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Traditional Indian sweets cannot be categorised as ‘confectionary’ and malai sweets too may be treated as sweetmeat for applicability of GST, according to the Madhya Pradesh Authority for Advance Ruling.

Confectionery includes sugar boiled sweets, lozenges, chewing gum, chocolate and ice lollies or edible ices, cakes, pastries, caramels and fudges. These attract GST at the rate of 12 or 18 per cent. Sweetmeats include Indian traditional sweets such as laddoo, khoya barfi, peda, gulab jamun, Mysore paak beside milk-based sweets and attract GST at the rate of 5 per cent.

The Authority’s ruling followed Indore-based Anand Products seeking advance ruling on categorisation of malai mithai, being sold under brand ‘Anna Malai Mithai’ for applicability of GST.

The mithai, whose ingredients include sugar, vegetable fats, skimmed milk powder, emulsifiers and flavours, is marketed in small sachets of around 4 gms. The applicant submits that the sweetmeat is ‘rabdi’ and recognised as ‘mithai’ or ‘misthan’. The applicant queried whether this product be treated as sweet meat or as other dairy products consisting of natural milk constituents?

The term ‘confectionary’

The AAR said the product can neither be categorised as a product of natural milk constituents nor as confectionery. Further, it said that confectionery is generally a wider term that refers to a large number of products.

The term confectionery has been derived from the word ‘confection’ which means the act of mixing things. Thus this term can be used to refer to a large number of products.

MPAAR concluded by placing ‘Anna Malai Mithai’ under the category of sweetmeat and thus it will attract 5 per cent GST .

Issues on sweetmeats

Sweetmeats have tasted many applications before AAR, but the earlier ones focussed more on applicability of GST based on how one consumes them or on the turnover of sweet shops. For example, last year, West Bengal’s Authority for Advance Ruling ruled that sale of sweetmeats, namkeens and bakery items from the sweet parlour is to be treated as supply of goods if the same are not served or consumed in the parlour and accordingly ITC can be availed in respect of these goods.

In 2018, Uttarakhand AAR ruled that if a sweet shop also provides eating facility within the premise, it will be treated as restaurant services and will be liable to pay GST at the rate of 5 per cent with ITC. This ruling (single rate) might simplify matters for sweet shopkeeper as all types of sweetmeats attract GST at the rate of 5 per cent, cake and pastries have 18 per cent, unbranded bhujia has 5 per cent and branded bhujia has 12 pent.

Earlier, this year, Karnataka AAR ruled that a sweet shop, manufacturing and selling sweets and namkeen over the counter only, will be required to pay GST at the rate of 1 per cent provided it is under composition scheme.

Source : The Hindu Businessline July 28th 2022