MUMBAI: Is a softy ice-cream mix product of milk or sugar? According to a latest ruling given by the GST Authority for Advance Rulings (AAR) – Rajasthan bench, the product’s main part is sugar, not milk. Further, because it comprises components like stabilizers and flavorings, it’s not a ‘natural’ dairy product. Consequently, the AAR held that it could appeal to a Goods and Services Tax (GST) charge of 18%.
The producer VRB Consumer Products, a non-public firm, had sought a ruling on classification of its ‘Vanilla Mix’. This product was bought to institutional consumers who in flip used it to provide tender serve ice cream utilizing softy-making machines. The firm argued that their product needs to be categorised underneath Heading 0404. This covers merchandise ‘consisting of natural milk constituents – whether or not containing added sugar or sweeting matter’. Thus, the product could be eligible for a decrease, making it eligible for a decrease GST charge of 5%.
However, the AAR refuted this declare and noticed that the foremost ingredient of the product is sugar (61.2%) and not milk solids (34%), that are added to the sugar.
“On account of a higher percentage of sugar 61 percent in the final product, the advance ruling authority concluded that ‘milk solids are added to sugar’ and not that ‘sugar is added to milk solids’. Accordingly, the applicant’s argument for classifying the product under the entry which covers ‘milk products’ was rejected as it was held that the final product comprises of several ingredients and each ingredient plays a vital role in the product” stated Harpreet Singh, Partner, Indirect Tax, at Deloitte-India.
Products that include milk have typically been the subject material of dispute. Earlier, the AAR held lassi, which is a fermented milk product, to be exempt from GST. However, flavoured milk was held topic to 12% GST.
