AAAR Rules GST Exemption Only for Milk Not for Flavoured Milk

There will be no GST levied on fresh milk and pasteurized milk in July this year said the government. But a 5% minor GST would get applicable to the curd, lassi, buttermilk and paneer when the same would get sold in the pre-packaged and labelled form at an Ultra High-Temperature Milk.

Concerning the flavoured milk, is it only said to be the milk or beverage or if sold in the pre-packaged form that would be levied with 5% GST? An Appellate Authority of Advance Ruling (AAAR) would mention that the flavoured milk is not milk rather than the same would be treated as the drink that has milk as an ingredient.

Flavoured Milk is Taxed at 12%

The higher authority said it when the ice cream maker Vadilal communicated with them on the same concern. A 12% GST would be applicable on the flavoured milk exceeding what milk pre-packaged form would be levied.

Vadilal before AAAR post to the authority for the Advance Ruling (AAR) specified that GST must be subjected to be applied on the flavoured milk. The flavoured milk comprises a ‘beverage containing milk’ the same draw a 12% GST, in a ruling the Gujarat Authority for Advance Ruling (AAR) specified in April.

Gujarat AAAR ensures that the AAR ruling on the classification mentioned that flavoured milk does not say to be milk and is a beverage that contains milk. The same mentioned that flavoured milk these milk is not in its natural form however the same was taken post to the application of the precise process of the milk.

Tax experts mentioned that “Classification of products under GST requires looking into aspects like common parlance, end-use, technical specifications, constituents of the products etc. In this particular case, the authorities have given precedence to the contents of the product rather than common parlance,”

“Even if flavour is added to milk, under common parlance, most would still treat the product as milk and not as a beverage. This plea was not accepted by the authorities,” a tax expert expressed.

GST Rate on Dairy Products

GST that would come into force from July 2017 would not get charged on the milk and the sweet yogurt-based drink lassi. If the flavoured lassi remains outside the GST then the flavoured milk draws a 12% tax.