The Rajasthan Authority of Advance Ruling (AAR) has ruled that vanilla-flavored softy ice cream mix is not a dairy product and will attract an 18% GST rate. This decision was based on the fact that the primary ingredient in the mix is sugar, not milk solids. The AAR also noted that the mix contains other ingredients, such as flavoring agents and stabilizers, which further contribute to its classification as a processed food preparation rather than a dairy-based product.
VRB Consumer Products Pvt Ltd had approached the AAR on the taxability of vanilla mix in powder form which will have 61.2 per cent sugar, 34 per cent milk solids (skimmed milk powder) and 4.8 per cent of other ingredients, including flavouring substances and salt.
As per GST law, food preparations subjected to further processing for human consumption attract 18 per cent tax. Also preparations consisting of milk powder, sugar and any other added ingredients, powder for table cream, jellies, ice cream and similar preparations, also attract 18 per cent GST.
This classification means that manufacturers and sellers of softy ice cream mix will need to adjust their pricing and ensure they are charging the correct GST rate. The ruling provides clarity for businesses in the sector and helps ensure compliance with GST regulations.
This ruling is significant because it clarifies the GST rate for a popular product that was previously subject to some ambiguity. It also highlights the importance of ingredient composition and manufacturing processes in determining GST classification.
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