Flavoured Milk or Beverage? HC Directs Fresh Review of GST Heading

The assessee company, engaged in selling “Winkin’ Cow” flavoured milk, filed a writ petition requesting that the product be classified under Tariff Heading 0402 of the Customs Tariff Act, 1975, which covers milk and cream, instead of Chapter 22, which includes beverages. The Tamil Nadu State Appellate Authority for Advance Ruling (AAAR) incorrectly rejected its appeal by refusing to categorise the product as milk under Chapter 4. It based its argument on Section 103(2) of the CGST Act and a Division Bench decision of the Andhra Pradesh High Court in Sri Vijaya Visakha Milk Producers Co. Ltd. v. ACCT, ruling that flavoured milk should be classified under Heading 0402.

During the hearing, the petitioner also requested the defreeze of its bank accounts, which had been frozen following the disputed classification. The respondents argued that the classification had already been finalised by the AAAR and advised the petitioner to seek available remedies through the appropriate appellate process.

Main Issue Before Court: Whether “Winkin’ Cow”-flavored milk falls under a different GST classification or Tariff Heading 0402 as milk and cream, and if the AAAR rejection prevents pursuing new relief.

High Court’s View: The Hon’ble High Court directed the petitioner to submit a new representation within two weeks to the relevant appellate authority. The Court further ordered that the authority must decide on this representation based on its merits within four months, in accordance with legal procedures. Meanwhile, the respondents were instructed to instruct the petitioner’s bank to lift the freeze on the accounts immediately.

The writ petition was thus disposed of without any order on costs, and the connected miscellaneous petition was also disposed off.

To Read Full Order, Download PDF Below