AP AAR: GST Rate On Crackle Should Rise to 18% from 12%

The goods and services tax (GST) rate for crackles used as ice cream toppings sold to companies may increase from 12 percent to 18 percent.

As per the recent ruling of the Authority for Advance Rulings (AAR), crackles sold to ice cream companies should be treated and charged as an industrial input, not sugar-boiled confectionery.

However, the applicable GST rate is yet to be specified by the AAR, experts expect it to be 18 percent, not the 12 percent rate requested by the applicant. The matter concerns a product known as NBS crackle, primarily made of sugar but also added with ingredients like cashew nuts, butter, and glucose.

Ice cream manufacturers like Hindustan Unilever Ltd. and Dairy Classic Ice Creams are supplied this product by the applicant primarily for use as ice cream toppings.

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The applicant argued that the topping should be classified as sugar-boiled confectionery with a 12 percent GST rate. However, the court ruled that the product wasn’t meant for direct consumption by end users. The product in question is specifically sold to ice cream manufacturers which is an essential industrial input which has now become necessary practice to add it.

Sandeep Sehgal, the partner at AKM Global which is a tax and consulting firm, emphasized that this ruling highlights the importance of considering a product’s ultimate use when determining its tax classification to levy tax.

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