M/S. Srichakra Milk Products LLP vs. Deputy Assistant Commissioner (St)

Held

The Court allowed the writ petitions, following its previous order dated 10.12.2024 in W.P.No.254 of 2024. In that prior judgment, the Court had considered the material placed before it and held that flavoured milk falls under tariff heading No. 0402 (HSN Code 0402 9990) and ought to be taxed under that heading. Consequently, all orders passed to the contrary by the assessing authorities were set aside. The Court directed the Assessing Authority to redo the assessments in accordance with its directions. The ratio decidendi is that flavoured milk, based on its composition and nature, is classifiable under HSN Code 0402 9990, which deals with milk products, rather than under headings for beverages. The operative direction was to set aside the impugned orders and redo the assessments as per the Court's finding on classification.

Facts

These writ petitions concern the classification and taxation of flavoured milk under the GST regime and the APVAT Act, 2005. The petitioners, M/s. Srichakra Milk Products LLP and M/s. Sangam Milk Producer Company Limited, challenged orders passed by various GST and Commercial Tax authorities. The core dispute revolves around whether flavoured milk should be taxed under HSN Code 0402 9990 (dairy products) or HSN Code 2202 9930 (other non-alcoholic beverages). The tax periods in dispute range from April 2019-March 2020, July 2017-March 2018, April 2018-March 2019, and April 2012-March 2015. The petitioners sought to set aside the impugned orders and declare flavoured milk taxable at 5% under specific notifications.

Key Issues

1. Whether the impugned orders, which classified flavoured milk under HSN Code 2202 9930 and taxed it accordingly, are illegal, arbitrary, and contrary to law, particularly in light of the classification under HSN Code 0402 9990 as argued by the petitioners? 2. Whether the supply of flavoured milk is taxable under HSN Code 0402 9990 at 5% (CGST 2.5% and SGST 2.5%) as per Schedule-1 of Notification No. 1/2017-Central Tax (Rate) and G.O.Ms.No.258, dated 29.6.2017, as contended by the petitioners? Petitioner's Arguments: The petitioners argued that flavoured milk should be classified under HSN Code 0402 9990, which pertains to milk and cream, concentrated or with added sugar or other sweetening matter, and that it should be taxed at 5% as per the relevant notifications. They sought to set aside the orders that classified it under other headings and imposed higher taxes. Revenue's Arguments: The judgment does not explicitly record arguments made by the revenue or state respondents. However, their actions in issuing the impugned orders suggest they contended for the classification of flavoured milk under HSN Code 2202 9930 or a similar heading not favorable to the petitioners.