TaxTMI 
TaxTMI 
2019 (11) TMI 1366
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....COMPLEX (herein after referred as 'Applicant') is registered under the GST Act 2017 vide GSTIN No. 33AADCK8591Q1ZR. The Applicant has sought Advance Ruling on the following questions: 1. What is the rate of tax and HSN Code for fruit beverages or drinks with HSN Code? 2. The definition under the FSSAI Act in section 2.3.3.A can be taken as an aid to classify the product? If so kindly clarify. 3. Is there any persevered percentage of fruit or pulp in the beverages to call them as carbonated fruit beverages or drinks under the GST Act? The applicant submitted a copy of challan evidencing payment of application fees of Rs. 5, 000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2. The applicant stated that they are going to manufacture beverages with fruit juices and without milk. They understand from the industry that fruit pulp or fruit juice based drinks fall under HSN code 22029020 liable to be taxed at 12%. They state that fruit juice based drinks should be called as "Carbonated beverage with fruit juice" as per Para 3A definition in FSSAI Act. 3.1 The applicant was extended an opportunity to be heard in person on 2....
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.... glucose either singly or in combination. It may contain peel oil and fruit essences. It may also contain any other ingredients appropriate to the products. 2. The product may contain food additives permitted in these regulations including appendix A. The product shall conform to the microbiological requirements given in Appendix B. It shall meet the following requirements: (i) Total soluble solids (m/m) - Not less than 10.0 percent (ii) Fruit content (m/m) a. Lime or Lemon juice - Not less than 5.0% b. Other fruits - Not less than 10.0. Percent 3. The product shall have the colour, taste & flavor characteristic of the product & shall be free from extraneous matter. As per FSSAI Clause 3A in case the quantity of fruit juice is below 10.00 percent, but not less than 5.0 percent. (2.5 percent, in case of lime or lemon), the product shall be called 'carbonated beverage with fruit juice and in such cases the requirement of TSS (Total soluble solids) shall not apply and the quantity of fruit juice shall be declared on the label. The applicant has contended that it could be evidenced from the above said definition both categories of carb....
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....ty regulators, stabilizer, preservatives, sweeteners, natural colour and synthetic food colours and Contains Fruit. 3.8 They also submitted a proposed label for the beverage. The label is for Bovonto's K Juice Grape' Grape Flavuored Drink'. The product is called as 'Carbonated Fruit Beverage' with ingredients Carbonated water, sugar, grape juice, acidity regulator, preservative, permitted colour and added flavor. 4.1 The applicant vide letter dated 11.09.2019 received on 13.09.2019, furnished additional submissions detailing the manufacturing process with quantities of each raw materials used in the production and modified the queries in the Advance Ruling Application by mentioning/inserting the name of their specific product for clarification. The manufacturing process with the quantities of each raw material is as follows: Product: Grape Based Carbonated Fruit Drink (200ml) Production Capacity: 10,000 liters Processing Flow Chart Prepare the sugar solution (10%) at 75-80 deg Celsius in blending tank (Minimum capacity: 1000 ltrs) ¯ Filter the sugar solution using to remove the unwanted impurities ¯ Transfer the sugar solution to the silo ....
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....it based drinks? 2) What is the rate of tax and HSN code for their product name? 3) Is there any persevered percentage of fruit or pulp in the beverages to call them as carbonated fruit beverages or drinks under the GST Act? Section 97(2) of the CGST Act / Tamil Nadu GST Act (TNGST) gives the scope of Advance Ruling Authority, i.e., the question on which the Advance Ruling can be sought. For ease of reference, the section is reproduced as under: 97 (2) the question on which the advance ruling is sought under this Act, shall be in respect of,- (a) Classification of any goods or services or both; (B) Applicability of a notification issued under the provisions of this Act; (c) Determination of time and value of supply of goods or services or both; (d) Admissibility of input tax credit of tax paid or deemed to have been paid; (e) Determination of the liability to pay tax on any goods or services or both; (f) Whether applicant is required to be registered; (g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goo....
