The Goods and Services Tax (GST) authority has determined that softy ice cream does not qualify as a milk product, citing sugar as its primary ingredient. The Rajasthan Bench of the GST Authority of Advance Ruling (AAR) concluded that since sugar constitutes the majority of the product—61.2 percent—softy ice cream falls outside the 5 percent GST bracket applicable to milk products. Instead, an 18 percent GST will be applied.
The decision arose from an application by VRB Consumer Products, which sought to categorize its Vanilla Mix under the lower GST rate. The company contended that the mix, composed primarily of natural milk components, is utilized by institutional buyers to produce softy ice cream. VRB argued that the product should be classified under heading 0404, which includes items made from natural milk components, regardless of added sugars or sweeteners.
However, the AAR rejected this claim, noting that the mix consists predominantly of sugar rather than milk solids, which are only 34 percent of the product. The ruling emphasized that the formulation effectively demonstrates that “milk solids are added to sugar,” rather than the reverse.
In addition, the authority pointed out that the inclusion of stabilizers and flavorings in softy ice cream disqualifies it from being categorized as a ‘natural’ milk product. This decision follows previous controversies over milk product classifications; for instance, the AAR previously deemed lassi—a fermented milk product—GST-exempt, while imposing a 12 percent tax on flavored milk.
According to a report from Business Standard, Sandeep Sehgal, Partner-Tax at AKM Global, noted that this ruling contradicts a Supreme Court decision regarding Amrit Foods, which classified ‘milkshake mix’ and ‘soft serve mix’ for institutional sales as “dairy produce” under sub-heading 0404.90.
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