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.

Summary

Issues Involved:
1. Classification of the product "Jigarthanda" under the description of goods.
2. Taxability or exemption status of "Jigarthanda".
3. HSN code and rate of tax if the product is exempted.
4. HSN code and rate of tax if the product is taxable.

Issue-wise Detailed Analysis:

1. Classification of the product "Jigarthanda" under the description of goods:

The applicant manufactures a product named "Jigarthanda" using pasteurized milk, milk cream, badam pisin, sugar, and nannari syrup. The manufacturing process involves pasteurization, preparation of sugar syrup, collection of milk cream, and mixing of all ingredients to form a semi-solid product. The key question is whether this product can be classified under HSN 0402 or any other category.

The judgment states that "Jigarthanda" is classified as "goods" under Section 2(52) of the CGST Act, 2017, which defines goods as "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."

2. Taxability or exemption status of "Jigarthanda":

The ruling clarifies that "Jigarthanda" is taxable. The applicant's claim that the product falls under HSN 0402 (Milk and Cream, concentrated or containing added sugar or other sweetening matter) was rejected. Instead, it is classified under HSN 2202 99 30, which covers "Beverages containing milk."

3. HSN code and rate of tax if the product is exempted:

The product "Jigarthanda" is not exempted. The ruling explicitly states that it does not find a place in Schedule III of the CGST Act, 2017, as non-supply nor is it exempted under Notification No.2/2017 CTR dated 28.06.2017.

4. HSN code and rate of tax if the product is taxable:

The product is classified under HSN 2202 99 30 as "Beverages containing milk." The applicable tax rates are as follows:
- CGST @ 6%
- SGST @ 6% for intra-state supply, as per Notification No.1/2017 CTR dated 28.06.2017 vide serial No.50 of Schedule II and G.O. (Ms.) No. 62 dated 29.06.2017.
- IGST @ 12% for inter-state supply, as per Notification No.1/2017 Integrated Tax (Rate) dated 28.06.2017.

Ruling:

1. Classification: "Jigarthanda" manufactured by the applicant is covered under the description of goods.
2. Taxability: "Jigarthanda" is taxable.
3. Exemption Status: "Jigarthanda" is not exempted.
4. HSN and Tax Rate: "Jigarthanda" is classified under HSN 2202 99 30, attracting CGST @ 6%, SGST @ 6% for intra-state supply, and IGST @ 12% for inter-state supply.