GST: Flavoured milk not flavour of the season

The flavoured milk is set to attract a 12% tax after GST Authority for Advance Ruling (AAR) in Gujarat, Tamil Nadu and Karnataka. It continues to remain taxable under GST, while flavoured lassi is exempt from taxes. Flavoured milk is a ‘beverage containing milk’ while Lassi is a fermented milk product as stated by AAR in its decisions.

In separate rulings on cases involving Britannia and Gujarat Cooperative Milk Marketing Federation, it was ruled that flavoured milk should be taxed at 12%. The rulings noted that that ‘full cream milk’ and partially skimmed milk’ are two variants of milk.

Earlier GST Authority for Advance Ruling, Gujarat (AAR-Gujarat) had said that Lassi, a fermented milk product, will no longer attract Goods and Services Tax (GST). This ruling was made by AAR in July following a case where Sampoorna Diary and Agrotech had approached the authority against the GST rate applicable on Lassi. Sampoorna Diary and Agrotech is a dairy company based in Valsad. It is a major manufacturer and supplier of Lassi and other milk products in the state.

Food companies have raised their concerns over this. They are questioning how for tx purposes any addition in milk in the form of flavouring agents like chocolate, mango, etc can change the overall product, while lassi remains as it is even if it is flavoured. This is set to hurt the food and beverages companies. Experts suggest this in turn will also affect the local dairy producers’ and farmers’ profitability, as the company will reduce their pays.