Non-alcoholic beverages or mocktails like mojito, rose lemonade, cucumber mint, etc will now attract 40% goods and service tax (GST) in West Bengal. The West Bengal Authority for Advance Ruling (AAR) has ruled out that non-alcoholic beverages, including ready-to-drink mocktails will attract 40% GST while iced tea extracts, tea essences, syrups, and beverage concentrates will attract 5%. The ruling clarifies the tax classification of several processed beverage products. Here’s in-depth information about the new AAR rulings about the GST on mocktails and other kinds of drinks.
Ready-to-drink beverages without fruit pulp or fruit juice cannot be classified as fruit-based drinks under the Customs Tariff Act, 1975, the authorities said.
These drinks, such as mojito, rose lemonade, cucumber mint, and lychee vitamin water, do not contain any fruit pulp or fruit juice. They cannot be covered by tariff item no. 22029920 of the Customs Tariff Act, 1975.
This pertains to “fruit pulp or fruit juice-based drinks’. The non-alcoholic beverages are covered by tariff heading no. 2202 that includes mineral water and aerated water containing added sugar or other sweetening matter or flavoring, and other non-alcoholic beverages, excluding fruit, nut, or vegetable juices of Heading 2009”, the ruling stated.
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The authority also ruled that beverage syrups and drink concentrates will now attract 5% GST. Authorities stated that syrups and concentrates such as ginger lime, raw mango, and lemon mint are liquid preparations that are meant to be mixed with water before consumption.
It must be noted that though an AAR ruling is applicable only for the applicant and the concerned tax authority, it can still be relied upon in similar matters. Along with it, many policy changes are based on AAR rulings, showing their significance.
One of the applicants, Kolkata based Sage Organics is engaged in the manufacture and supply of various non-alcoholic beverages and related preparations. These preparations include iced tea, syrups, and concentrates. It contended that these products are processed food / beverage items for human consumption and not ‘luxury’ or ‘sin’ goods.
It said that, “The products are sugar free, health-oriented beverage preparations and are marketed as alternatives to high sugar drinks. Accordingly, they are eligible to be considered under Schedule II of the GST rate notifications and not under Schedule III”. For your information, Schedule II under GST has an 18% tax rate whereas Schedule III includes items taxed at 40%. In its submission, the tax department recommended a 40% rate for RTD non-alcoholic beverages, while iced tea mixtures and syrups will attract 5%.
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West Bengal’s AAR has classified RTD mocktails under the 40% GST slab. The authorities have said that RTD beverages without fruit pulp or fruit juice cannot be classified as fruit-based drinks under the Customs Tariff Act, 1975.
