Flavoured Milk to attract 12% GST
Shambhavi Sharma / 2021-04-20 10:06:47

The Gujarat Co-operative Milk Marketing Federation Ltd, which sells dairy products under the Amul brand, has asked the AAR to look into the taxability of flavoured milk sold under the Amul brand. As Amul Kool /Amul Kool Cafe under the Goods and Services Tax (GST).
Standardization of fresh milk based on fat content, followed by heating at a given temperature, filtration, pasteurisation, and homogenization, and finally mixing of sugar and different flavours before bottling, according to the applicant.
The flavoured milk will be classified as a 'beverage containing milk,' which is taxed at 12% under GST, according to the authority.
Previously, the Karnataka AAR had ruled that flavoured milk is taxable at 5%, based on an application by the Karnataka Cooperative Milk Producers Federation.
Flavored milk is currently subject to a 5% GST imposed by the Indian government. Milk products are included in Chapter 4 of the tariff list, while flavoured milk will be protected by tariff item/HSN (Harmonized System of Nomenclature).
Facts of the Case
  • The applicant is a milk and milk powder manufacturer, which includes flavoured milk. On their outward supply of "flavoured milk," the applicant requests clarity on the HSN code and duty scale.
  • As per applicant, Flavored milk is a sweetened dairy beverage made with milk, sugar, allowable colours, and artificial or natural flavourings.
  • The flavoured milk manufacturing process is summarised as follows: standardisation of fresh milk based on fat content, heating at a specific temperature, filtration, pasteurisation, and homogenization, sugar and flavour mixing, and finally bottling. The applicant presented a flavoured milk process flow map.
Issues in Question
  • The question raised asked about the GST Rate applied on the flavoured milk.
  • After verifying the applicant's basic facts, it was discovered that the applicant falls under the jurisdiction of the Centre, Narasaraopet CGST Range, Guntur CGST Division.
  • As a result, as prescribed by Section 98(1) of the CGST/APGST Act 2017, the application has been forwarded to the jurisdictional officers, along with a copy to the State Tax authorities, Assistant Commissioner (State Tax), Narasarao peta Circle, for their remarks.
  • No proceedings relating to the issue on which the claimant requested an Advance Ruling are pending or completed, as per the jurisdictional officers in question.
Contentions of the Applicant
  • The claimant insists that merely adding sugar or various flavours to milk does not alter its fundamental characteristics;
  • Flavored milk or milk shakes are used as a milk substitute and are a basic milk preparation.
  • There is no manufacturing process involved, and milk does not alter its composition in any way, so flavoured milk is classified under Chapter 4 of the Customs Tariff.
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Ruling and Findings
  • According to the Gujarat Authority for Advance Ruling (AAR), flavoured milk is a "beverage containing milk" that should be subjectd to a 12 percent GST.
  • "Due to the conflicting rulings issued by state AAR benches, classification of ready-to-drink flavoured and sweetened milk will be a topic of litigation in the near future," Mohan added.

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