GST Classification and Tax Rate for Masala Pan
The Maharashtra Authority for Advance Ruling decided that Masala Pan is a distinct product taxed at 18% GST, not a composite supply.
- Ruling
- Order No. GST-ARA-81/2021-22/B-629, dated 28/11/2025
- Dated
- 28 Nov 2025
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Masala Pan is classified under HSN 2106 9099 as a miscellaneous edible preparation.
- The Authority rejected the claim that betel leaf is the principal supply.
- The product attracts an 18% GST rate rather than lower individual ingredient rates.
In short
The company asked if selling 'Masala Pan'—betel leaves filled with ingredients like gulkand and coconut—counts as a 'composite supply' where the leaf is the main item. They argued that because the leaf is the base, the whole product should be taxed based on the leaf's rate. The Authority disagreed, ruling that the ingredients are not naturally bundled and the final product is a distinct item.
What has changed
How it worked before
Many businesses assumed that because betel leaf is the primary component of a pan, the entire preparation could be treated as a composite supply with the leaf as the main item.
What has changed
The Authority ruled that Masala Pan is a 'Miscellaneous Edible Preparation' under HSN 2106 9099. This means you cannot separate the ingredients to apply lower tax rates; the entire product is subject to an 18% GST rate.
Who this affects
Pan shop owners, food manufacturers, and businesses selling prepared betel leaf products.
An example
A pan shop owner in Pune sells various types of Meetha Pan. They were previously unsure if they should tax the pan based on the betel leaf or the total mixture. Based on this ruling, they should classify their Masala Pan under HSN 2106 9099 and charge 18% GST on the full sale price.
What you should do
If you sell Masala Pan, you should apply the 18% GST rate. Remember that an Advance Ruling only binds the business that asked for it and their specific tax office; it is not a law that automatically applies to your business, though it shows how the department views this product.
If you do nothing
If you apply a lower tax rate based on the assumption that this is a composite supply, you risk a tax demand notice for the difference. A tax officer may charge you the 18% rate plus interest and penalties for underpayment. Relying on a ruling that does not apply to you can lead to costly disputes during an audit.
The terms explained
- Composite Supply
- A set of goods or services bundled together that are naturally sold as a package, where one item is the main product and others are secondary.
- HSN
- The Harmonized System of Nomenclature is a code used to classify goods for taxation purposes.
- Ancillary
- Something that is secondary or supplementary to the main item being sold.
The ruling in detail
Authority for Advance Ruling
M/s. Sharad Sadashiv Patil
Order No. GST-ARA-81/2021-22/B-629, dated 28/11/2025 · Maharashtra
Questions before the authority
- Classification of Goods/ Services
- Whether Supply of 'Masala Pan' is a Composite Supply with Principal Supply as Betel Leaf and other components as ancillary supply?
Facts
The applicant intends to manufacture and supply 'Masala Pan' (Meetha Pan), which consists of betel leaves filled with various ingredients like gulkand, desiccated coconut, tutti-frutti, and mouth fresheners. The applicant argued that the product is a composite supply with the betel leaf as the principal supply, as the other ingredients are merely ancillary to the consumption of the betel leaf.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification of Masala Pan | Chapter Heading 2106 9099, taxable at 18% Under entry No. 23 of Schedule III of Notification 1/2017 CT (R) |
| Whether Composite Supply | Answered in the negative The ingredients are not naturally bundled |
The Authority ruled that 'Masala Pan' is not a composite supply because the ingredients are not naturally bundled in the ordinary course of business. Instead, the product is classified as a 'Miscellaneous Edible Preparation' under Chapter Heading 2106 9099, attracting a GST rate of 18%.
Reasoning
The Authority determined that the ingredients are not naturally bundled because the consumer demands the final product as a whole, not just the betel leaf. It relied on the definition of 'composite supply' under Section 2(30) of the CGST Act, noting that no single ingredient acts as the principal supply. Consequently, the product is classified as a 'Miscellaneous Edible Preparation' under Chapter Heading 2106 9099, supported by Supplementary Note 6 to Chapter 21.
Provisions relied on
- Section 2(30) of the CGST Act
- Section 2(90) of the CGST Act
- Section 8 of the CGST Act
- Notification No 01/2017-Central Tax (Rate) dated 28/06/2017
- Supplementary Note 6 to Chapter 21
For the practitioner
This ruling clarifies that the preparation of 'Masala Pan' is **not a composite supply** and is instead a distinct product classified under **HSN 2106 9099**. Practitioners should note that the Authority rejected the argument that betel leaf serves as the principal supply, effectively subjecting the entire product to the higher 18% tax rate rather than the lower rates applicable to individual ingredients.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/sharad_sadashiv_patil_order.pdf
Legibility of the scan, as read: high.
Prepared 14-10-2026.
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