Flavoured milk has discovered completely different flavours with completely different Authorities for Advance Rulings (AARs). Whereas Gujarat AAR adopted its counterparts in Tamil Nadu and Andhra Pradesh to carry GST on the charge of 12 per cent, the Karnataka AAR went for five per cent.
Newest rulings from Gujarat are associated with two well-known milk product manufacturers, Amul and Vadilal. Gujarat Co-Operative Milk Advertising Federation Ltd, proprietor of Amul model, approached AAR to get ruling relating to on its flavoured milk product offered beneath commerce identify of ‘Amul Kool/Amul Kool Cafe’. One other software was moved with comparable query by Vadilal for its flavoured milk product being offered beneath the commerce identify of ‘Energy Sip’.
Manufacturing course of
Gujarat Co-operative submitted that the method of the flavoured milk is standardisation of contemporary milk in keeping with the fats contents after which heating at sure temperature adopted by filtration, pasteurisation and homogenisation after which mixing of sugar and varied flavours and at last bottling. Highlighting the truth that because the commodity milk and milk merchandise are enumerated in Chapter 4 of the tariff checklist and flavoured milk will likely be coated beneath tariff merchandise/HSN (Harmonised System of Nomenclature, a globally accepted system for software of tariff beneath customized responsibility and GST), ‘04029990’ which implies GST charge can be 5 per cent.
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Giving comparable arguments, Vadilal mentioned in its software that the Nationwide Diary Analysis Institute, Bangalore has additionally confirmed that flavoured milk falls, beneath Dairy produce as per the FSSAI regulation. The applicant additionally highlighted ruling by Karnataka AAR which held that ‘flavoured milk’ is classed beneath the Tariff heading 04029990 which implies GST on the charge of 5 per cent. The mentioned Advance Ruling Authority has additionally taken word of the judgment rendered by Allahabad Excessive Courtroom in Gujarat Co-operative Milk Advertising Federation the place it was particularly noticed that ‘flavoured milk’ is a type of milk, and it’s neither a by-product of milk nor a milk product.
After going by means of all of the arguments and details, Gujarat AAR famous that this matter was represented earlier than GST Council for its assembly on December 12. Firms requested to shift the classification in order that charge may very well be lowered to five per cent from 12 per cent. Nonetheless, Fitment Committee (the committee of tax officers suggest charge classification which is then thought of by GST Council) didn’t favour which was accepted by GST Council.
AAR additionally took word of rulings by Tamil Nadu’s AAR (within the matter of Britannia Industries) and Andhra Pradesh’s AAR (in issues of Tirumala Milk and Sri Chakra Milk) and accordingly held “‘flavoured milk’ is classifiable beneath Tariff Merchandise 2202 99 30 of the First Schedule to the Customs Tariff Act, 1975 as a ‘beverage containing milk’.” This implies GST charge can be 12 per cent.
Numerous tax positions
In keeping with Harpreet Singh, Associate at KPMG, that is one other occasion of numerous tax positions being adopted by States. Whereas three AARs have held flavoured milk to be taxable at 12 per cent, Karnataka AAR has held it to be liable at 5 per cent. “There can’t be a extra compelling cause for constituting a Nationwide stage Advance ruling authority, for offering tax certainty,” he mentioned.