The Gujarat Appellate Authority for Advance Ruling (GAAAR) has ruled that instant mixes, such as idli, dosa, and khaman flour, are subject to an 18% GST. This decision came after Kitchen Express Overseas Ltd. argued that their products should attract only 5% GST like sattu. The ruling emphasized that the inclusion of spices and other additives differentiates these mixes from simpler flours, justifying the higher tax rate.

Instant mixes like idli, dosa, and khaman flour should not be classified as chhatua or sattu and should incur an 18% GST, according to a ruling by the Gujarat Appellate Authority for Advance Ruling (GAAAR). Kitchen Express Overseas Ltd., a Gujarat-based company, had appealed against the GST advance authority’s decision, arguing that its seven ‘instant flour mixes’ are ‘ready to cook’ rather than ‘ready to eat’ and thus should attract a 5% GST similar to Sattu. The company sells mixes for gota, khaman, dalwada, dahi-wada, dhokla, idli, and dosa in powder form.

The GAAAR rejected the company’s argument, stating that the ingredients in ‘instant flour mixes’ do not align with the GST rules applicable to Sattu. According to a CBIC circular, the small amounts of ingredients used to make Sattu are specified in the GST rules for a 5% tax rate. However, “the said clarification is not applicable in the present case as the products being supplied by the appellant contain spices and other ingredients, which is not the case with the ‘chhatua or sattu’,” the GAAAR explained.

The appellate authority also emphasized that the need for the consumer to follow certain cooking processes does not exempt these products from the 18% GST. Abhishek Jain, Indirect Tax Head & Partner at KPMG, noted that “classification disputes are among the most common areas of litigation under the GST. Despite the issuance of circulars, differing interpretations of the clarifications provided in these circulars have often elevated the challenges.”

Moore Singhi Executive Director Rajat Mohan stated that the GAAAR affirmed the Advance Ruling Authority’s (AAR) decision to classify ‘Kitchen Express’ branded flours, including Khaman and Dhokla, under Chapter Heading (CH) 2106 90 99, thereby subjecting them to an 18% GST rate. “The determination was predicated on the products’ significant inclusion of additives, such as sugar, salt, and spices, distinguishing them from simpler flours classified under chapter 1101, 1102, or 1106, which attract a 5% GST rate,” Mohan explained.

The AAAR clarified that CH 2106 90 99 encompasses ‘ready to cook’ food preparations and dismissed the appellant’s comparison to ‘sattu,’ asserting that the substantial presence of additives in the appellant’s products justifies the higher tax rate, Mohan added.