The Authority for Advance Rulings (AAR) in Karnataka issued an important ruling (KAR ADRG 26/2023) on July 13, 2023, concerning the classification and applicable GST rates for various types of chikkies manufactured by M/s. Sirimiri Nutrition Food Products Private Limited.
This ruling provides clarity on how different varieties of chikkies should be classified under the Goods and Services Tax (GST) regime and the corresponding tax rates.
Details of the Case
| Details | Description |
|---|---|
| Applicant | M/s. Sirimiri Nutrition Food Products Private Limited |
| State | Karnataka |
| Order No. | KAR ADRG 26/2023 |
| Order Date | 13th July, 2023 |
| Key References | Notification No. 1/2017-Central Tax (Rate) dated 18.06.2017, Notification 41/2017-Central Tax (Rate) dated 14.11.2017 |
Questions Raised
- What is the classification of various chikkies under their respective HSN codes?
- Which HSN code applies to each type of chikkies?
- Are the dry fruit chikkies classified under HSN 1702 or 1704?
- What are the applicable GST rates for these products?
Key Points from the Ruling
- Classification of Chikkies:
- Chikkies, being jaggery-based preparations intended for direct consumption, are classified as sugar confectioneries.
- Products without cocoa are classified under HSN 1704.
- Products containing cocoa are classified under HSN 1806.
- Applicable GST Rates:
- Chikkies without cocoa (Sesame, Amaranth, Crushed Peanut, Spirulina, and Dry Fruit Chikkies) are taxed at 5% GST under HSN 1704.
- Chocolate Peanut Chikkies, containing cocoa, are taxed at 18% GST under HSN 1806.
Analysis and Findings
The ruling provides a clear distinction based on the presence of cocoa in the products. The key ingredient in all these chikkies is jaggery, which falls under the broad category of sugar. Therefore, chikkies without cocoa are classified under sugar confectionery, while those containing cocoa fall under chocolate and other food preparations containing cocoa.
Key References and Notifications
- Notification No. 1/2017-Central Tax (Rate): This notification outlines the GST rates for various products, including sugar confectionery.
- Notification 41/2017-Central Tax (Rate): Amends the GST rates and provides specific entries for sugar confectioneries and cocoa preparations.
FAQs
- What is the GST rate for sesame chikkies?
- Sesame chikkies are classified under HSN 1704 and are taxed at 5% GST.
- How are chocolate peanut chikkies classified?
- Chocolate peanut chikkies contain cocoa and are classified under HSN 1806, with an applicable GST rate of 18%.
- Do all chikkies fall under the same HSN code?
- No, chikkies without cocoa fall under HSN 1704, while those with cocoa fall under HSN 1806.
Conclusion
The AAR’s ruling provides much-needed clarity on the classification and GST rates for various types of chikkies. This ruling helps manufacturers ensure compliance with GST regulations and apply the correct tax rates to their products. By distinguishing between chikkies with and without cocoa, the ruling simplifies the classification process and ensures uniformity in taxation.
