New Delhi . Everyone is crazy about soft ice cream in India. However, now softy ice cream lovers will have to pay a higher price to buy ice cream, because the GST authority has not considered softy ice cream as a milk product. The Rajasthan Bench recently gave a judgment in this case, stating that the main ingredient of Softy ice cream is not milk, but sugar. Therefore, these milk products cannot be brought under the ambit of 5 percent GST. Instead, 18 percent GST will be applicable on it.
A company named VRB Consumer Products had applied to the GST Advance Ruling Authority to include its product Vanilla Mix in the 5 percent GST category. The company’s argument was that the product was made from natural milk components and hence should be subject to 5 percent GST. This mix is used by institutional buyers in making softy ice cream.
However, the GST authority rejected the company’s claim. According to them, the proportion of sugar in the product is 61.2 percent, while milk solids are only 34 percent. The GST authority concluded that milk solids were mixed with sugar and not sugar milk solids. Moreover, softy ice creams also contain additives like stabilizers and flavourings, which keep softy ice creams out of the category of natural milk product.
Earlier, the GST Advance Ruling Authority had declared Lassi, a fermented milk product, exempt from GST, while 12 per cent GST was imposed on flavored milk. This case reflects that there have been controversies regarding GST on milk products in the past, and this decision presents a new challenge for consumers.