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

Held

The Court held that flavoured milk should be taxed under HSN Code 0402 9990. This decision follows a previous order by the same Court dated 10.12.2024 in W.P.No.254 of 2024, which had already considered and decided this specific issue. The Court found that based on the material placed before it, flavoured milk indeed falls under tariff heading No. 0402. Consequently, all orders that classified flavoured milk under a different tariff heading and imposed tax liabilities contrary to this finding were set aside. The Assessing Authority was directed to redo the assessments in accordance with the Court's directions. The ratio decidendi is that flavoured milk, based on its composition and the relevant tariff classifications, is to be treated as a milk product under HSN 0402, not a beverage under HSN 2202.

Facts

The petitioners, M/s. Srichakra Milk Products LLP and M/s. Sangam Milk Producer Company Limited, are challenging orders passed by GST and APVAT authorities. The core dispute revolves around the classification and tax rate applicable to flavoured milk. The petitioners contend that flavoured milk should be classified under HSN Code 0402 9990 and taxed at 5% (2.5% CGST and 2.5% SGST) as per specific notifications. The impugned orders, passed by Deputy Assistant Commissioners (ST) and other revenue authorities, classified flavoured milk under different headings and imposed higher tax liabilities for various periods, including April 2019-March 2020, July 2017-March 2018, April 2018-March 2019, and April 2012-March 2015. The petitioners seek to set aside these orders and declare the correct classification and tax rate.

Key Issues

1. Whether flavoured milk is to be taxed under HSN Code 0402 9990 or HSN Code 2202 9930? 2. Whether the impugned orders classifying flavoured milk under a different tariff heading and imposing higher tax liabilities are illegal, arbitrary, and contrary to law? The petitioner argues that flavoured milk correctly falls under HSN Code 0402 9990, attracting a 5% tax rate as per Schedule-1 of Notification No. 1/2017-Central Tax (Rate) and corresponding State notifications. They rely on these notifications to support their classification. The revenue authorities, through their impugned orders, classified flavoured milk under a different tariff heading, leading to a higher tax demand. The judgment does not explicitly record the revenue's specific arguments regarding the classification under HSN Code 2202 9930, but their actions imply a contention for that classification.