GST: Sweet deal for lassi lovers, but no such joy for those who like flavoured milk

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Lassi, a fermented milk product, will no longer attract Goods and Services Tax (GST), according to a recent decision of the GST Authority for Advance Ruling, Gujarat (AAR-Gujarat). This ruling was made by AAR following a recent 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.

However, flavoured milk will continue to remain taxable under GST. In its earlier rulings the AAR has said that owing to the complexities of the classification, flavoured milk will not be exempted from GST, the Times of India reported.

Background 

Sampoorna Diary and Agrotech sells Lassi under the brand name ‘Elan’ in four different flavours- Plain (without added salt and sugar), salt with cumin, strawberry with sugar and blueberry with sugar. It was noted by the AAR that the core ingredients of the Lassi that was being manufactured and sold were curd, water and spices, the TOI report mentioned.

The lassi bottle showed that it was a ‘dairy-based fermented drink’. Sampoorna Dairy had sought the advance ruling on whether products manufactured as Lassi, and sold under different names could be classified as Lassi under Description of Goods and if the goods are taxable under or not, along with other issues.

As per the GST classification, products like curd, Lassi and buttermilk have been listed under the exempted category.

However, manufacturers and suppliers of flavoured milk have not been that lucky and continue to shell out GST. In the case of Amul, which manufactures and supplies flavoured milk, AAR Gujarat had previously held that a GST rate of 12% would apply under the classification of HSN 22029930.

According to tax experts, both Lassi and flavoured milk in essence are dairy-based drinks but classification codes treat them differently.