The GST authority has refused to classify Softy ice cream as a milk product. The authority said that its main ingredient is sugar, not milk. Rajasthan Bench of GST Authority of Advance Ruling (AAR) refused to consider a softie ice cream a milk product and said that its main ingredient is not milk, but sugar. Therefore, softy cannot be brought under the purview of the 5 per cent GST levied on milk products. Therefore, 18 per cent GST will have to be paid on it.

A company named VRB Consumer Products had applied to the authority to include its product Vanilla Mix in the category of products with 5 per cent GST. The company said that this product is made from natural milk components and that 5 per cent GST should levied on it. The company sells this product to institutional buyers. They use it to make softy ice cream. The company argued that this mix should be classified under heading 0404, which covers ‘products made from natural milk components’ – whether sugar or sweeteners are added to them or not.

The authority rejected this claim and held that the major component of the product is sugar (61.2 per cent) and not milk solids (34 per cent) which are added to the sugar. Since the product contains 61 per cent sugar, more than a majority, the advance ruling authority concluded that ‘milk solids are added to sugar’ and not ‘sugar is added to milk solids’.

In its decision, the authority said that additives such as stabilisers and flavourings are also added to softy ice cream, which makes it out of the category of ‘natural’ milk products. On this basis, the applicant’s argument to classify the product under ‘milk products’ was rejected. There have been controversies over milk products in the past as well. Earlier, AAR had declared lassi, which is a fermented milk product, free from GST. But 12% GST was imposed on flavoured milk.