Comments
With sugar as the major ingredient, ‘Softy ice-cream mix’ does not qualify as a dairy product, said Rajasthan’s Authority for Advance Ruling (RAAR) and ruled that the product will attract 18 per cent GST.
Alwar (Rajasthan)-based VRB Consumer Products Private Limited moved AAR seeking advance ruling regarding classification and tax rate levied on dried softy ice-cream mix (low fat) in vanilla flavour. The mix comprises sugar (61.2 per cent), milk solids or skimmed milk powder (34 per cent) and other ingredients (4.8 per cent), including flavouring agents and salt. “The product i.e. ‘Vanilla Mix’ - dried softy ice cream mix (low fat) in vanilla flavour will attract GST at the rate of 18 per cent (9 per cent each of CGST and SGST),” RAAR said in a recent ruling.
It may be noted that AAR ruling is applicable only on the applicant and jurisdictional tax officers. However, it can be relied upon in similar matters. Also, there have been many instances when ruling by AAR has become the base for policy formulation.
RAAR observed that ‘milk solids are added to sugar’ in the product and not the other way round.
As per GST law, food preparations subjected to further processing for human consumption attract 18 per cent tax. Also, preparations consisting of milk powder, sugar and any other added ingredients, powder for table cream, jellies, ice cream and similar preparations, also attract 18 per cent GST. “It is also evident that the product in question cannot be termed as a dairy produce,” the AAR said.
Sandeep Sehgal, Partner with tax consulting firm AKM Global said that AAR rejected its classification as a dairy product. He said this is in contrast to the Supreme Court’s decision in Amrit Foods, where the Court classified ‘milk shake mix’ and ‘soft serve mix’ for institutional sales as “dairy produce” under Chapter sub-heading 0404.90. “The divergence between these rulings underscores the complexities businesses face when classifying products for GST purposes, highlighting the importance of ingredient composition and product usage in determining tax liability,” he said.
As on date ice cream sold through shops or parlours attracts 18 per cent GST. However, if it is bundled with food supplies by hotels or restaurants, it is treated as part of ‘restaurant service’ and attracts 5 per cent GST. An average Indian consumes just 400 millilitres of ice cream as against 28.4 litres in New Zealand, 20.8 litres in USA and 18 litres in Australia.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.