Parotas are not rotis? The Karnataka bench of the Authority for Advance Ruling (AAR) doesn’t think that branded frozen parotas are and so has said that it will be taxed higher under GST at 18 percent compared to 5 percent for rotis and chapatis.

This comes after iD Fresh, a Bengaluru-headquartered food products company that offers ready-to-cook and fresh foods, had approached the AAR in January asking whether the preparation of its whole-wheat parota and Malabar parotta can be classified under the same tariff heading and product description of ‘Khakra, plain chapati or roti’ that attracts a GST rate of 5 percent.

AAR, however, had a different opinion and said that it doesn’t fall in the same category, adding that iD Fresh’s parotas are not ready-to-eat and need processing before consumption, and hence have to be taxed differently.

iD Fresh is now set to appeal against the order. CEO Musthafa PC told CNBC-TV18, “We have a window of 30 days but we will appeal by next week.”

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Musthafa said the company has been paying 5 percent tax on parotas under the VAT regime and even under GST.

“We have been paying 5 percent VAT for several years and GST rate at 5 percent as well over the last three years. That is because the Karnataka VAT order of 2012 said chapatis and parotas will be taxed at 5 percent. Even the Mumbai AAR had ruled that parotas should be taxed at 5 percent,” Musthafa said.

Six months ago, tax auditors questioned the company about the classification of parotas under the 5 percent GST rate, which is why iD Fresh decided to approach the Authority for Advanced Rulings in Karnataka.

“We hope it is a wrong classification by the authority, and we will go for an appeal. I am confident of getting it to 5 percent,” Musthafa said.

Meanwhile, social media users made a meal out of the issue, with parotas becoming a hot topic of discussion on Twitter on Friday.

“I am happy that people love parotas. I saw a tweet, which said parotas are an emotion,” Musthafa said.

In fact, the company saw parotas selling like hot cakes during the lockdown, with iD Fresh seeing sales of 1 million daily despite the company having to scale down operations, Musthafa said.

“Before COVID, we were selling 12 products across 45 cities, but we cut it down to 4 SKUs in 21 cities during the lockdown. Even then, we saw a 20 percent growth in revenues,” Mustafa explained.

“On a daily basis we sold close to 1 million parotas. That is the power of parotas,” Mustafa said on a lighter vein.

First Published:Jun 12, 2020 8:25 PM IST