Flavoured milk or beverage? AAAR says Vadilal's Power Sip is the latter

GST rate is 5% on milk and 12% for beverage; company says product is flavoured milk

The issue of classification of food products under the goods and services tax (GST) regime refuses to die down. Under the GST regime, rates are decided based on these classifications, giving rise to various disputes over the matter.

In the latest case, the Gujarat-based Appellate Authority of Advance Ruling (AAAR) upheld the ruling by AAR that a product by Vadilal Industries – Power Sip – is a beverage and not flavoured milk. This went against the contention of Vadilal. Experts too said classification of products should also factor in how are they  referred to in common parlance.

Milk is classified