Sri Vijaya Visakha Milk Producers Company Ltd. Vs Asst. Commissioner of Central Tax and Others (Andhra Pradesh High Court)
The case of Sri Vijaya Visakha Milk Producers Company Ltd. Vs. Assistant Commissioner of Central Tax revolves around the classification of flavoured milk under the Goods and Services Tax (GST) regime. The petitioner, engaged in processing and selling flavoured milk, initially filed returns under tariff heading 0402, which pertains to milk and cream containing added sugar or sweetening matter. However, the tax authorities rejected this classification, determining that flavoured milk should be classified under tariff heading 2202, which covers beverages containing milk. The authorities argued that the addition of flavour to milk transforms the product into a beverage, which is taxed differently under the GST law.
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The dispute centers on the interpretation of the relevant GST tariff entries. Tariff heading 0402 includes milk and cream, whether concentrated or containing added sugar, while tariff heading 2202 specifically covers beverages containing milk. The authorities reasoned that flavoured milk, due to the addition of flavours like Badam, changes its nature from milk to a beverage, thus making it subject to the higher tax rate under heading 2202. Consequently, the authorities imposed a tax demand along with penalties under Sections 122(2)(b) and 74 of the GST Act for alleged evasion of tax.
