Case Title: M/s Heritage Foods Ltd. & M/s Model Dairy Pvt. Ltd. v. Additional Commissioner & Others
Court: High Court of Andhra Pradesh, Amaravati
Petition Nos.: W.P. Nos. 27108, 21998 & 22055 of 2021
Date of Judgment: 29 January 2025
Bench: Justice R. Raghunandan Rao & Justice Maheswara Rao Kuncheam
Category: Classification under GST
Relevant Section: Section 9 of the CGST Act, 2017 (read with Schedule I of GST Tariff)
Facts (Para 1–2)
The petitioners, M/s Heritage Foods Ltd. and M/s Model Dairy Pvt. Ltd., both engaged in the manufacture and sale of flavoured milk, challenged the departmental classification of their product under Tariff Heading 2202 9930, which covers beverages containing milk, taxable at 12% (6% CGST + 6% SGST).
They contended that flavoured milk retains the essential character of milk, being only mixed with permitted flavours, and therefore should be classified under Heading 0402 9990 as “milk and cream, concentrated or containing added sugar or other sweetening matter”, taxable at 5% (2.5% CGST + 2.5% SGST).
Questions for Determination
Whether flavoured milk should be classified as:
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Heading 2202 9930 – “Other non-alcoholic beverages containing milk” (12%), or
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Heading 0402 9990 – “Milk and cream with added sugar/flavour” (5%).
Court’s Observations (Para 2–3)
The Division Bench referred to its earlier decision dated 10 December 2024 in W.P. No. 254 of 2024, which had exhaustively examined the same issue and held that flavoured milk retains the essential nature of milk and thus merits classification under HSN 0402 9990.
Adopting that reasoning, the Bench held that there was no justification for treating flavoured milk as a beverage under 2202.
The Court noted that the product undergoes no fermentation or carbonation process and remains a dairy product. Hence, it qualifies under 0402 9990 as milk with added flavour or sugar.
Judgment (Para 3)
Following the ratio in W.P. No. 254 of 2024, the Court disposed of all three writ petitions in favour of the petitioners, holding that:
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Flavoured milk shall be classified under Tariff Heading 0402 9990, attracting 5% GST (2.5% CGST + 2.5% SGST).
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Petitioners are entitled to claim refund of excess tax already paid under 12% rate, subject to verification.
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Any pending miscellaneous applications stand closed.
Summary of Related Case Referred
| Case Name | Citation / WP No. | Finding | Outcome |
|---|---|---|---|
| M/s Heritage Foods Ltd. & M/s Model Dairy Pvt. Ltd. | W.P. Nos. 27108, 21998 & 22055 of 2021 | Classification of flavoured milk under 0402 9990 | GST rate 5% + refund admissible |
| Earlier Judgment (Same HC) | W.P. No. 254 of 2024 (A.P. HC, 10 Dec 2024) | Flavoured milk retains nature of milk; cannot be treated as beverage | Held taxable at 5% under 0402 9990 |
Between Fine Lines – Trade Takeaway
This ruling reaffirms that flavoured milk remains a dairy product and not a beverage merely due to addition of flavouring. Dairy companies charging 12% GST can now seek refund of excess tax and revise classification to 0402 9990 (5%). The decision ensures uniform treatment across states and prevents unnecessary litigation on minor processing of milk-based goods.
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