Jigarthanda attracts higher rate of GST - AAR TN

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Jigarthanda, a popular milk-based beverage sold in Tamil Nadu, will attract 12% GST, according to TN State’s Authority for Advance Ruling (TNAAR).

Before looking at the issue, let's first look at the contents of this drink.

The main ingredients that go into the making of Jigarthanda are milk, almond pisin, basundi, ice cubes and sherbet. 

One may be aware that at present, fresh milk and pasteurised milk are fully exempt from GST.

Further, milk products like curd, lassi, buttermilk and paneer are also exempt from GST if sold in a form other than pre-packaged and labelled.  GST at the rate of 5% applies to curd, lassi, buttermilk and paneer, when sold in pre-packaged and labelled form and also UHT milk.

Further, a GST of 12 % applies to condensed milk, butter, ghee and cheese. 

A Madurai-based Madurai Famous Jigarthanda LLP, one of the manufacturers of the product with a brand name said it is packed its product  in unit containers and is also available in loose form/in bottles without sealing.

The firm said that its final product is not fermented but a pasteurised milk product. Further it was submitted that GST is being levied at 5 %. 

The firm moved to TNAAR to find 

1. Whether the product manufactured as pasteurised milk and milk cream but named ‘Jigarthanda’ can be classified as Jigarthanda under description of goods?

also  

2. Whether this good was taxable or exempted and if taxable then what would be the rate and HSN (Harmonised System of Nomenclature) ?

Based on all the facts presented and arguments made, TNAAR first categorised the said product as a goods taking note of explanation given along with HSN and went on to  to examine whether the said product can be classified a beverage. 

It said that ‘milk and cream’ referred to in HSN 0402 and Jigarthanda manufactured by the applicant are not the same and on this ground it means that the said product will not attract a GST of 5%. 

The next issue was about categorising the product as a beverage. 

The word ‘beverage’, though not defined under the CGST Act, 2017, in common parlance, it is considered as a drink that can be consumed directly. The said product can be consumed directly and hence is a beverage with a base of milk.

Further, based on the explanation it is clear that milk flavoured with cocoa or other substances are specifically excluded from Chapter heading 0402 (GST at the rate of 5 %) and included under Chapter heading 2202 (GST at the rate of 12 per cent). 

Accordingly, it ruled that Jigarthanda will attract GST at the rate of 12 %


SRIVATSAN.R.

GST-CHENNAI

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