Packed and branded Halwa is sweetmeat or namkeen? Kerala’s Authority for Advnace Ruling (KAAR) has held that it is sweetmeat.
Sweetmeat attracts 5 per cent GST. However, namkeen or savoury items like fruit and vegetable chips, bhuijas, and other snack foods etc and extruded snacks attract GST at the rate of 12 per cent. There have been some questions on classification of halwa outsourced from a supplier and then packed and sold under a brand name, which is why this ruling is critical. It may be noted that AAR ruling is applicable only on the applicant and jurisdictional tax officer, still it can be relied upon in similar matter. Also, many rulings have become part of policy decisions in the past.
Kottayam based Halwa Haveli approached AAR to seek advance rulings on two issues. First, whether packed halwa purchased from an outsourced manufacturer and marketed under the applicant’s brand name are classified as ‘Namkeen etc.’ Second, if halwa is purchased from a supplier and packed at the applicant’s facility and marketed under the applicant’s brand name, will it be classified as ‘Namkeen etc..’
The contention of the applicant was that serial number 101 of Schedule 1 of notification no. 1/2017, dated June 28, 2017, specified the sweetmeats falling under HSN 210690. Halwa being sweetmeat is to be classified as same whether packed in container or not. In the same notification, another schedule is related to Namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form.
Further, the applicant said that Halwa being a traditional sweet, which is like Mithai, does not fall under second schedule. On a plain reading it is clear that Halwa whether it is packed or not or whether it is branded or unbranded would be under schedule 1 and taxable at 5 per cent.
After going through all the arguments made and facts presented, AAR said that Schedule 1 specifically covers sweetmeat. “The same classification applies when halwa is purchased from a supplier and packed at the applicant’s facility and marketed under applicant’s brand name,” AAR said in its recent ruling. Accordingly, it made it clear that said product cannot be classifiable as ‘Namkeens etc…’.