Flavoured milk taxable at 12% under GST: AAR rules in Amul dairy case

Flavoured milk is basically 'beverage containing milk' and will attract 12 per cent GST, the Gujarat Authority for Advance Ruling (AAR) has said.

Gujarat Co-operative Milk Marketing Federation Ltd, which markets dairy product under Amul brand, had approached the AAR on the taxability under the Goods and Services Tax (GST) of flavoured milk which the company sells under trade name Amul Kool /Amul Kool Cafe.

The applicant had submitted before the AAR that the process of the flavoured milk is standardisation of fresh milk according to the fat contents and then heating at certain temperature followed by filtration, pasteurisation and homogenisation and then mixing of sugar and various flavours and finally bottling.

The authority said that the flavoured milk would be classifiable as a 'beverage containing milk', which is taxable at 12 per cent under GST.

Earlier the Karnataka AAR, in an application of Karnataka Cooperative Milk Producers Federation, had ruled that flavoured milk is taxable at 5 per cent.

AMRG & Associates Senior Partner Rajat Mohan said contradictory AAR rulings and hyper-technical interpretation of tax rate entries in GST law are leading to litigation.

"Classification of ready to consume flavoured and sweetened milk would be a subject matter of litigation in near future due to the contradictory rulings given by state AAR benches," Mohan added.