In a recent ruling, the Rajasthan bench of the GST Authority for Advance Rulings (AAR) determined that the softy ice-cream mix, sold by VRB Consumer Products, is primarily sugar-based, and not a milk product. As a result, it will attract a Goods and Services Tax (GST) rate of 18%. The ruling emphasized that since the product contains 61.2% sugar and only 34% milk solids, it cannot be classified under dairy products eligible for a lower tax rate.
VRB Consumer Products had requested the classification of its ‘Vanilla Mix’ under Heading 0404, which covers products consisting of natural milk constituents. If accepted, this would have allowed the product to be taxed at 5% GST. However, the AAR rejected this argument, pointing out that additives like stabilizers and flavorings further distanced the product from being considered a ‘natural’ milk product.
Harpreet Singh, Partner, Indirect Tax at Deloitte-India, stated that the AAR’s decision rested on the fact that milk solids were added to sugar, and not vice versa, making the product sugar-dominant. This decision sets a precedent for other similar products, clarifying their tax classification.
This case is one of many where products containing milk have sparked debate. For example, while lassi was ruled exempt from GST, flavored milk was subjected to 12% GST in a prior ruling.
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