Softy Ice Cream Mix Classified as Sugar-Based, Attracts 18% GST Due to High Sugar Content

In a recent decision by the GST Authority for Advance Rulings (AAR) – Rajasthan bench, a soft-serve ice cream mix has been classified as a sugar-based product rather than a dairy one. This ruling was in response to an application by VRB Consumer Products, a company that produces 'Vanilla Mix' used to make softy ice cream. The company argued that its product should be classified as a dairy product under GST Heading 0404, which would attract a lower 5% tax rate.

However, the AAR ruled otherwise, noting that sugar constitutes 61.2% of the product, while milk solids make up only 34%. Since sugar is the dominant ingredient, the product was deemed not to fall under the category of natural dairy products. The mix also contains additives such as stabilizers and flavorings, further distancing it from the 'natural' label. Consequently, it was determined that the product would attract an 18% GST rate.

This ruling reflects ongoing disputes regarding the GST classification of milk-based products. For instance, lassi was previously ruled exempt from GST, while flavored milk was taxed at 12%. This decision continues to highlight the complexities in classifying products with milk content under GST laws.