The Karnataka Authority for Advance Ruling (AAR) in the case of M/s SATS Food Solutions India Private Limited vide Advance Ruling No. KAR ADRG 11/2023 dated 21.02.2023, has ruled that 18% GST is applicable on the supply of ready-to-eat and ready-to-cook food products in frozen form with shelf-life extension to Aviation industries, Institutional, Quick Service restaurants, hotels, food aggregators, ghost and cloud kitchens, online restaurants and cafes.
In this case, the applicant SATS Food Solutions India Private Limited (SFSI) is a wholly owned subsidiary of SATS Limited, Singapore. The applicant are engaged in the business of manufacture/production and supply of frozen food in institutional packs to company in Aviation Industries, quick service restaurants, Hotels etc., across Ready to Eat (RTE) or Ready to cook (RTC) or processed and semi processed categories. The aspect of take away and food parcels to individual customers are not available.
The applicant submits that, they will supply the products in Bulk Industrial Packs in B2B space to companies who will then further sell it to its end customers in consumable format by way of thawing, assembling, re-packaging and handling etc. Further, the applicant stated that most of the food items manufactured by them are classifiable either under HSN Code 2007 or under HSN Code 2106 90 99 and are subject to GST of 12% or 18% under Schedule II and Schedule III of Notification No.01/2017-Central Tax (Rate) dated June 28, 2017.
For this purpose, the applicant has sought an advance ruling on the issue of the GST rate on ready-to-eat and ready-to-cook food products.
The AAR observed that since the applicant is into the manufacture of RTE and RTC food products, these are covered under the explanation to tariff heading 2106, which provides as under,
“all kinds of food mixes, including instant food mixes, soft drink concentrates, Sharbat, the betel nut product known as “Supari,” sterilized or pasteurized millstone, ready-to-eat packaged food, and milk containing edible nuts with sugar or other ingredients, Diabetic foods; [other than namkeens, bhujia, mixture, chabena and similar edible preparations in ready to consumption form]”
Accordingly, the AAR held that food products manufactured by the applicant are exigible for GST at 18% as per entry No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated June 28, 2017.