Orissa AAR: Chewing Tobacco Without Lime Tube Attracts 28% GST

The Orissa Authority for Advance Ruling (AAR) ruled that raula gundi, chewing tobacco without lime tubes, attracts 28% Goods and Services Tax (GST) with a 160% compensation cess.

The applicant is in the business of manufacturing raula gundi, i.e. chewable gundi, and supplying it to various tea shops, betel shops, grocery shops, etc., under cover of GST invoices.

The applicant stated that they purchase raw materials like tobacco dust, bhaja dhania, madhuri, mala zira, mustard oil, epoil, lime, etc., to prepare raula gundi. Accordingly, the applicant sought an advance ruling regarding the HSN code of raula gundi.

The department submitted that the product raula gundi is classifiable under Tariff Heading 24039910 considering the predominant ingredient, i.e., tobacco, involved in making the chewable gundi. Also, the department stated that the tax rate on raula gundi chewing tobacco without the lime tube is 28%, and the Cess rate is 160%.

The AAR has observed that Raula Gundi is a chewable tobacco in which tobacco is the predominant or principal ingredient. Also, the AAR noted that the value for GST computation would be the transaction value plus basic excise duty, National Calamity Contingent Duty (NCCD), and any other amount as prescribed in Section 15 of the GST Act, 2017.

The AAR held that the applicable rate of GST on the product is 28%. The product also appears at Sl. No.26 of the notification dated June 28, 2017, issued under the CGST Act, 2017, under which a compensation cess of 160% is leviable on it.

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@clear.in