AAR Karnataka: Classification of Cake Gel under GST held as Food Preparation

The applicant is engaged in the manufacture of bakery ingredients, including “Cake Gel,” marketed under the brand names Rich Cake Gel and Prime Classic Cake Gel. The product is utilized as a bakery additive in cake batter in order to enhance aeration, volume, crumb texture, and stability, thus enhancing cake quality.
Cake Gel is manufactured through emulsifiers and humectants extracted from oils and fats of plants. Though the applicant had been paying GST at the rate of 18% under HSN 1517 90, they requested an advance ruling on its proper classification and rate of GST.

Issue Raised: Whether “Cake Gel” is classifiable as edible mixtures of vegetable oils taxable at 5% GST or as food preparations not elsewhere specified, attracting 18% GST.

AAR Decision: The Authority noted that Chapter 15 covers animal/vegetable/microbial fats and oils, and preparations thereof. But Cake Gel is not a mere blend of oils or fats but a composition with emulsifiers and humectants, which are chemically different and not merely vegetable oils. Hence, classification under HSN 1517 was not correct. It was argued that Cake Gel, being an edible preparation as “food preparations not elsewhere specified or included.”

Therefore, the rate of GST applicable is 18% under Entry No. 23 of Schedule III to Notification No.1/2017-Central Tax (Rate) dated 28.06.2017, as amended. The product “Cake Gel” is classifiable under HSN 2106 90 99 and taxable at 18% GST.

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