Non-Alcoholic Beverages are taxable at 40% GST, while Iced Tea and Tea Extracts are at 5%:AAR [Read Order]

The West Bengal Authority for Advance Ruling (WBAAR) has issued a detailed order on the Goods and Services Tax (GST) classification of non-alcoholic beverages, iced tea preparations, syrups, and tea extracts, ruling that while iced tea and tea extracts qualify for the concessional 5% GST rate, other non-alcoholic drinks fall under a higher 40% slab.

The applicant, Sage Organics Pvt. Ltd., engaged in producing sugar-free and health-oriented drinks such as iced teas, syrups, vitamin waters, and herbal mixes, had sought clarity on the correct HSN codes and applicable GST rates under GST 2.0.

The company argued that its products were processed food and beverage items, not luxury or “sin goods” like alcohol or tobacco, and therefore should be taxed at moderate rates (12–18%). They proposed HSN codes such as 22029020 for iced tea, 21069019 for syrups, and 21012010 for tea extracts.

The Revenue, however, maintained that most non-alcoholic beverages fall under Schedule III, attracting 40% GST, while iced tea and tea extracts fall under Schedule I, taxed at 5%.

After examining product samples and preparation processes, the Authority observed that Sage Organics’ non-alcoholic beverages (like mojito mixes, vitamin waters, and flavoured drinks) do not contain fruit pulp or juice and therefore fall under tariff item 22029990, taxable at 20% CGST + 20% SGST.

The bench of Shafeeq S and Jaydip Kumar Chakrabarti concluded that the non-alcoholic beverages, as specified by the applicant, will be taxed 40%, and Iced tea & tea extracts, Syrups & concentrates will be taxed 5% for both.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates