Branded Areca Nut ‘Supari’ Attracts 5% GST: Madras HC

The Madurai Bench of the Madras High Court has ruled that Branded Areca Nut ‘Supari’ attracts 5% Goods and Service Tax (GST). The bench of Justice G.R. Swaminathan quashed a GST demand raised against a Dindigul-based manufacturer of branded and scented betel nuts, holding that the product continues to retain the character of dried areca nut and is correctly classifiable under Chapter 8 of the Customs Tariff Act, attracting only 5% GST. A writ petition was filed by a partnership firm engaged in the manufacture and sale of branded areca nut products sold in small pouches under the trade name “Roja Pakku”. The dispute related to the period from July 2017 to March 2023, during which the firm had classified its product as “dried areca nuts” under tariff heading 0802, availing the lower GST rate. The GST department challenged this classification, arguing that the product should instead fall under Chapter 21 as a “food preparation” or “betel nut product known as supari”, which would attract GST at 18%. The department relied on the processing involved, including breaking the nuts into smaller pieces and adding small quantities of oil, sugar, sweeteners, menthol, and spices, to contend that the product had lost its original identity as a dried nut. The authorities also referred to Note 3 to Chapter 8, which permits only limited treatments to dried fruits and nuts, asserting that the petitioner’s process went beyond what is allowed under that chapter. After examining the manufacturing process in detail, the High Court noted that the raw betel nuts were merely sun-dried, cleaned, broken into pieces, mildly heated, and mixed with small quantities of additives primarily for preservation and flavour. The Court found that these processes did not fundamentally alter the nature of the product. The key legal issue, the Court observed, was whether such processing caused the areca nut to lose its “essential character”. On this point, the Court relied heavily on the Supreme Court’s landmark ruling in Crane Betel Nut Powder Works v. Commissioner of Customs & Central Excise, which held that cutting betel nuts into pieces and adding sweeteners or flavouring agents does not result in the manufacture of a new product, as “the betel nut remains a betel nut”. The court held that this principle squarely applied to the present case, noting that the end product continued to retain its original identity, albeit in a modified form. The Court also took note of the fact that the specific entry “betel nut product known as supari” was deleted from Schedule III (Chapter 21) with effect from 15 November 2017 through a GST notification amendment. This deletion, the Court observed, further weakened the department’s argument that the product should automatically fall under Chapter 21 after the amendment. The judgment also referred to a recent decision of the same High Court in a similar matter involving another manufacturer selling a comparable product under a different brand name. In that case as well, the Court had quashed the show cause notice on merits, holding that there was no change in the tariff entry or in the character of the product even after the introduction of GST. Adopting the same reasoning, the court concluded that the issue was no longer res integra and that the department had acted without proper application of mind in issuing the impugned demand. The High Court quashed the show cause notice issued by the Additional Commissioner of CGST and Central Excise and allowed the writ petition. The Court held that the petitioner’s product is classifiable under Chapter 0802 and is liable to GST at the lower rate applicable to dried areca nuts. Case Details Case Title: N.V.K. Mohamed Sultan Rowther & Sons Versus The Additional Commissioner of CGST and Central Excise Case No.: W.P(MD)No.26155 of 2023 Date: 26/11/2025 Counsel For Petitioner: N.Prasad Counsel For Respondent: N.Dilipkumar Click Here To Read Order Read More: India–UK Tax Treaty Applies to Dividend Distribution Tax: Bombay High Court

Branded Areca Nut ‘Supari’ Attracts 5% GST: Madras HC

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Branded Areca Nut ‘Supari’ Attracts 5% GST: Madras HC

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