GST Ruling: Vanilla Ice Cream Mix Exempt from Dairy Classification

The Rajasthan bench of the Authority of Advance Ruling (AAR) has determined that vanilla-flavored softy ice cream mix is not a dairy product and is subject to an 18% GST. The ruling was based on the mix's high sugar content and additional processing, distinguishing it from traditional dairy products.

The Rajasthan branch of the Authority of Advance Ruling (AAR) has ruled that vanilla-flavored softy ice cream mix is subject to 18% GST as it is not classified as a dairy product. The ruling comes after VRB Consumer Products Pvt Ltd sought clarification on the taxability of their vanilla mix in powdered form.

According to the AAR, the mixture, containing 61.2% sugar and 34% milk solids, as well as other ingredients including flavoring substances, does not constitute a dairy product. The classification decision relied heavily on the product's dominant sugar ingredient and intended use in soft serve machines, rather than milk.

Tax experts note the ruling diverges from the Supreme Court's decision in Amrit Foods, highlighting challenges businesses face in product classification for GST purposes. AMRG & Associates Senior Partner, Rajat Mohan, and AKM Global's Partner-Tax, Sandeep Sehgal emphasize the importance of ingredient composition and manufacturing processes in such tax determinations.

(With inputs from agencies.)