JUNE 23, 2020

By S Murugappan

IT was a lazy afternoon. Raj, my lawyer friend and me, to energise ourselves, decided to saunter into the eating joint near my office. Raj has doubled up as a GST consultant considering the fact that nowadays there is a huge demand for the flock of his likes to take care of the computations of tax, credit reversals and filing of a plethora of tax returns for the Good and Simple Tax.

The Malabar Speciality Restaurant, where we are venturing into after a gap of several months, is a multi-cuisine restaurant selling food in its premises and also offering a variety of packaged foods for working couples who spend the better part of their days in the offices around that restaurant.

We noticed that there were more of sanitisers than of pepper and salt jars. With masked servers, the atmosphere was a little daunting.

After we selected a corner table with only two chairs to maintain social distancing, an youngster with a neat fitting white mask on his face and wearing neat white gloves on his hands approached us. We could discern his beaming smile through his mask. I ordered my favourite Malabar parota with kurma for both of us.

"Once you eat parota here you will not like to take it in any other place" I told Raj, "this place is so famous for its varieties of parotas and pricewise also they are reasonable."

After finishing two plates of tasty parotas and sipping a cup of hot coffee, Raj looked at me and I could sense what is going on in his mind.

"Can we get a pack of parotas ?" Raj asked.

"Why not?" I said and without waiting for his confirmation, called the bright young server and asked him to give us four packets of Malabar parotas. The youngster, whose name, I understood later, is Yash, was very happy.

"We have our own MSR brand pack of parotas which you can heat and eat fresh at home whenever you want. But…" After starting with full energy, at the end of the sentence Yash's voice faded off.

"But… What" I demanded.

"Sir, since yesterday we have increased the rates; it comes with 18% GST; nearly one fifth of the price will be tax." Yash spoke slowly.

The GST mind in Raj suddenly became alive. "What, what, why 18% ?"

"Sir, in Bangalore, some advance ruling is given. It says for parota it is 18% tax. My boss is a God-fearing and Tax-fearing man. He follows the straight path."

"But that was for Bangalore and only for the person who went in search of a ruling and not here" Raj countered.

"But my boss will not take any chance sir, our GST inspector advised yesterday that we also collect 18% since the department throughout the country is alerted instantly by the digital way of knowledge sharing. He said that to be on the safer side, they will issue notices if we don't charge 18% and leave it to big bosses to decide the matter. The inspector even said that my boss can check the ruling in 2020-TIOL-114-AAR-GST."

By now, my instinct told me that this man is not an 'ordinary' server. Raj also must have felt the same way but the GST rate disagreement, probably, clouded his thinking in that direction for the present.

Then, Yash hesitatingly added, "You can try our packaged rotis sir, there it is only 5% GST."

My friend was really angry by this time. "All belong to the same genus; how can you charge differently?"

"But, sir, if you want parota you ask for parota and not for roti. So they are not like products in common parlance, but different. That is the logic the ruling authority has applied sir."

"But Yash, in your menu card you put all these under 'Indian breads'." I interjected, "As a matter of fact you give us a breadbasket and put all these naans, rotis, parathas, kulchas etc. in that basket."

Yash murmured, "Yes sir, even our food inspector in his certificate given to us put them under 'breads'. He says that as per his law, it comes under 'bread'. But, sir the Advance Ruling Authority has said roti and parota are not like products in respect of their essential nature; so 18% is correct." Yash tried to explain further with a different reasoning adopted by the AAR.

"That is appalling. Roti is a flatbread while parota is a layered flatbread. That's all. How is their 'essential' nature different ? You google it and you will find. It is baffling that our taxmen don't try to understand, at least, the common man's food." Raj argued on top of his voice.

Yash kept his cool. "Sir, the authority also reasoned that the packaged parota is not a 'ready to eat preparation'; so they do not fall under chapter 19 and that chapter 19 covers only completely cooked and ready to consume foods. As such these parotas should fall under chapter 21. On the other hand, plain chapatis or rotis, according to the advance ruling authority, are completely cooked preparations."

Raj stood his ground. "Yash, look here; it is not that chapter 19 covers only ready to eat preparations. Papad is in chapter 19 but it has to be fried or roasted before eating. You don't eat raw papad unless you happen to be a naughty kid. Also packaged roti is not ready for eating; it has to be heated and oil applied, if needed, before it is eaten. So on both counts your authority's ruling is erroneous."

He added further. "You know the rules of interpretation stipulate that any incomplete article will be classified and treated as the complete article if it has the essential characteristics of the finished article. What is to be done here is only heating the roti or parota at home. After heating also, it remains the same, a roti or parota, and does not become a dosa."

"To top it all, your tax collectors have conveniently put both chapters 19 and 21 against the products 'plain chapatti and rotis'. It appears that they're confused about the correct classification and, therefore, have very conveniently, provided multiple classifications in the schedule to the notification"

I asked Yash, "instead of plain chapattis if you sell packaged stuffed chapattis, will you charge 5% or 18%? Or, what about attractively packed take away chicken chapatti wraps sold in Airport kiosks?"

Yash was quick to respond. "Sir, the notification is plain. It's language is plain. It mentions plain chapattis. Anything else should be under 18%."

My friend Raj was aghast. By now, the boss from the cash counter was staring at us. He yelled at Yash. "Hey, why are you wasting your time with the customer who has finished eating? Go to table 7."

Yash remained undaunted. He opened a new line of argument. "Sir, parota, roti etc. are not baked products; they don't fall under chapter 19 as bakery products or as baker's wares."

My friend was not ready to give up. "Yash, do you know where from the word roti has come? It has come from the Sanskrit word 'Rotika' which means bread. You don't know any of these. There are hundreds of varieties of rotis; only, the way of making them is different. Do you know that Tandoori roti is technically a baked product ? Do you know pizzas, which are referred to as 'pizza bread' in your notification (though no one goes to an outlet and asks for a pizza bread, but only asks for a pizza) are not baked but deep-fried in Scotland?"

Yash kept silent at the barrage of these arguments; and I was wondering as to how much there is breadth and width on the issue of taxing breads and parotas.

Signs of exhaustion appeared on my friend's face. He concluded. "Yash, forget all these, you tell me one thing. When I eat this same parota here you are billing me with 5% tax. If I want to take the same product packed, you want to charge 18%. What is the logic? "

Yash, with his smile visible through the mask replied. "Sir, I understand; what is given to you here is a service and not parotas or goods. What you are taking home are goods. Sir, both are different and so taxes are different."

I quipped, "Yash, what you're saying is that both are not same though both are same."

Raj could not hide his amazement. "I thought one reason for doing away with the Central excise/VAT laws and service tax law as taxing statutes was to eliminate the distinctions and often blurring definitions between what is 'service' and what are 'goods' and now you are saying still they are fundamentally different under our simple tax."

Yash started moving to table 7.

Then my friend abruptly asked. "Yash, where were you working earlier?"

"Sir, I was in an auditor's office."

"What is your qualification?"

"I studied B.Com, Sir. Because of corona pandemic the offices were closed and I had no earnings and no work for nearly 3 months. My boss here is my neighbour; so I have landed in this place sir. He is a kind man."

We bought four packets of MSR brand parota by paying 18% GST and were on the way back to our office. Raj was lost in his deep thoughts. I asked him what happened.

"I will take this young boy as my assistant. Post-covid pandemic, there will be lot of work for me in GST", said Raj with a smile on his face.

[The author is a Chennai based Advocate and the views expressed are strictly personal.]