GST classification of beverage products turns on composition and tariff fit, fixing different schedule entries and rates.

The AAR, West Bengal classified the products by reference to their composition, description and tariff fit. Non-alcoholic beverages without fruit pulp or fruit juice were held classifiable under heading 2202, tariff item 22029990, while iced tea preparations and tea extracts, essences and concentrates were classifiable under heading 2101, sub-heading 210120, and syrups and beverage concentrates under sub-heading 210690, tariff item 21069019. On that basis, other non-alcoholic beverages fell in Schedule III, whereas iced tea preparations, tea extracts, syrups and beverage concentrates fell in Schedule I. The applicable GST rates were therefore 20% CGST plus 20% SGST for the former and 2.5% CGST plus 2.5% SGST for the latter.

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Issues: (i) Whether the products manufactured as non-alcoholic beverages, iced tea preparations, syrups and beverage concentrates, and extracts, essences and concentrates of tea were correctly classifiable under the claimed HSN entries and corresponding tariff headings. (ii) Whether the said products fell under Schedule I or Schedule III of the amended GST rate notifications. (iii) What GST rate applied to each category of goods under GST 2.0.

Issue (i): Whether the products manufactured as non-alcoholic beverages, iced tea preparations, syrups and beverage concentrates, and extracts, essences and concentrates of tea were correctly classifiable under the claimed HSN entries and corresponding tariff headings.

Analysis: The product descriptions, ingredients, and preparation processes showed that the non-alcoholic beverage products did not contain fruit pulp or fruit juice and were therefore not classifiable as fruit-juice based drinks. They fell under heading 2202, with tariff item 22029990 for other non-alcoholic beverages. The iced tea preparations and extracts, essences and concentrates of tea were found to fall under heading 2101, specifically sub-heading 210120. The syrups and beverage concentrates were found to fall under sub-heading 210690 and more specifically tariff item 21069019.

Conclusion: The claimed HSN classifications were not fully correct. The correct classification for non-alcoholic beverages was 22029990, for iced tea preparation and tea extracts was 210120, and for syrups and beverage concentrates was 21069019.

Issue (ii): Whether the said products fell under Schedule I or Schedule III of the amended GST rate notifications.

Analysis: The non-alcoholic beverage products were held to fall under Schedule III because they were other non-alcoholic beverages not covered by the Schedule I exclusions. Iced tea preparation and extracts, essences and concentrates of tea were held to fall under Schedule I as goods covered by tariff item 210120. Syrups and beverage concentrates were also held to fall under Schedule I as goods covered by tariff item 21069019.

Conclusion: Non-alcoholic beverages fall under Schedule III, while iced tea preparation, tea extracts, syrups and beverage concentrates fall under Schedule I.

Issue (iii): What GST rate applied to each category of goods under GST 2.0.

Analysis: The rate schedules applied 20% CGST plus 20% SGST to other non-alcoholic beverages under Schedule III. Goods falling under Schedule I attracted 2.5% CGST plus 2.5% SGST. Applying those entries, the non-alcoholic beverage products were taxable at 40% in aggregate, while iced tea preparations, tea extracts, and syrups and beverage concentrates were taxable at 5% in aggregate.

Conclusion: Non-alcoholic beverages were taxable at 20% CGST plus 20% SGST, and iced tea preparation, tea extracts, syrups and beverage concentrates were taxable at 2.5% CGST plus 2.5% SGST.

Final Conclusion: The ruling settled the tariff classification and GST slab applicable to each product category, with non-alcoholic beverages placed in the higher Schedule III slab and the iced tea and concentrate products placed in Schedule I at the concessional rate.

Ratio Decidendi: Classification under the GST rate schedules depends on the actual composition, product description, and tariff heading fit of the goods, and goods not covered by a specific Schedule I entry remain classifiable as other non-alcoholic beverages under Schedule III.

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