Karnataka AAR ruled that 5% GST applicable on packed and branded Pushti

The Hon'ble Karnataka Authority for Advance Ruling ("the Karnataka AAR") in the matter of M/s. Devanahalli and Hosakote Taluks MSPC [Advance Ruling No. KAR ADRG 56/2021 dated October 29, 2021], ruled that Pushti is classified under HSN code 1106. If unbranded it attracts nil Goods and Services Tax ("GST") as per S. No. 78 of Notification No. 2/2017-Central Tax (Rate) dated June 28, 2017 and if branded and packed it attracts 5% GST as per S. No. 59 of Schedule I of Notification No. 1/2017-Central Taxes (Rate) dated June 28, 2017.

Factually, the M/s. Devanahalli and Hosakote Taluks MSPC ("the Applicant") are registered as a Society under Karnataka Societies Registration Act, 1960. The Applicant stated that as per the Integrated Child Development Services ("ICDS") Scheme of the Government of India, Karnataka State Government has established Mahila Supplementary Production and Training Center ("MSPC") in all the taluks of the State. MSPC supply supplementary food to Anganwadi centers through Child Development Project Office ("CDPO") and the activities and operations of MSPC are supervised by the CDPO of the concerned Taluks. The society i.e MSPC is all women associated with the main objective of member's welfare especially widows, women in reservation cadre, backward communities, and SC/ST. Further, the society also aims at providing high nutrition food products to beneficiaries under ICDS Scheme. The Applicant states that the Society is formed with the motive of social welfare and not monetary benefits and is into supply of Pushti which is a powdered mixture of Ragi, Rice, Wheat, Green gram, Fried gram, Moong dal, and Soya in different proportions to CDPO and CDPO, in turn applies the same to Anganwadis which is further distributed to children, pregnant women and lactating mothers.

The Applicant has sought the advance ruling on the issue in respect of classification and rate on Pushti.

The Hon'ble Karnataka AAR ruled that Pushti which is a powdered mixture of Ragi, Rice, Wheat, Green gram, Fried gram, Moong dal, and Soya in different proportions is classified under HSN code 1106. If unbranded it attracts Nil GST as per S. No. 78 of Notification No. 2/2017-Central Tax (Rate) dated June 28, 2017 and if branded and packed it attracts 5% GST as per S. No. 59 of Schedule I of Notification No. 1/2017-Central Taxes (Rate) dated June 28, 2017.