GST on Popcorn: GST ruling puts popcorn in 18% tax bracket | India Business News

MUMBAI: 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), approached 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 1 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 addition 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 covered 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 required heating by the customers) that the GST be 18%, albeit under a different category.
In Video:Why GST ruling puts popcorn under 18% tax bracket

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