Papad are not alike fryums and liable for 18% GST as ruled by Authority of Advance Rulings (AAR). AAR stated that papads are not similar to the fryums we eat and hence shouldn’t be place under the same tax cap.
In its order rejecting a petition seeking to bring irregular-sized packaged snack food as referred to as un-fried fryums at par with papad for applicability of GST, the AAR said that in the matter of the product under reference, where no clear definition has been provided in the statute, the principle of common parlance is used.
With acknowledging the issue, papads are not similar as fryums, should learn to pay the 18% GST on the basis of common parlance, as said by AAR.
This means interpretation of statutes for deciphering the mind of the lawmaker rather than any other scientific reasoning.
Common parlance which is being used to categorise the papad and fryums will be applicable to other products too having little vague categorisation previously.
In this particular case, it is clear that all other ‘un-fried packaged food’ have been considered as ‘namkeen’ and not as ‘papad’. Hence, they attract different tax rates as compared to the traditional food item.
With this one can observe that all these classification disputes would be the next big litigation area in GST, and practically bite every industry wherever an exemption or a lower rate of tax is being paid and re-categorisation can also be done later on.
GST was introduced in the country by Late. Finace minister Arun Jaitley in Feb, 2015 and can be marked as a value-added tax levied at all points in the supply chain, with credit allowed for any tax paid on input acquired for use in making the supply. It would apply to both goods and services in a comprehensive manner, with exemptions restricted to a minimum.