Traditional Indian sweets cannot be categorised as ‘confectionary’ in the traditional sense, Madhya Pradesh’ Authority for Advance Ruling (MPAAR) has said. Further, it ruled that malai sweets to be treated as sweetmeat for applicability of Goods & Services Tax (GST).

Confectionary includes sugar boiled confectionery, lozenges, chewing gum and bubble gum, chocolate and ice lollies or edible ices, cakes, pastries, caramels, fudges etc. These attract GST at the rate of 12 or 18 per cent. Sweetmeats include Indian traditional sweets such as laddoo, khoya barfi, peda, gulab jamun, Mysore paak beside milk-based sweets and attract GST at the rate of 5 per cent.

Indore based Anand Products approached MPAAR to seek advance rulings on categorisation of malai mithai, being sold under brand ‘Anna Malai Mithai’ for applicability of GST. The mithai, whose ingredients include sugar, vegetable fats, skimmed milk powder, whet powder, emulsifiers and flavours, is marketed in small sachets of around 4 gms. The applicant submits that the sweetmeat is ‘rabdi’ and recognised as ‘mithai’ or ‘misthan’. The applicant’s query was that —”should this product be treated as sweet meat or as other dairy products consisting of natural milk constituents?”

The term ‘confectionary’

After going through all facts presented and subsequent arguments, AAR said the product neither be categorised as a product of natural milk constituents nor as confectionery. Further, it said that confectionery is generally a wider term that refers to a large number of products. The term confectionery has been derived from the word ‘confection’ which means the act of mixing things. Thus this term can be used to refer to a large number of products.

“In common parlance, confectionery may include chocolates, pastries, cakes, toffees, caramels, fudges, honey syrups, candies, lollypops, ice cream etc. However, traditional Indian sweets (commonly known as mithai) are more specific than this,” the bench said. Further, it added that traditional Indian sweets cannot be said to form a part of confectionery in the traditional sense of word.

MPAAR concluded by placing ‘Anna Malai Mithai’ under the category of sweetmeat and thus it will attract 5 per cent GST .

Issues on sweetmeats

Sweetmeats have tasted many applications before AAR, but ther earlier ones focussed more on applicability of GST based on how one consumes them or on the turnover of sweet shops. For example, last year, West Bengal’s Authority for Advance Ruling (AAR) ruled that sale of sweetmeats, namkeens and bakery items from the sweet parlour is to be treated as supply of goods if the same are not served or consumed in the parlour and accordingly ITC can be availed in respect of these goods.

In 2018, Uttarakhand AAR ruled that if a sweet shop also provides eating facility within the premise, it will be treated as restaurant services and will be liable to pay GST at the rate of 5 per cent with ITC. This ruling (single rate) might simplify matters for sweet shopkeeper as all types of sweetmeats attract GST at the rate of 5 per cent, cake and pastries have 18 per cent, unbranded bhujia has 5 per cent and branded bhujia has 12 pent.

Earlier, this year, Karnataka AAR ruled that a sweet shop, manufacturing and selling sweets and namkeen over the counter only, will be required to pay GST at the rate of 1 per cent provided it is under composition scheme.

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