Apple Cola Fizzy and Malt Cola Fizzy are Carbonated Beverages with Fruit Juice attracts Tax at 40% (with cess): AAR [Read Order]

AAR Gujarat - Apple Cola Fizzy - Malt Cola Fizzy - Carbonated Beverages - fruit juice - Tax - AAR - Taxscan

The Gujarat Authority for Advance Ruling ( AAR ), has ruled that Apple Cola Fizzy and Malt Cola Fizzy are Carbonated Beverages with fruit juice that attracts GST at 28% and GST Compensation Cess at 12%.

The applicant M/s. Mohammed Hasabhai Karbalai, intends to supply apple juice-based drinks in the name of ‘Apple Cola Fizzy’ and ‘Malt Cola Fizzy ‘. Both the drinks will be apple juice-based drinks having the same ingredients and manufacturing process, the second one having an added flavor of malt. The applicant is confused and wishes to seek the classification of the goods which it proposes to manufacture.

The applicant submits that drinks prepared from juice concentrates and other ingredients including water, sugar, flavors etc., and processed by heat are classifiable 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 may be prepared from carbonated water or by the process of carbonation, however thermal processing or processing by heat is not a trait of carbonated beverages. The applicant further submitted that their product is a thermally processed fruit beverage/ready to serve fruit beverage complying with category 2.3.10 as per FSSAI Regulations, 2011 having carbon dioxide as an ingredient that is used for preservation purposes only.

The Authority observed that FSSAI is not empowered under the GST scheme of law to issue directions/ instructions for GST Classification. The FSSAI has been created for laying down science-based standards for articles of food and to regulate their manufacture, storage, distribution, sale, and import to ensure the availability of safe and wholesome food for human consumption and cannot be the factor in the determination of the classification of goods under the GST scheme of law and procedure.

The Authority further observed that the subject goods which consist of water, sugar, sweetener, apple juice concentrate, flavours, aerated with carbon dioxide gas and presented in airtight containers fulfill the criteria to merit consideration for classification at HSN 220210.

The AAR bench consisting of members Atul Mehta and Arun Richard has ruled that Apple Cola Fizzy and Malt Cola Fizzy are Carbonated Beverages with fruit juice, classifiable at HSN 22021090 and liable to tax at the rate of 40% including cess.

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In Re:M/s. Mohammed Hasabhai Karbalai

Counsel for Appellant:   Ms.Shuchi Sethi, CA

CITATION:   2022 TAXSCAN (AAR) 168

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