This HSN confusion is linked to the nutrition in your Food!


This HSN confusion is linked to the nutrition in your Food!
Apr, 2021
By Vikash Dhanania

Hey there

How are you?

Well, this question doesn't make sense in the present times of the COVID-19 pandemic when some places are in full lockdown while some are in partial lockdown.

But the good thing is that we are all together even in these difficult times.

I would like to start with a Warm Namaskar from me, DOST Vikash Dhanania.

I believe that every time should be utilised in the right manner and the best way is to use the time to gain information.

We know that the bad times will pass, but the things we learn will stay with us and help us even after the pandemic is over.

Today, I would like to share an important example that will tell you a lot about HSN codes and GST.

The Story about Fortified Rice Kernels

Before we talk about the story linked to HSN codes and GST, let's understand a bit of History about Fortified Rice Kernels.

We all know that fertilisers and chemicals have increased the yield of crops; however, this has also brought with itself numerous problems.

The Biggest problem is a reduction in the minerals and nutrients in the crop that we get. The quality of the yield keeps decreasing with the addition of chemicals into the fields.

This further leads to an increase in malnutrition.

What should we do to solve this problem?

This is where Fortified products come into the picture. Fortified products are prepared by processing the crops and adding proteins, minerals and other nutrients into the crops.

This processing increases the nutritional value of the food products and boosts our overall health.

This is not just the case with crops but numerous other food products like vegetables, flour, milk and others.

And one such famous Fortified food product is Rice, which is known as Fortified Rice Kernels.

Rice is also processed similarly to increase the nutritional content.

The big question is whether GST will be applicable on Fortified Rice Kernels and if yes, what would be the HSN code?

To find the answer to the question, we researched and found the answer.

We got the answer to our questions from searching a case presented to the Rajasthan Authority for Advance Ruling.

In this case, JVS Foods Pvt. Ltd. asked for clarification by submitting that Fortified Rice Kernels is a type of Rice in which the nutrition is more than naturally available Rice.

However, the Authority found this hard to believe and stated that the process of creating Fortified Rice Kernels involved grinding Rice.

Rice is ground and converted into flour. Vitamins and minerals are then added to the flour, and the mixture is again processed to give it the shape of a Grain of Rice.

Fortified Rice Kernels are then packed into 25 Kgs. packs, which clearly states that Fortified Rice Kernels should be mixed with Rice in the ratio of 1:100 to be used.

This clearly states the difference between Fortified Rice Kernels and normal variation of Rice.

The Authority then also gave a reference to the Chapter 10 heading in its ruling, which clearly states that processed or worked Grains will not be included in this category.

The appropriate classification for it is 1904, and the rate of GST on Fortified Rice Kernels will be 18% instead of 5%

This ruling cleared all our doubts linked to Fortified Rice Kernels and also taught us that processing of any kind changes the meaning of Goods and Services completely in GST. The rate of GST can also change after the processing of a particular product.

We must have complete knowledge about the HSN codes and GST rates linked to our category of products. Having the knowledge will save us from numerous GST related problems in the future!

If you have any confusion related to any aspect of GST, contact Us, and we will help by solving your GST problems and creating an automated system of GST in your Business which will help you avoid making almost every mistake related to the GST framework!!!

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Thanks & Regards