27.10.2023: Industry seeks clarity on namkeen, snacks amid ambiguity over GST product categorisation

The ambiguity in product categorisation when it comes to Goods and Services Tax (GST) rates is causing confusion once again—this time it is snacks and namkeens. The snacks industry is now seeking clarity from the government on the status of namkeen, fryums and snacks after a slew of DGGI notices, sources told CNBC-TV18.

“DGGI has sent notices to industry players seeking GST at 18%. The industry is of the view that namkeen and related snacks should be treated at 12% GST under HSN Code 2106 and the uncooked and unfried snack pellets attract 5% GST,” they added.
The industry is basing its stance on the 2012 Supreme Court ruling in an excise regime-related case between the government and Pepsi Foods Ltd on Kurkure, where the apex court classified it as namkeen. After the Supreme Court order, Pepsi Foods and other industry players have been filing GST under the Namkeen category at 12%.
However, sources say that “DGGI is of a view that select namkeen and snacks such as chips attract 12%, and other namkeen and snacks which are treated as fryums or snacks cooked and involving extrusion process attracts 18% GST.”
This category has products such as Bhujia, Kurkure, Cheetos, select varieties under Bingo etc, which are treated as namkeen, snacks with process of extrusion, thus should be treated at 18%.
The confusion over the GST classification has been an issue for both the government and the industry. The CBIC circular in January 2023 clarified that snack pellets such as fryums etc made after the process of extrusion are to be classified, under HSN Code 1905 and will attract 18% GST. Not just this, another circular issued in August 2023 said that uncooked and unfried snack pellets would attract 5% GST.
Some of the impacted industry players are PepsiCo, Haldirams, ITC, Pratap Snacks, Bhikaji, Bikano, etc.
The key thing to watch out for is what view the government and GST Council take after considering the ongoing industry representation and what happens to the DGGI notices that have been issued.
Experts note ambiguity in this regard and suggest the GST Council to provide adequate clarification as the way forward.
Source: CNBC TV 18 

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