2026-VIL-152-AAR
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SGST Advance Ruling Authority

GST - Gujarat AAR - Classification and applicable rate of GST of Papad Khar - Whether Papad Khar should be classified under HSN 2501 (Common Salts) at 5% GST or HSN 2102 (Prepared Food Additives) at 5% GST on ground that it is alkaline salt used as food ingredient, or whether it qualifies for GST exemption under Notification 2/2017-CT entries 96 or 23 as ingredient essential for manufacture of papad - HELD - Papad Khar containing 70% sodium chloride, 15% sodium carbonate and 15% sodium bicarbonate does not fall under HSN 2501 as it is not common salt or rock salt which contain pure or near-pure sodium chloride. The product is obtained by manufacturing process involving mixing and chemical processing beyond the scope of heading 2501 which covers only products in crude state or subjected to limited mechanical or physical processing without roasting or calcining or mixing - Papad Khar does not fall under HSN 2102 as it is fundamentally different from yeasts and baking powders in chemical composition, functional use and resulting effect on dough - The product contains sodium carbonate and sodium bicarbonate as active ingredients while yeasts are living microorganisms and baking powders are leavening agents. Papad Khar correctly falls under HSN 28362090 (Carbonates and Peroxocarbonates) as the chemically active components of sodium carbonate and sodium bicarbonate form 30% of the product composition and the product is mixable derivative of carbonates and bicarbonates falling within the scope of heading 2836 - The principle that raw materials and finished products are separate items with independent HSN codes and that rates are determined by their specific tariff entries and not by position in supply chain does not support contention that raw materials should be taxed at nil rate because finished product is exempt - Papad Khar does not qualify for exemption under Notification 2/2017-CT as the exemption for papad relates only to the final product and not to raw materials or ingredients used in its manufacture - Papad Khar is classifiable under HSN 28362090 under Entry No. 35 of Schedule II of Notification 09/2025-Central Tax (Rate) and is liable to 18% GST – Ordered accordingly
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