One of the biggest debates in the pizza world has always been — should pineapple be a topping or not. Well, this time around, the debate has been about something completely different. Pizza lovers and brands are all up in arms about it about the recent order by the Haryana Appellate Authority for Advance Ruling which ruled that pizza toppings are not part of a pizza and hence should attract a higher GST of 18 per cent. While this has triggered a massive meme fest on social media, pizzeria brands in Bengaluru are upset and confused.
Amrut Mehta, chef and director at Little Italy Group of restaurants, feels this ruling works against the interests of the customers. “The ruling is just strange and confusing. We always promote extra topping to upsell our items. The toppings getting a jump of 18 per cent is a big challenge. From a business perspective, calculation just gets more complex,” says Mehta.
Karun Sondhi, co-founder of Raffaele’s Ristorante Pizzeria, says, “If this ruling is enforced and if we reduce the pizza price, it just means suicide for us. There is already a hike in the price of maida and oil. As soon as we heard about the news, we immediately rang up our accountant. We are consulting tax experts to make this GST structure comprehensive.”
Similarly, Nithin Kannan, who opened Thin Tony’s Pizza one month ago, feels the customisation of pizzas in different pizzerias can complicate the GST structure. “Every pizzeria sells its own customised pizzas. Sometimes it’s the toppings or the cheese that is less. How would that be treated under this new ruling,” asks Kannan.
In order to understand the ruling further, CE spoke to a tax expert who didn’t want to be named. He explains, “The ruling is right because there is a classification between ‘readyto- cook’ and ‘ready-to-eat’ food items. Pizza falls under the first category, which actually attracts a higher GST rate. Readyto- cook items needs to be cooked, prepared and then served. In this case, a consumer cannot have plain bread. Hence, the toppings come as a classification of a food being prepared and not as part of the pizza.”
Consumers can’t seem to wrap their heads around it either and might just think twice before ordering their favourite pizzas. “Pizza for me is a combination of all ingredients including the toppings. Otherwise it is just considered a pizza bread without any toppings. The ruling is definitely illogical and if this is enforced, I will definitely think twice to buy a pizza next time,” says Aishwarya Roy, a real estate professional.
While the confusion continues, netizens are having a field day with this. Some are worried if chutney and sambar would be taxed next, and some others feel avoiding the toppings due to heavy tax can keep them healthy!
Why 18% GST
The Appellate Authority for Advance Ruling observed that product pizza topping contains 22 per cent vegetable fat as compared to Mozzarella cheese of 14.5 per cent. The vegetable fat is not a prescribed ingredient for processed cheese. Therefore, the product pizza topping would not qualify to be classified under heading 0406 as cheese is not the major ingredient. The product pizza topping being edible preparation for human consumption, would merit classification under Chapter 21. As the product would not fall under specific entry, it would be classifiable under the residual entry ‘food preparations not elsewhere specified’ under tariff item 2106 90 99 and chargeable to GST at 18 per cent.
(Source: Taxmann)