West Bengal AAR rules non-alcoholic beverages to attract 40% GST

Ready-to-drink ( RTD) non-alcoholic beverages such as mojito, rose lemonade, and more will attract 40 percent GST, following a ruling by the West Bengal Authority for Advance Ruling (AAR).

The ruling came in response to an application by Sage Organics, a Kolkata-based manufacturer of non-alcoholic beverages and beverage preparations. The applicant argued that its products including iced tea, syrups, concentrates and RTD beverages are processed food or beverage items meant for human consumption and should not be categorised as luxury or sin goods.

The authority stated that these beverages do not contain fruit pulp or fruit juice and therefore cannot be classified under tariff item 22029920 of the Customs Tariff Act, 1975, which covers fruit pulp or fruit juice-based drinks. Instead, they fall under tariff heading 2202, which includes waters such as mineral and aerated waters containing added sugar, sweetening matter or flavouring, as well as other non-alcoholic beverages excluding fruit, nut or vegetable juices classified under Heading 2009, report added. As a result, these products attract the higher GST rate of 40 percent.

The AAR further clarified that syrups and beverage concentrates including flavours such as ginger lime, raw mango and lemon mint are liquid concentrates intended for consumption after dilution with water. These are classified under tariff heading 21069019 and will attract 5 percent GST. Similarly, iced tea preparations, extracts, essences and concentrates of tea, along with syrups and beverage concentrates, will also be taxed at 5 percent.

The ruling came in response to an application by Sage Organics, a Kolkata-based manufacturer of non-alcoholic beverages and beverage preparations. The company argued that its products including iced tea, syrups, concentrates and RTD beverages are processed food or beverage items meant for human consumption and should not be categorised as luxury or sin goods.

While AAR rulings apply only to the applicant and the relevant tax authority, they are often referenced in similar cases and can influence future policy decisions.