The Goods and Services Tax (GST) Council Meeting, headed by Finance Minister Nirmala Sitharaman invited mixed reaction after it announced that pre-packed and labelled ready-to-eat popcorn will attract a 12 per cent tax while caramelized popcorn would attract an 18 percent GST. On 21st December, the Ministry of Finance, in a release, clarified that “ready to eat popcorn which is mixed with salt and spices are classifiable under HS 2106 90 99 and attracts 5 per cent GST if supplied as other than pre-packaged and labelled and 12 per cent GST if supplied as pre-packaged and labelled. However, when popcorn is mixed with sugar thereby changing its character to sugar confectionary (eg caramel popcorn), it would be classifiable under HS 1704 90 90 and attract 18 per cent GST”.
It further added, “There is no new imposition of any tax in this regard and is merely a clarification as certain field units were demanding different tax rates on the same. Therefore, it is a clarification being recommended by the GST Council to settle the disputes arising out of interpretation.”
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Reacting on this, Harsh Bhuta, Partner, Bhuta Shah & co, said that the 55th GST Council Meeting’s recommendation to impose three different tax rates on popcorn undermines the very foundation of GST, which was designed to promote ease of doing business, compliance, and a simplified tax structure. “This move introduces unnecessary complexity, increases compliance burdens, and is likely to fuel litigation. What starts with popcorn today could easily extend to other products tomorrow, further complicating the tax framework and deviating from the original intent of GST reform,” he added.
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Experts also stated that the announcement highlights the need for greater simplicity in GST classifications. Mohammad Asif Mansoory, Partner, Economic Laws Practice, said, “The GST Council’s nuanced classification of popcorn emphasises the complexity of indirect tax law, where even a sprinkle of sugar or salt can lead to significant tax rate differences.” Interestingly,
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