By Dairy Dimension News Desk | Hyderabad |
In a decisive push for policy clarity, leading players from Telangana’s dairy industry have formally urged the state government to recommend uniform classification of flavoured milk under the 5% GST slab, aligning with recent Supreme Court and High Court rulings.
At a meeting with K. Haritha, Commissioner of Commercial Taxes, a high-level delegation submitted a representation highlighting legal and economic grounds for this request. The group included key executives from Dodla Dairy, Heritage Foods, Lactalis India (Thirumala), Creamline Dairy (Jersey), Masqati Dairy, and the Federation of Telangana Chambers of Commerce and Industry (FTCCI).
“The dairy sector is crucial for rural livelihoods and nutritional security. Misclassification of flavoured milk under higher GST brackets could distort affordability and market stability,” the delegation emphasized.
⚖️ Legal Backing: Supreme Court Affirms 5% GST Classification
On May 9, 2025, the Supreme Court of India ruled in Assistant Commissioner of Central Tax vs. Sri Vijaya Visakha Milk Producers Co. Ltd. that flavoured milk remains a dairy product under HSN 0402, qualifying for a 5% GST rate. The apex court upheld the earlier decision by the Andhra Pradesh High Court, which stated that adding flavours does not alter milk’s fundamental nature.
This ruling has strengthened the industry’s legal stance and prompted calls for a formal GST Council notification to harmonise tax treatment nationwide.
🔍 Ground Reality: Industry Already Aligned
Several dairy companies have already adopted the 5% GST slab for flavoured milk, based on the judicial precedent. However, the lack of an explicit central notification has left room for disputes, audits, and compliance risks, especially across different states.
Despite legal clarity, field-level officers continue to question the classification. This creates litigation risk and uncertainty in supply chains,” said CA Mohd. Irshad Ahmed, Chairman, GST & Customs Committee, FTCCI.
📈 Why GST Clarity Matters for Dairy
- Supply Chain Consistency: A formal GST Council clarification would prevent arbitrary reclassification across jurisdictions., ensuring consistency in the supply chain
- Price Stability: Ensures affordable pricing for flavoured milk—a key product for health-conscious urban consumers and rural households alike.
- Cooperative Welfare: Prevents tax-related cost pass-throughs that can erode farmer returns in cooperative supply chains.
🗳️ What Industry Wants Next
- Telangana to advocate for confirmation of 5% GST rate via Council notification.
- HSN 0402is to be assigned to all flavoured milk variants
- Uniform application across states to avoid regional distortions
Commissioner Haritha acknowledged the concerns and assured the delegation that the matter would be reviewed and escalated appropriately.
As the industry awaits a formal policy update, stakeholders hope that this ruling sets a lasting precedent in recognising value-added dairy products as essential, rather than luxury, items.