In a triumphant victory for Modern Food Enterprises, the Kerala High Court has classified Malabar ‘Parota’ as akin to bread, subjecting it to a lower GST rate of 5%. This landmark decision marks the end of a protracted legal battle, overturning previous rulings that imposed an 18% GST.
After facing setbacks from the Authority for Advance Rulings and its Appellate Bench, Modern Food Enterprises emerged victorious with the High Court’s ruling. Tax experts emphasise the significance of this verdict, as it sets a judicial precedent, potentially influencing similar cases nationwide.
Modern Food Enterprises argued that the ingredients and preparation process of Parotas align closely with those of products classified under ‘Heading 1905’, such as bread, pastry, cakes, and biscuits. Justice Dinesh Kumar Singh concurred, noting the similarities and justifying the reclassification.
Previous rulings, including those by the Gujarat Bench and Karnataka Bench of the AAR, had imposed a higher GST on similar products, leading to confusion and prolonged litigation. The inconsistency in classification norms and multiple tax slabs has been a perennial issue, prompting calls for simplification from industry experts.
Despite this favourable ruling, apprehension remains among manufacturers in other states, fearing potential litigation. Nevertheless, the Kerala High Court’s decision is a significant milestone in the ongoing debate over GST classification and taxation.
Vakilsearch’s legal experts analyse the Kerala High Court’s reclassification of Malabar ‘Parotta’ as bread, significantly reducing the GST rate to 5%, and its implications for the food industry and taxation. This landmark ruling, which concludes a prolonged legal battle for Modern Food Enterprises, highlights the importance of judicial intervention in clarifying ambiguous tax classifications. Vakilsearch remains committed to providing expert guidance and legal support to businesses navigating complex tax regulations and advocating for fair and transparent tax policies.
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