In re Dakshina Kannada Co-Operative Milk Producers Union Ltd (GST AAR Karnataka)
1. Whether Stainless Steel cans of 40 Liters capacity is liable to be classified under HSN code 7310 or 7323?
The applicant is not the supplier of the said SS cans but the recipient. Thus no advance ruling can be given on this issue of classification of stainless steel cans of 40 liters capacity as the same is beyond the jurisdiction of this authority.
2. Whether flavored milk is liable to be classified under HSN code 0402 99 90 or under 2202 99 30?
The applicant is part of Karnataka Co-operative Milk Producers Federation Limited, in respect of whom advance ruling was given on the issue of classification of flavored milk, which has been dismissed by the Appellate Authority for Advance Ruling, Karnataka, on the grounds that the appellant therein had suppressed the facts of pending investigation. The applicant also produces same branded (Nandini) product flavoured milk and hence this authority can’t give any ruling on the said issue.
3. Whether milk cream is liable to be classified under HSN code 0403 or 0401?
No ruling can be given on the issue of classification of milk cream, as the required information has not been furnished by the applicant.
4. Whether cold coffee is liable to be classified under HSN code 0402 99 90 or under 2202 99 30?
The cold coffee is similar to flavoured milk with the only difference that the flavor is coffee specific. Thus no ruling can be given by this authority on the issue of classification of cold coffee for the reasons stated at ruling (ii) supra.
5. Whether provision of subsidized lunch and refreshments to employee through contractors is to be treated as supply and if yes under which tarrif classification it has to be classified?
The applicant merely pays the part consideration towards the cost of lunch and refreshments to their employees through contractors and hence the said activity does not amount to supply, in terms of Section 7(i)( c ) of the CGST Act 2017.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, KARNATAKA
ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 & UNDER SECTION 98(4) OF THE KGST ACT, 2017
M/s Dakshina Kannada Co-op. Milk Producers Union Ltd., (called as the Applicant’ hereinafter), having GSTIN number 29AAAAD0202C1ZN, have filed an application for Advance Ruling under Section 97 of the CGST Act, 2017 & KGST Act, 2017 read with Rule 104 of CGST Rules 2017 & KGST Rules 2017, in Form GST ARA-01, discharging the fee of Rs.5,000/- each under the CGST Act and the KGST Act.
2. The applicant, located at Kulshekar, Mangaluru is a District level Cooperative Society, registered under GST Act. The Applicant is engaged in processing of Milk & Milk Products. The applicant has sought advance ruling in respect of the following questions:-
i) Whether Stainless steel cans of 40 liters capacity is liable to be classified under HSN code 7310 or 7323.
ii) Whether flavored milk is liable to be classified under HSN code 0402 99 90 or under 2202 99 30.
iii) Whether milk cream is liable to be classified under HSN code 0403 or 0401.
iv) Whether cold coffee is liable to be classified under HSN code 0402 99 90 or under 2202 99 30.
v) Whether provision of subsidized lunch and refreshments to employees through contractors is to be treated as supply and if yes under which tariff classification it has to be classified.
3. The applicant furnishes the following relevant facts having a bearing on the questions on which Advance Ruling is sought.
i) CLASSIFICATION & RATE OF GST APPLICABLE ON STAINLESS STEEL MILK CAN WITH LID OF 40 LTS CAPACITY
The applicant is purchasing stainless steel cans of 40 liters capacity for resale of the same to members for storage of milk. The steel cans are purchased from outside the state. The supplier of the stainless steel can was classifying the same under HSN code 7310 and IGST was collected @18%. However recently the said supplier has started to classify the same under HSN code 7323 and IGST is collected @12%.
Product description of product code HSN 7323 is as under.
Table, Kitchen, or other household articles and parts thereof, of iron or steel wool, pot scourers and scouring or polishing pads and the like of iron and steel.
Product description of product code HSN 73101010 is as under.
Tanks, Casks, Drums, Cans, Boxes, and similar containers, for any material (other than compressed or liquefied gas) of iron or steel, of a capacity not exceeding 300 Its, whether or not lined or heat insulated, but not fitted with mechanical equipment.
ii) CLASSIFICATION AND RATE OF GST APPLICABLE ON FLAVOURED MILK
The applicant is manufacturing and marketing flavoured milk and classified the same under chapter 4 with HSN 04029990 taxable @5%.
As per Food Safety and Standards Authority of India, flavoured milk means” the product prepared from milk or other products derived from milk or both and edible flavorings with or without addition of sugar, nutritive sweeteners, thereon dairy ingrediants, stabilizers and food colours. Flavoured milk shall be subject to heat treatment.
Where flavored milk is dried or concentrated, the dried or concentrated product on addition of prescribed amount of water shall give a product conforming to the requirements of flavored milk.
HSN chapter 4 covers dairy products,-
i) Milk (i.e. Full cream milk and partially or completely skimmed milk
ii) Cream
iii) Buttermilk, curdled milk and cream, yogurt, kephir and other fermented acidified milk and cream.
iv) Whey
v) Products consisting of natural milk constituents not elsewhere specified or included.
vi) Cheese and curd.
Further chapter 4 doesn’t cover,-
i) Food preparations based on dairy products.
ii) Products obtained from milk by replacing one or more of the natural constituents (e.g. oleic fats)
iii) Ice creams and other edible ice.
iv) Medicaments
v) Casein, milkalbuminand hardened casein
The composition of flavored milk as per the test reports issued by Independent laboratory institute is as under
