‘Antioxidant Water’ with natural Betel Leaf extract and natural Ajwain seeds will be classified as flavoured water, Tamil Nadu’s Authority for Advance Ruling (TNAAR) has said. Accordingly, it will attract a 28 per cent slab rate and a 12 per cent compensation cess under GST.
Chennai-based M/S Idya approached the TNAAR to seek an advanced ruling on the classification of ‘Antioxidant Water’ containing natural Betel Leaf extract and natural Ajwain seeds. Also, it sought clarification on whether the 12 per cent rate, currently being charged, is correct.
During the arguments, the State Jurisdictional Officer classified the product under the heading ‘Waters, including natural or artificial…not containing added sugar…nor flavoured’ while the Central jurisdictional authority classified it under ‘’Water, including mineral…aerated …. containing sugar…or flavoured.” In the case of the first category, GST will be applicable at 12 per cent, while in the second instance, GST rate would be 28 per cent (plus 12 per cent compensation cess)
“The Anti-Oxidant water, i.e., the Taan Flavored water’, as certified by the CSIR-CFTRI is rightly classifiable under HSN 2202 1090 as – All goods (including aerated waters), containing added sugar or other sweetening matter or flavoured, and taxable at 28 per cent,” TNAAR said in its ruling dated November 5, but made public now.
According to Sandeep Sehgal, Partner at AKM Global, the AAR held that the product’s raw materials do not constitute fruit juice or pulp, and its flavoured characteristics justify the assigned HSN code. “This ruling highlights the ongoing challenges in GST classifications due to varying interpretations of product composition and additives. By focusing on the raw materials and manufacturing process, the AAR emphasized the importance of aligning classifications with the actual nature of the goods. The decision reinforces the need for businesses to carefully evaluate their products to ensure compliance and mitigate potential disputes,” he said.