18% GST on Chocolate Milk Powder: AAR [Read Order]

The Karnataka Authority of Advance Ruling (AAR) ruled that 18% Goods and Services Tax ( GST ) applicable on Chocolate Milk Powder.

The Applicant, M/s Karnatka Co-operative Milk Producers Federation Ltd. is an Association of persons and is registered under the Goods and Services Act, 2017, engaged in processing of milk and milk products. They manufacture Skimmed Milk Powder and Whole Milk powder, classify the same under tariff number 0402, taxable at 5% and supply the same to government schools through Zilla panchayats under “Ksheera Bhagya yojana” scheme as part of the midday meal scheme to school children.

At the request of the Government of Karnataka to supply milk powder mixed with chocolate, they also manufacture and supply Chocolate flavored Whole Milk Powder (Chocolate Milk Powder in short), effective from November 2017 to different schools located in the districts of Mysore and Bellary region. They classified the said “Chocolate Milk powder” under chapter 1806 and are paying the GST at the rate of 18%.

The applicant has sought advance ruling in respect of the classification of Chocolate Milk Powder.

The coram consists of Dr. Ravi Prasad and Mashood Ur Rehman Farooqui noted that The product in the instant case is neither milk nor milk powder but ‘Chocolate Milk Powder’, which is admittedly obtained on blending of Whole Milk Powder with Chocolate Flavoured Powder in the ratio of 97.5 to 2.5. Further, it is an admitted / undisputed fact that the product in question also does not have the characteristics, required under FSSAI and BIS, to be considered as Milk Powder, in terms of para 7.5 supra. Thus the instant product does not cover under the heading 0401 or 0402. The other remaining headings of Chapter 4 are not relevant to the instant product. Therefore, the AAR ruled that the product “Chocolate Milk Powder” is classified under the Tariff heading 1806.

To Read the full text of the Order CLICK HERE