The Andhra Pradesh High Court has ruled that flavoured milk is a milk product under GST, siding with Dodla Dairy Limited and reducing its tax liability from 12% to 5%. This decision offers significant financial relief and sets a precedent for the broader Indian dairy industry by clarifying GST classification for value-added dairy products.
In a landmark decision, the Andhra Pradesh High Court ruled in favor of Dodla Dairy Limited, a leading Indian dairy company, stating that flavoured milk should be classified as milk and not a beverage for the purposes of Goods and Services Tax (GST). The judgment significantly reduces the applicable GST rate from 12% to 5%.
Dodla Dairy, established in 1995 and headquartered in Hyderabad, is a prominent dairy producer with a wide range of offerings including milk, curd, butter, ghee, paneer, and flavoured milk. The company operates across several Indian states and exports to international markets.
The dispute arose when tax authorities classified flavoured milk under GST Heading 2202 99 30—used for “beverages containing milk”—which attracts a 12% tax. Dodla Dairy contested that its flavoured milk, made primarily from milk with added sugar and flavoring, rightfully belongs under Heading 0402 99 90, which applies to “milk and cream, concentrated or containing added sugar or other sweetening matter,” attracting only 5% GST.
The court concluded that the addition of flavoring does not change the fundamental nature of the product, which remains essentially milk. This interpretation nullifies a prior tax demand of ₹10.3 million from authorities. Dodla Dairy, which had paid ₹7.767 million under protest, is now eligible to claim a refund.
This ruling not only provides Dodla Dairy with financial relief but also sets a legal precedent that could benefit other dairy producers facing similar classification issues. It brings greater clarity to the GST treatment of value-added dairy products and may lead to reclassification of similar items in the future.
The decision marks a critical development in India’s evolving GST landscape and offers a clearer path forward for companies in the dairy and functional food sectors.
