Sugarcane Juice not a agricultural produce; GST Rate of 12% applicable: AAR

The Applicant M/S Gobind Sagar Mills Ltd. is engaged in manufacturing Sugar and Molasses. In this case main raw material is sugarcane.

Questions asked by the applicant:

1.   Classification of sugar cane  Juice

2.   Rate of GST applicable on the sale of Sugarcane Juice

3.   Applicability of a notification that affects the rate of tax (if any)

Analysis by Authority of Advance Ruling

In the present case sugarcane juice is produced by way of crushing of sugarcane and hence not produced by farmer. Also process changes it’s form and constitution along with changes are of such nature that if it is to be attain the secondary market for use and become raw material for production of sugar, molasses etc.

Since all the three Conditions of agricultural produce is not fulfilled by sugarcane juice and hence it is not considered to be agricultural produce.

he next question arises that if it is not agricultural produce how will it be classified. In this context study shows that sugarcane is neither a fruit nor a vegetable. Sugarcane is usually a type of grass/plant, sugarcane is not the result of flowering plant nor does it develop through seeding. So sugarcane can not be considered as fruit. Sugarcane fiber and stalks can not be eaten or digested, so it does not qualify as a vegetable either.

Ruling:

Ruling 1. Sugarcane juice is classifiable under chapter 20 and tariff item 20098990.

Ruling 2. Sugarcane Juice is taxable at a rate of 6% CGST & 6% SGST or 12 % IGST.

Ruling 3. Notification no 1/2017 central tax (rate) dated 28/6/2017 would be applicable.

For Official Ruling Download PDF Given Below: