Assistant Commissioner of Central Tax & Ors. Vs Sri Vijaya Visakha Milk Producers Company Ltd. & Anr. (Supreme Court of India)
The Supreme Court of India has dismissed a special leave petition filed by the Assistant Commissioner of Central Tax and others, leaving undisturbed a judgment by the Andhra Pradesh High Court concerning the Goods and Services Tax (GST) classification of flavoured milk. The High Court had ruled that flavoured milk should be classified under a tariff heading attracting a lower GST rate, a position the apex court was not inclined to overturn.
The brief order from the Supreme Court stated, “Delay condoned. We are not inclined to interfere with the impugned judgment; hence, the present special leave petition is dismissed.” This decision by the highest court effectively upholds the Andhra Pradesh High Court’s ruling in the case involving Sri Vijaya Visakha Milk Producers Company Ltd.
The dispute originated from a disagreement over the correct classification of flavoured milk under the GST regime. The tax authorities contended that flavoured milk, due to the addition of flavours and sugar, transforms into a beverage and should therefore be categorized under Tariff Heading 2202, which typically attracts a GST rate of 12%.
However, Sri Vijaya Visakha Milk Producers Company Ltd. argued that flavoured milk is essentially milk with added flavouring and sweetening and correctly falls under Tariff Heading 0402, a category for milk and cream, attracting a lower GST rate of 5%. The company had been classifying its product under this heading and filing returns accordingly. The tax department challenged this classification, leading to demands for differential tax and penalties.
