New Delhi, Oct 27 (KNN) The snack industry is urging the government to clarify the status of namkeen, fryums and snacks after a slew of DGGI notices, sources told CNBC-TV18.

The ambiguity in product categorisation when it comes to Goods and Services Tax (GST) rates is causing confusion once again, this time it is snacks and namkeens.

“DGGI has sent notices to industry players seeking GST at 18 per cent. The industry is of the view that namkeen and related snacks should be treated at 12 per cent GST under HSN Code 2106,” they added.

As per the report, the industry is basing its stance on the 2012 Supreme Court ruling in an excise regime-related case between the government and Pepsi Foods Ltd on Kurkure, where the apex court classified it as namkeen. After the Supreme Court order, Pepsi Foods and other industry players have been filing GST under the Namkeen category at 12 per cent.

However, sources say that “DGGI is of a view that select namkeen and snacks such as chips attract 12 per cent, and other namkeen and snacks which are treated as fryums or snacks cooked and involving extrusion process attracts 18 per cent GST.”

This category has products such as Bhujia, Kurkure, Cheetos, select varieties under Bingo etc, which are treated as namkeen, snacks with process of extrusion, thus should be treated at 18 per cent.The confusion over the GST classification has been an issue for both the government and the industry.

Abhishek A Rastogi, founder of Rastogi Chambers, who has argued before the writ court on the differential rate of the product when it leads to arbitrariness said, “The endeavour of the GST council and the select committee report for rates was to levy a lower rate for essential products such as food products. The higher rate of 18 per cent for snacks which involves extrusion process leads to disparity in taxing namkeen and snacks. In other words, there is a lack of intelligible differential to impose a higher rate of tax based on an essential process which is required to prepare such snacks.”

“Fixation of the tax rate is certainly a policy decision of the legislature. But when such a policy decision is arbitrary, vague, or leads to absurd results, the decision may have to cross the test of constitutional validity”, he added.

(KNN Bureau)