Ice-cream lovers beware: GST body drops a sugar bomb on softy mix

The GST Authority for Advance Rulings (AAR) in Rajasthan has ruled that a softy ice-cream mix is primarily made of sugar, not milk. Consequently, it will attract an 18% Goods and Services Tax (GST) rate, ToI reported.

The decision came following an application by VRB Consumer Products, a private company, seeking clarity on the classification of its ‘Vanilla Mix’. This mix is sold to buyers who produce soft serve ice cream using specialized machines. The company argued that the mix should be classified as a milk product under Heading 0404, which includes products with natural milk constituents, thus qualifying for a lower GST rate of 5%.

However, the AAR found that the mix's main ingredient is sugar (61.2%), with milk solids making up only 34%. The ruling stated, “On account of a higher percentage of sugar 61 percent in the final product, the advance ruling authority concluded that ‘milk solids are added to sugar’ and not that ‘sugar is added to milk solids’.”


Harpreet Singh, Partner, Indirect Tax, at Deloitte-India, explained that the ruling rejected the argument to classify the product as a milk product because it comprises several ingredients, each playing a crucial role.

This ruling adds to previous GST classification disputes involving milk-based products. For example, lassi, a fermented milk product, was previously exempted from GST, whereas flavored milk was subjected to a 12% GST.