Papad Khar Correctly Classifiable Under HSN 2836 at 18% GST, Not Under HSN 2501 or 2102 at 5%: Gujarat AAR Rules That Exemption for Papad Does Not Extend to Its Raw Materials

The Gujarat Authority for Advance Ruling has held that Papad Khar — a traditional alkaline salt used as a raising and alkalizing agent in the preparation of papad, fafda, and other Indian snacks — is correctly classifiable under sub-heading 28362090 (Carbonates; Peroxocarbonates) of the Customs Tariff Act, 1975, attracting GST at 18% (9% CGST + 9% SGST), and does not fall under either HSN 2501 (Common Salts) at 5% or HSN 2102 (Yeasts; Prepared Baking Powders) at 5%. The ruling by Members Sushma Vora and Vishal Malani in Application No. GUJ/GAAR/R/2026/33 (M/s Jignesh Kantilal Makadia, trade name Amee Industries, decided 11.09.2026) also rejected the contention that exemption enjoyed by papad under GST should logically extend to its essential raw materials.

The applicant, a manufacturer of Papad Khar at Metoda GIDC, Rajkot, had been classifying the product under HSN 2836 at 18% but sought a ruling that it should be classified under HSN 2501 (as a common or rock salt) or HSN 2102 (as a prepared food additive or condiment) at 5%, or alternatively be exempted as an essential food ingredient under Notification No. 2/2017-CT (Rate). The applicant submitted that the product’s composition was 70% sodium chloride, 15% sodium carbonate, and 15% sodium bicarbonate, and that its primary use was as a food ingredient, not a chemical compound.

The AAR undertook a detailed analysis of the Chapter Notes, tariff headings, and HSN Explanatory Notes for all three competing headings. For HSN 2501, it found that Chapter 25 covers only products in the crude state or subjected to limited physical processing — not products obtained by mixing chemicals in a manufacturing process involving heating, dissolving, and solidification. Papad Khar was neither common salt nor rock salt, given that it contained only 70% sodium chloride along with significant proportions of sodium carbonate and bicarbonate. For HSN 2102, the AAR found that the heading covers yeasts and prepared baking powders, both of which are fundamentally different products from Papad Khar — baking powder is a leavening agent for baked goods that makes them soft and fluffy, while Papad Khar is an alkaline salt that provides crispness and crunch to traditional Indian snacks. The two serve fundamentally different purposes in cooking and are not interchangeable.

The AAR concluded that Papad Khar, being essentially a mixture of sodium carbonates and sodium bicarbonates (the chemically active components) with sodium chloride as a diluent and flavour carrier, is aptly classified under heading 2836 which covers carbonates and peroxocarbonates. On the applicant’s argument that since papad itself is GST-exempt, its essential ingredient should receive similar treatment, the AAR held that there is no established principle in GST jurisprudence that raw materials used in the manufacture of a finished product should be exempt from GST merely because the finished product is exempt. GST is a value-added tax and tax rates for inputs and final products are determined independently based on their specific tariff entry, not by their position in a supply chain. The product was held to fall under Entry No. 35 of Schedule II of Notification No. 09/2025-CT (Rate) at 18%.

- 2026-juristway.com-2465-AAR(Gujarat)-GST  |  AAR Gujarat  |  GUJ/GAAR/R/2026/33  |  11.09.2026