Ready-to-drink non-alcoholic beverages such as mojito, rose lemonade and cucumber mint will attract a 40% goods and services tax, the West Bengal Authority for Advance Ruling said. The authority also ruled that iced tea extracts, tea essences, syrups and beverage concentrates will attract 5% GST.
The ruling clarifies the tax classification of several processed beverage products. It draws a distinction between ready-to-drink beverages and concentrates or syrups meant to be diluted before consumption.
An advance ruling applies only to the applicant and the tax authority involved. However, such rulings often guide similar cases and can influence policy decisions.
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Classification Ruling
Ready-to-drink beverages without fruit pulp or fruit juice cannot be classified as fruit-based drinks under the Customs Tariff Act, 1975, the authority said.
“Ready-to-drink non-alcoholic beverages such as mojito, rose lemonade, cucumber mint, and lychee vitamin water do not contain any fruit pulp or fruit juice. As such, they cannot be covered by tariff item no. 22029920 of the Customs Tariff Act, 1975, which pertains to ‘fruit pulp or fruit juice-based drinks'. The said non-alcoholic beverages are covered by tariff heading no. 2202, which includes waters—such as mineral waters and aerated waters containing added sugar or other sweetening matter or flavouring, and other non-alcoholic beverages, excluding fruit, nut or vegetable juices of Heading 2009,” the ruling stated, according to a report by Hindu BusinessLine.
Under GST rate schedules, products classified under this category attract a tax rate of 40%.
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Tax On Syrups And Concentrates
The authority also ruled that beverage syrups and drink concentrates attract 5% GST.
Syrups and concentrates such as ginger lime, raw mango and lemon mint are liquid preparations meant to be mixed with water before consumption, the ruling said. These products fall under classification 21069019 and attract a GST rate of 5%.
Applicant's Argument
The ruling followed an application by Kolkata-based Sage Organics, which manufactures and distributes non-alcoholic beverages and related products. Its portfolio includes iced tea, syrups, concentrates such as ginger lime, raw mango and orange electrolytes, as well as ready-to-drink beverages including mojito, rose lemonade and lavender honey.
The company argued that these products are processed food or beverage items meant for human consumption and should not be treated as luxury or sin goods.
“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,” the applicant said.
Schedule II under GST prescribes an 18% tax rate, while Schedule III includes items taxed at 40%.
In its submission, the tax department recommended a 40% rate for ready-to-drink non-alcoholic beverages, while iced tea mixtures and syrups should attract 5%.
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