In re IDYA (GST AAR Tamilnadu)
In a ruling regarding the GST classification of “Natural Antioxidant Water” with betel leaf and ajwain extract, M/s. IDYA, a manufacturer based in Chennai, sought clarification on the correct HSN code and applicable GST rate for their product. The company had been using HSN code 22029920, which typically applies to fruit pulp or juice-based drinks. However, the product did not contain any fruit pulp or fruit juice, but rather was a flavored water with natural plant extracts. The Tamil Nadu GST Advance Ruling Authority (AAR) concluded that the classification under HSN 2202 was inappropriate, as the product did not match the description of beverages containing fruit pulp or juices.
The ruling further clarified that the product should be classified under HSN code 22011010, which covers natural mineral waters and aerated waters not containing added sugars or flavoring agents. Accordingly, the correct GST rate for this category was determined to be 18%. The AAR also rejected the applicant’s claim of charging a 12% GST rate for the product, reinforcing the classification under the higher 18% rate. The ruling provided detailed insights into the manufacturing process of the antioxidant water, which involved hydro-distillation of betel leaf and ajwain, followed by blending the resultant oils with packaged drinking water, as per technical guidelines from the CSIR-Central Food Technological Research Institute. This ruling emphasizes the importance of correctly classifying products based on their composition to ensure accurate GST compliance.
