2023 (1) TMI 978 - AAR - GST
Classification of goods - ready to drink Jigarthanda sold in unit container by the appellant - to be classified as Jigarthanda under description of goods or not - taxable or exempt goods - whether to be classified as Milk and Cream covered under HSN 0402 as claimed by the applicant? - HSN of the product and rate of tax on product.
Whether Jigarthanda is goods or not? - HELD THAT:- By analyzing the definition of “goods” defined under Section 2(52) of CGST Act, 2017 which reads as ““goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. Jigarthanda manufactured by using various ingredients or inputs is in the form of semi-solid form, as stated by the applicant, satisfies the definition of “goods” and accordingly, it is held that “Jigarthanda” is goods.
Classification of Jigarthanda - HELD THAT:- The classification of goods under GST regime has to be done in accordance with the Customs Tariff Act, 1975, which in turn is based on Harmonized System of Nomenclature, popularly known as 'HSN'. The rules of interpretation, section notes and chapter notes as specified under the Customs Tariff Act, 1975 are also applicable for classification of Goods under GST regime. However, once an item is classified in accordance with the Customs Tariff Act, 1975, the rate of tax applicable would be arrived at on the basis of notifications issued under GST by the respective Governments.
As per the Oxford Dictionary “beverage” means a type of drink except water. The word 'beverage' though not defined under the CGST Act, 2017, is considered, in common parlance, as a drink that can be consumed directly and the instant product `Jigarthanda” can be consumed as it is and hence is a beverage with a basis of milk. Further, on conjoint reading of Chapter heading 0402 and 2202 and relevant explanatory notes, it is clear that milk flavoured with cocoa or other substances are specifically excluded from Chapter heading 0402 and included under Chapter heading 2202.
Various ingredients prepared and packed separately are sold and invoiced to dealers and outlets as “Jigarthanda” in units of liter and the same are mixed at the retail outlet as a cold beverage before sale to customers / consumers. Therefore, various ingredients cannot be classified as such and treated as mixed supply as claimed by the applicant. The goods has to be classified on the basis and form in which it is bought and sold in the market and not on the basis of packing for transportation and preservation from being decayed - Jigarthanda, which qualify as goods merit classification under HSN 2202 99 30, is neither finding place in Schedule III of the CGST Act, 2017 as non-supply nor exempted under Notification No.2/2017 CTR dated 28.06.2017. Therefore, it is a taxable goods covered under Notification No.1/2017 CTR dated 28.06.2017 vide serial No.50 of Schedule II as “Beverages containing milk” attracting CGST of 6% and attracting SGST of 6% vide serial No.50 of Schedule II of G.O. (Ms.) No. 62 dated 29.06.2077 for intra state supply. It attracts 12% IGST vide serial No.50 of Schedule II of Notification No.1/2017 Integrated Tax (Rate) dated 28.06.2017, for interstate supply.