Kerala High Court characterizes Malabar “Parota” as similar to bread, making it exempt from the 5% GST

Fortunate a third time! This accurately sums up Modern Food Enterprises’ win against the Goods and Services Tax (GST) in the “Parota” manufacturing and supply business. Following fruitless decisions by the Kerala High Court’s Appellate Bench and the Authority for Advance decisions, the latter concluded that Malabar “Parota” is similar to bread since it has the same components and should be subject to 5% GST rather than 18%, as ruled by the other quasi-judicial venues.

According to tax experts, advance decisions pertaining to a transaction are legally obligatory on the parties involved. They do, however, have a strong influence on evaluating instances that are comparable. On the other side, a high court order establishes precedent. However, producers in other states may not follow this high court order because of fear of lawsuits.
According to Modern Food, it is clear from examining items covered by “Heading 1905″—which includes bread, pastry, cakes, and biscuits—that their contents are almost identical.
It went on to say: For marketing reasons, parotas are semi-cooked to maintain the best possible shelf life and moisture content, which keeps them soft and tasty even when reheated. Similar to pizza bases and pappads, these items fall under “Heading 1905” rather than “Entry 2106,” which deals with leftover food preparations, as was previously decided in the prior judgments.In his earlier this month decision, Justice Dinesh Kumar Singh approved of this plea.

After ruling in September 2021 that frozen parathas are not rotis, the Gujarat Bench of the AAR imposed an 18% GST on Vadilal Industries. The Karnataka bench of the AAR had given a similar stance in the ID Fresh Food case earlier in July 2020. This verdict and the other fell under TOI.
Numerous slabs and complicated categorization rules can result in an ongoing legal battle. Advance decisions, which sometimes vary from state to state, often don’t assist put an end to the problem until the GST Central Council intervenes and issues a notice outlining the rate or providing clarification. One of the first steps towards simplification, according to an industry expert, may be to merge several slabs.