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.... not exceeding 50 g/ kg but not exceeding 200g/ kg in very acidic fruits except in case of Apple Juice, Orange Juice (reconstituted from concentrate), Grape Juice, Pineapple Juice (reconstituted from concentrate). It is seen from the above that as per the classification of FSSAI, Fruit juices are unfermented but fermentable product obtained by a mechanical process from sound, ripe fruit or the flesh thereof and processed by heat, in an appropriate manner, before or after being sealed in a container, so as to prevent spoilage and are intended for direct consumption. In the instant case, the product is made by adding fruit juices to large quantities of water along with other preservatives which then goes through a carbonation process. The juices are not meant for direct consumption here but are just one ingredient of the drinks. Para 2.3.30 of the above Regulations states 2.3.30 Carbonated Fruit Beverages or Fruit Drinks: 1. Carbonated Fruit Beverages or Fruit Drink means any beverage or drink which is Purported to be prepared from fruit juice and water or carbonated water and containing sugar, dextrose, invert sugar or liquid glucose either singly or in combi....
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....s, both diet/ light and regular types. These beverages may be clear, cloudy, or may contain particulate matter (e.g. fruit pieces). Includes so-called "energy" drinks that are carbonated and contain high levels of nutrients and other ingredients. Therefore, it is seen from above that fruit juices and carbonated beverages with fruit drinks are distinct products in the FSSAI regulations and the product of the applicant is not thermally processed fruit juice but covered under Para 2.3.30 of the regulations and Category 14.1.4.1 in the food category system in Appendix A to these regulations. 6.3 In terms of explanation (iii) and (iv) to Notification No. 1/2017 - Central Tax (Rate) dt. 28-06-2017, tariff heading, sub-heading, heading and chapter shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 and the rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975, including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall be applied for the interpretation and classification of goods. 6.4 The relevant entries of the Customs Tari....
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....r in suspension or as a deposit. Provided they retain their original character, the fruit or vegetable juices of this heading may contain substances of the kinds listed below, whether these result from the manufacturing process or have been added separately : (1) Sugar. (2) Other sweetening agents, natural or synthetic, provided that the quantity added does not exceed that necessary for normal sweetening purposes and that the juices otherwise qualify for this heading, in particular as regards the balance of the different constituents (see Item (4) below). (3) Products added to preserve the juice or to prevent fermentation (e.g., sulphur dioxide, carbon dioxide, enzymes). (4) Standardising agents (e.g., citric acid, tartaric acid) and products added to restore constituents destroyed or damaged during the manufacturing process (e.g., vitamins, colouring matter), or to "fix" the flavour (e.g., sorbitol added to powdered or crystalline citrus fruit juices). However, the heading excludes fruit juices in which one of the constituents (citric acid, essential oil extracted from the fruit, etc.) has been added in such quantity that the balance of....
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.... alcoholic beer 2202 99 -- Other : 2202 99 10 --- Soya milk drinks, whether or not sweetended or flavoured 2202 99 20 --- Fruit pulp or fruit juice based drinks 2202 99 30 --- Beverages containing milk 2202 99 90 --- Other HSN Explanatory Notes to Chapter 2009 states 22.02 - Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured, and other non-alcoholic beverages, not including fruit or vegetable juices of heading 20.09. 2202.10 - Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured - Other : 7202.91 - - Non-alcoholic beer 2202.99 - - Other This heading covers non-alcoholic beverages, as defined in Note 3 to this Chapter, not classified under other headings, particularly heading 20.09 or 22.01. (A) Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured. This group includes. inter alga ....
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....assified as 'fruit pulp or fruit juice' under CTH 22029020, the main ingredient of the product is to be the fruit pulp or juice, which is not the case at hand. 6.5 As per the First Schedule to Customs Tariff, CTH 22021010 covers 'Aerated waters' and CTH 22021090 covers 'Others'. To further classify them, we may resort to the FSSAI regulations above to understand what aerated waters are. Para 2.10.6 BEVERAGES NON-ALCOHOLIC - CARBONATED 1. CARBONATED WATER means water conforming to the standards prescribed for Packaged Drinking Water under Food Safety and Standard Act, 2006 impregnated with carbon dioxide under pressure and may contain any of the following singly or in combination: 1. Sugar, liquid glucose, dextrose monohydrate, invert sugar, fructose, honey, fruits and vegetables extractives and permitted flavouring, colouring matter, preservatives, emulsifying and stabilising agents, citric acid, numeric acid and sorbitol, tartaric acid, phosphoric acid, lactic acid, ascorbic acid, malic acid, edible gums such as guar, karaka, carobean, furcellaran, tragacanth, gum ghatti, edible gelatin, albumin, licorice and its derivatives, salts of sodium, calcium ....