Case Law Details
Malabar Regional Co-Operative Milk Producers Union Limited Vs State of Kerala (Kerala High Court)
The Petitioner, Malabar Regional Co-operative Milk Producers Union Limited, approached the Kerala High Court challenging six assessment orders (Exts. P1 to P6) that levied Goods and Services Tax (GST) at the rate of 12% on flavoured milk, instead of the rate of 5%. The Petitioner, a co-operative society engaged in manufacturing milk and milk products, contended that the demand for 12% GST was arbitrary and unjust.
The Petitioner submitted that the correct GST rate for flavoured milk is 5%, citing binding judicial precedents. They specifically relied on a judgment from the Andhra Pradesh High Court (Writ Petition No. 254 of 2024). That judgment determined that sweetened milk, and by extension, flavoured milk, should be classified under Tariff Entry 0402 (“Milk containing added sugar or other sweetening matter”), which is the special entry, rather than Entry 2202 (“beverage, containing milk”), which is the general entry. This classification places the product under the 5% tax bracket. The Andhra Pradesh High Court’s conclusion was fortified by a Madras High Court judgment (M/s Parle Agro Pvt. Limited Vs. Union of India, dated October 31, 2023) that had reviewed the relevant law and tariff changes.
Crucially, the Petitioner also relied on orders from the Supreme Court of India. A Special Leave Petition (SLP(C)(D) No. 17602 of 2025) preferred against one such decision was dismissed by the Supreme Court on May 9, 2025. A subsequent Supreme Court order (SLP(Civil) Diary No. 30600 of 2025) confirmed that the issue of whether flavoured milk is taxable at 5% (Item 403/04030000) or 12% (Item 9930) has been decided, with the Writ Court having held that it must be taxed at 5%.
Based on the clear and binding declaration of law from the superior courts, the Kerala High Court concluded that the matter required a fresh assessment. The Court, therefore, set aside the assessment orders (Exts. P1 to P6) and directed the 2nd Respondent (Assessing Authority) to pass fresh assessment orders in light of the stated declaration of law, confirming the correct GST rate is 5%.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
Petitioner has approached this Court challenging Exts.P1 to P6 assessment orders, which illegally and arbitrarily levied GST at the rate of 12% instead of the actual rate of 5% GST on flavoured milk.
2. The petitioner, ‘Malabar Regional Co-operative Milk Products Union Limited’, is engaged in the manufacturing of milk and milk products, including flavoured milk. It is submitted that the demand of GST @ 12% for flavoured milk instead of 5% of GST is arbitrary and unjust. Petitioner submits that the issue is covered in their favour by the judgment of the Andhra Pradesh High Court in Writ Petition No.254 of 2024, wherein paragraphs 14 and 15 reads as follows:
“14. Another way of looking at this issue is to consider sweetened milk. In a case where sweetened milk is to be sold, after bottling the same, it would fall within the meaning of Milk containing added sugar or other sweetening matter, under 0402. This drink could also be called a beverage, containing milk, falling under 2202. The entry, in 0402, is the special entry and the entry, under 2202, is the general entry and would have to give way to entry 0402. The same principle would apply to flavoured milk.
15. The Hon’ble High Court at Madras, it it’s judgment, dated 31.10.2023, in WP No.16608 and 16613 of 2020, in the case of M/s Parle Agro Pvt. Limited Vs. Union of India, after reviewing the law and the changes in the tariff entries, had come to the conclcusion, on similar lines, that flavoured milk would fall under 0402 and not under 2202. We are fortified, in our conclusion, by this judgment.”
Though an SLP was preferred as SLP(C((D)No.17602 of 2025, the same was dismissed as per Ext.P10. Petitioner also relies on the subsequent order of the Apex Court in SLP(Civil)Diary No.30600 of 2025, wherein paragraphs 2,3 and 4 reads as follows:
“2. The issue in these petitions is whether flavoured milk has to be classified as Item 403 taxable at the rate of 5% or as Item 9930 taxable at the rate of 12%. This issue has already been decided by this Court.
3. The writ Court has held that it has to be classified as Item 04030000 and 2025:KER:69717 has to be taxed at the rate of 5%.
4. The special leave petition against one such decision bearing SLP(C)(D) No.17602 of 2025 has already been dismissed by this Court vide order dated 09.05.2025.”
2. Heard the learned Government Pleader also.
3. In view of the above, I am of the opinion that the matter requires fresh assessment at the hands of the Assessing Authority on the basis of the decision of law as stated above. Therefore, Exts.P1 to P6 orders of assessment are set aside, directing the 2ndrespondent to pass fresh assessment orders in the light of the declaration of law as stated above.
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