Softy ice cream mixed in vanilla flavour is not considered a dairy product and will be taxed at 18% GST, according to the Rajasthan Authority of Advance Ruling (AAR).
Vanilla mix contains 61.2% sugar, 34% milk and 4.8% salt
VRB Consumer Products Pvt. Ltd. asked the AAR about the tax on vanilla mix powder, which contains 61.2% sugar, 34% milk solids (skimmed milk powder), and 4.8% other ingredients like flavourings and salt, Indian retailer reported.
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Meanwhile, the Authority of Advance Ruling (AAR) noted that each ingredient helps make the soft serve smooth and creamy. Additionally, the processing in the soft serve machine is crucial for achieving the soft and creamy texture of the product.
According to GST law, food preparations that need further processing for eating are taxed at 18%. Preparations with milk powder, sugar, and other ingredients, like table cream powder, jellies, and ice cream, also face an 18% tax.
“It is also evident that the product in question cannot be termed as a dairy produce,” the AAR commented. So, the ‘Vanilla Mix’—dried softy ice cream mix (low fat) in vanilla flavour—will attract 18% GST.
Sugar is main ingredient, makes it processed item – AMRG
Furthermore, AMRG & Associates Senior Partner Rajat Mohan said the ruling highlighted that sugar is the main ingredient, not milk solids, making it a processed food rather than a dairy product. “The classification was influenced by the product’s intended use in soft serve machines and its additional ingredients like stabilisers and flavouring agents. This decision underscores the significance of dominant ingredients and manufacturing processes in determining GST classification,” Mohan added.
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KM Global’s Partner-Tax, Sandeep Sehgal, pointed out that this ruling is different from the Supreme Court’s decision in Amrit Foods, which classified ‘milk shake mix’ and ‘soft serve mix’ for institutional sales as “dairy produce” under Chapter sub-heading 0404.90. “The divergence between these rulings underscores the complexities businesses face when classifying products for GST purposes, highlighting the importance of ingredient composition and product usage in determining tax liability,” Sehgal added.
