New Delhi: A pizza topping is not ‘pizza’ and hence should be classified differently. On it, a higher 18% Goods and Service Tax should be levied, the Haryana appellate authority for advance ruling (AAAR) has ruled.
On this, the tax experts have stated that this could complicate the taxation for outlets serving pizzas.
The GST rate on Pizza depends on how it is prepared and sold. A pizza sold and eaten within a restaurant attracts 5% GST, the pizza base bought separately attracts 12% while a pizza delivered at home attracts 18% GST.
The AAAR ruled on March 10 that pizza toppings should be levied with 18% GST as the preparation method is different from that of Pizza. It considered all the ingredients used in a topping and concluded that while a pizza topping is sold as a “cheese topping” it’s not really cheese and hence should attract higher taxes.
The authority has also stated that pizza toppings contain vegetable fats being 22% of the ingredients, and hence it does not qualify to be categorized as ‘processed cheese.’ Pizza topping would merit classification as ‘food preparation’, it said.
According to experts the GST rate should depend on three tests- common parlance test, end use test or ingredients test – and that often tax rates could differ how a product is categorized.
“The authorities have given weightage to the actual ingredients vis-a-vis common parlance, under which one would treat them as cheese toppings and classify them accordingly,” said Harpreet Singh, partner, KPMG India.
“This reiterates the fact that classification under GST is a factor of various principles, viz. end use of product, key constituents, common parlance, etc., and hence a complex process.”
A separate controversy is taking a spark around kiosks, restaurants and home delivery under GST. Tax experts said that in future, restaurants, kiosks and even pizza companies that buy these toppings would have to cough up 18% GST.
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