Malabar Parota is back in soup as a division bench of the Kerala High Court has stayed single judge bench ruling about lower duty.
“There shall be a stay of operation of the impugned judgment for a period of two months,” a division bench of Justices A Muhamed Mustaque and S Manu said in an interim order on Tuesday, while admitting appeal by the State Government against single judge ruling. Notice has also been issued to the manufacturer along with Central Government and Central Board of Excise and Custom (CBIC). Next date of hearing is July 17.
In April this year, disposing a petition by Kochi-based Modern Food Enterprises, a single judge bench of Justice Dinesh Kumar Singh said if key inputs (cereals, flour, starch, etc.) and preparations are somewhat similar for products, then exclusion of one product from the taxation point of view cannot be justified. The HSN in question is 1905 of chapter 19 which prescribes GST rate for pizza, bread, khakhra, plain chapati or roti.
According to rate notification, these are eligible for 5 per cent GST or they can be exempted too.
“I am of the view that petitioner’s products are also exigible at the rate of 5 per cent GST (2.5 per cent CGST + 2.5 per cent SGST) and not 18 per cent,” the bench had said in a ruling dated April 2. The company is engaged in the manufacture and supply of ‘Classic Malabar Parota’ and ‘Whole Wheat Malabar Parota.’
Earlier, when the company approached AAR for clarity on tax, it was told that its product would attract GST at 18 per cent. Also, the said products would not get exemption from GST as it is applicable only for the specific commodity ‘Bread (branded or otherwise)’. Aggrieved by this, the company moved AAAR.
After going through all the facts presented and arguments made, the appellate body was in view that contents of the subheading 1905 would cover products of bakery and all these items covered therein which are in ready-to-eat form. Whereas, whole wheat Malabar Parota or the Classic Malabar Parota manufactured by the petitioner is neither a bakery product nor ready for human consumption as it needs to be heated or further processed for human consumption. Accordingly, it held that the products are liable to be taxed at 18 per cent.
Then the company moved to the High Court and a single judge ruled in its favour while dismissing order by AAAR and AAR. Now, the division bench feels more discussion is needed and so given interim stay.