GST On Iced Tea 5%, Beverages Without Fruit Pulp Or Juice 40%: West Bengal AAR Clarifies

The West Bengal Authority for Advance Ruling (AAR) has ruled that non-alcoholic beverages not containing fruit pulp or fruit juice fall under other non-alcoholic beverages and attract GST at 20% CGST and 20% SGST, while iced tea preparations and tea extracts are classifiable as extracts, essences and concentrates of tea, and preparations based on such extracts, attracting GST at 2.5% CGST and 2.5% SGST.

A coram of Joint Commissioner, CGST & CX, Shafeeq S and Senior Joint Commissioner, SGST Jaydip Kumar Chakrabarti said,

“In our considered view, the non-alcoholic beverages as specified by the applicant will come under serial no. 2 of Schedule III and as such will be taxed @ 20% CGST + 20% SGST.”

The ruling came on an application filed by Sage Organics Private Limited, a Kolkata-based manufacturer of low-calorie and sugar-free non-alcoholic beverage preparations including iced tea preparations, syrups, beverage concentrates and tea extracts.

The company sought clarification on the correct classification of its products and the applicable GST rate under the revised GST rate notifications.

The applicant submitted that its products were processed food and beverage preparations meant for human consumption and could not be treated as luxury or sin goods. It argued that iced tea preparations should be taxed at 12% GST, while syrups, beverage concentrates and tea extracts should fall in the 18% tax bracket.

On examining the ingredients and the manufacturing process, the Authority noted that the non-alcoholic beverages made by the company did not contain any fruit pulp or fruit juice.

Because of this, they could not be classified as fruit pulp or fruit-juice-based drinks. Instead, the Authority held that these products fall in the category of other non-alcoholic beverages, which are placed in Schedule III of the GST rate notification.

Turning to iced tea and tea-based preparations, the Authority observed that these products are made using tea decoctions and extracts. In view of this, they were classified as extracts, essences, and concentrates of tea and preparations made from such extracts. Goods in this category fall under Schedule I and attract GST at 2.5% CGST and 2.5% SGST.

The Authority also looked at syrup, electrolyte, and beverage concentrate products that are meant to be mixed with water before consumption. These were found to be liquid concentrates rather than ready-to-drink beverages.

It held that such products are classifiable as food preparations not elsewhere specified, including soft-drink concentrates. Items falling in this category are covered under Schedule I of the GST rate notification for extracts and attract GST at 2.5% CGST and 2.5% SGST.