and sothe same logic should be applied to its product. It was contended that adoption of heating process on maize and adding oil and salt, the maize remains a grain and is covered under HSN 1005. Alternatively, it pleaded that their product merits classification under serial no. 57 of the Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 covering “cereal grains otherwise worked” attracting GST at the rate of 5%.
However, the AAR concluded that the product of the applicant is ready to eat prepared food and aptly fits into the description “Prepared foods obtained by roasting of cereal” falling under chapter 1904 10 attracting GST rate of 18%. Reliance was also placed on the Apex Court decision in the case of M/s Frito Lay India [2009 (242) E.L.T. 3 (SC)] pertaining to popcorns. The AAR held that the product falls under serial no. 15 of the Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 with the description that all goods, i.e. corn flakes, bulgar wheat, prepared foods obtained from cereal flakes”.
 
The AAR held that the process of manufacturing ready-to-eat popcorns involved heating of corn kernels, the addition of oil and seasonings. Therefore, it was concluded that the product does not remain a grain after the heating process and converts into popcorn.
 
In our opinion, the above ruling as regards cooked and ready to eat popcorns is correct as adoption of heat process on the maize leads to manufacture of popcorn which cannot be considered as a cereal. However, the ruling should not be applicable for “Act-II Popcorns” which are required to be heated by the customer before consumption. In our opinion, such product would continue to be considered as maize as mere addition of oil and preservatives would not change its character of cereal. Therefore, in nutshell, in order to avail benefit of 5% GST rate, the substantial characteristic of cereal/grain should not be changed as in case of ready to eat popcorns.
This is solely for educational purpose.
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