After paratha, ready-to-eat popcorn to attract 18% GST, clarifies AAR
New Delhi: Ready-to-eat popcorn, which is typically associated with fun times, will fall under the 18% GST bracket, Authority for Advance Rulings (AAR) said in a ruling. According to a report in the Times of India, when a Surat-based manufacturer of puffed corn (aka popcorn)- Jay Jalaram Enterprises- approached AAR to seek clarity on the applicable GST rate on the product, AAR clarified that popcorn will attract 18% GST.
The company manufactures popcorn seasoned with oil, spices and turmeric under the brand name ‘JJ’s Popcorn’. 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. 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 publication, the applicant claimed that 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 publication mentioned.
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.