Supreme Court Upholds 5% GST on Flavoured Milk, Rejects Centre’s Plea for 12% Tax Rate [Read Order]

The Supreme Court of India ruled that flavoured milk should be classified as milk under the GST law and taxed at 5%, rejecting the Union Government’s attempt to classify it under a higher tax slab of 12%.

Heritage Foods Limited (respondent) is a dairy company that produces flavoured milk. It had approached the High Court of Andhra Pradesh to resolve a dispute regarding how flavoured milk should be taxed under the Goods and Services Tax (GST) regime.

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The company’s counsel argued that flavoured milk is still essentially milk, even though it contains added flavours, and should be taxed at the lower rate of 5% under Tariff Item 04030000.

The AP High Court accepted this argument and ruled in favour of the company on 29 January 2025. The court held that the addition of flavours did not change the essential nature of the product and that it should be treated as milk under the GST classification system.

The Union of India was dissatisfied with the High Court’s ruling and filed a Special Leave Petition (SLP) before the Supreme Court. The government’s counsel argued that flavoured milk is a processed product because of the added ingredients like sugar and flavouring, so it should be classified under Tariff Item 9930, which carries a 12% tax rate. The counsel also sought condonation for a delay of 30 days in filing the petition.

The government’s counsel argued that the process of adding flavours and other substances made flavoured milk a new and different product from plain milk. On the other hand, the company’s counsel argued that flavoured milk remains a dairy product in public understanding and use, and its core character as milk is not changed by the addition of flavours.

The bench comprising Justices Pankaj Mithal and Prasanna B. Varale observed that the issue had already been addressed in a previous case, SLP(C)(D) No. 17602 of 2025, which was dismissed by the Supreme Court on 9 May 2025. The court observed that there was no need to reconsider the issue, as the classification of flavoured milk as milk had already been accepted in law.

The court allowed the application to condone the delay in filing and dismissed the Special Leave Petition on merits. The court held that the decision of the High Court of Andhra Pradesh required no interference. All pending applications were also disposed of.

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