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

Previously, the Karnataka AAR had ruled that flavoured milk is taxable at5%, based on an application by the Karnataka Cooperative Milk Producers Federation.Flavored milk is classified as a “beverage containing milk” and will be subject to a 12% GST, according to the Gujarat Authority for Advance Ruling (AAR).

Gujarat Co-operative Milk Marketing Federation Ltd, which sells dairy products under the Amul name, had approached the AAR about the taxability of its products under the GST.flavoured milk which the company sells under trade name Amul Kool /Amul Kool Cafe.The applicant told the AAR that the method for flavouring milk is standardisation of fresh milk based on fat content, followed by heating at a specific temperature, filtration, pasteurisation, and homogenization, and finally mixing of sugar and various flavours before bottling.

The flavoured milk will be classified as a ‘beverage containing milk,’ which is taxed at 12% under GST, according to the authority.Previously, the Karnataka AAR had ruled that flavoured milk is taxable at5%, based on an application by the Karnataka Cooperative Milk Producers Federation.

Conflicting AAR rulings and hyper-technical interpretations of tax rate entries in GST law, according to AMRG & Associates Senior Partner Rajat Mohan, are leading to litigation.“Due to the conflicting rulings issued by state AAR benches, classification of ready-to-drink flavoured and sweetened milk will be a topic of litigation in the near future,” Mohan added.