IAAR rules on GST on Apple and Malt Cola

IAAR rules on GST on Apple and Malt Cola

The bench held that the products were liable to tax at the rate of 40 percent

The Gujarat Authority for Advance Ruling (AAR) has held that Apple Cola Fizzy and Malt Cola Fizzy are carbonated beverages with fruit juice. Therefore, these attract the Goods and Services Tax (GST) at 28 percent and GST Compensation Cess at 12 percent.

The applicant, Mohammed Hasabhai Karbalai, intends to supply apple juice-based drinks 'Apple Cola Fizzy' and 'Malt Cola Fizzy'. While both the drinks would be apple juice-based having the same ingredients and manufacturing process, the latter would have an added flavor of malt. The applicant desired to seek the classification of the goods it proposed to manufacture.

He submitted before the authority that the drinks prepared from juice concentrates and other ingredients including water, sugar and flavor, and processed by heat, were classified under the category of 'Thermally Processed Fruit Beverages/Fruit Drinks/Ready to Serve Fruit Beverages.'

On the other hand, carbonated fruit beverages or fruit drinks were prepared from carbonated water or by the process of carbonation. But the thermal processing or processing by heat was not a trait of carbonated beverages.

The applicant further submitted that his product was a thermally processed fruit beverage/ready to serve fruit beverage. It complied with the category as per the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011, having carbon dioxide as an ingredient used only for preservation purposes.

However, the authority observed that FSSAI was not empowered under the GST scheme to issue directions or instructions for GST classification. FSSAI was created for defining the science-based standards for foods and to regulate their manufacture, storage, distribution, sale, and import. This would ensure the availability of safe and wholesome food for human consumption.

The authority, thus, perceived that the goods containing water, sugar, sweetener, apple juice concentrate and flavors (aerated with carbon dioxide gas and presented in airtight containers), fulfilled the criteria to merit consideration.

The AAR bench comprising members Atul Mehta and Arun Richard ruled that Apple Cola Fizzy and Malt Cola Fizzy were carbonated beverages with fruit juice, and liable to tax at the rate of 40 percent, including cess.