GST AAR Maharashtra: Candor Foods' LadduBar Classification Application Withdrawn — HSN 1704 vs HSN 2106 Question Remains Open

Background of the Case

In re Candor Foods Pvt. Ltd. (GST AAR Maharashtra) presents an interesting, albeit procedurally concluded, episode in GST classification jurisprudence. The case revolved around a deceptively straightforward question — how should a product branded as a "LadduBar" be classified under the GST regime? Should it fall under HSN 1704, which covers sugar confectionery including chikki, or under HSN 2106, which encompasses food preparations including sweetmeats? The answer to this question carried direct implications for the applicable tax rate and overall compliance obligations of the assessee.

M/s. Candor Foods Pvt. Ltd., a food manufacturing company, approached the Maharashtra Authority for Advance Ruling (AAR) seeking a definitive determination on this classification question. The application was filed on 12.06.2024 under the provisions of Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017.

The Core Classification Dispute: Chikki or Sweetmeat?

Nature of the Products in Question

The assessee's product portfolio under the "LadduBar" brand comprised multiple variants, each with a distinct formulation and ingredient profile. The specific products for which HSN classification was sought included:

  • Methi Dryfruit Laddubar
  • Dry-fruit Instant Energy Laddubar
  • Gondh Dry Fruit Laddubar
  • Wholesome Millet Laddubar
  • Kamarkas Vitality Laddubar

Each of these products carries a unique combination of traditional ingredients — dry fruits, millets, herbal components — blended into a bar format resembling the well-known Indian sweet preparation "laddu." The assessee was attempting to determine whether, as a class, these products aligned more closely with chikki-type confectionery or with the broader category of sweetmeats and food preparations.

Why the Classification Matters

The distinction between HSN 1704 (sugar confectionery/chikki) and HSN 2106 (food preparations/sweetmeat) is not merely academic — it has a direct bearing on the GST rate applicable to the product, which in turn affects pricing, input tax credit eligibility, and overall supply chain economics.

Under the GST rate schedule:

  • Products classified under HSN 1704 attract GST at varying rates depending on their precise sub-classification, with chikki and similar traditional Indian sweets often attracting 5% GST.
  • Products falling under HSN 2106 as food preparations may attract a different rate structure altogether.

For a food manufacturer dealing in products straddling the boundary between traditional Indian sweets and modern health/energy bars, this classification ambiguity creates genuine compliance uncertainty.

Questions Raised Before the Authority

The assessee formally placed two questions before the Maharashtra AAR: