Facts of the Case

This batch of five writ petitions was filed by M/s. Srichakra Milk Products LLP (Eluru, West Godavari District) and M/s. Sangam Milk Producer Company Limited (Guntur District) challenging assessment orders and Form GST DRC-07 summary orders issued by the Deputy/Assistant Commissioners (State Tax) for tax periods spanning July 2017 to March 2021. The petitioners, engaged in manufacturing and selling flavoured milk, contended that their product was wrongly classified and taxed under Tariff Heading 2202 99 30 instead of Tariff Heading 0402 99 90, resulting in a significantly higher tax demand. The impugned orders, passed under the Central Goods and Services Tax Act, 2017 and the corresponding State GST Act, were also challenged for lacking manual signature or Digital Signature Certificate authentication before upload to the GST common portal.

Issues Involved

  1. Whether flavoured milk is classifiable under Tariff Heading 0402 99 90 (dairy produce, 5% GST) or Tariff Heading 2202 99 30 (beverages containing milk, taxed at a higher rate).
  2. Whether assessment orders and Form GST DRC-07 summaries uploaded without manual signature or Digital Signature Certificate authentication are legally enforceable.
  3. Whether the assessing authorities were bound to follow the Court's own prior ruling on the identical classification question.

Petitioner's Arguments

  • Flavoured milk remains predominantly a dairy product and falls squarely within Tariff Heading 0402 99 90, attracting GST at 5% (2.5% CGST + 2.5% SGST) under Notification No. 1/2017-Central Tax (Rate) and the corresponding State notification.
  • The Department's classification under Heading 2202 99 30 was contrary to settled classification principles and imposed an unwarranted tax burden.
  • The impugned DRC-07 orders were uploaded without manual signatures or Digital Signature Certificates, rendering them legally unenforceable.
  • Recovery pursuant to such orders would cause severe and irreparable loss and hardship to the petitioners.

Respondent's Arguments

  • The State Tax authorities, represented by the Government Pleader for Commercial Tax, defended the classification of flavoured milk under Heading 2202 99 30 as a taxable beverage rather than plain dairy produce.
  • The assessment orders and DRC-07 summaries were issued in accordance with the procedure prescribed under the CGST/SGST Acts, and were valid despite the signature-related objections.

Court Order / Findings

  • The Division Bench noted that the identical classification question — whether flavoured milk falls under Heading 402 or Heading 2202 — had already been decided by the same Court in its order dated 10.12.2024 in W.P. No. 254 of 2024.
  • Following that earlier ruling, the Court held that flavoured milk is correctly classified under Tariff Heading 402 and is taxable accordingly, rejecting the Department's classification under Heading 2202.
  • All the impugned assessment orders and DRC-07 summaries passed on the contrary basis were set aside.
  • The Assessing Authorities were directed to redo the assessments for all the tax periods in question strictly in accordance with the Court's classification ruling.
  • The batch of writ petitions was allowed with no order as to costs, and all pending interlocutory applications were closed.

Important Clarification

  • Once a High Court has authoritatively settled the classification of a product under the GST tariff schedule, assessing authorities cannot continue passing fresh orders adopting a contrary classification against the same or similarly placed taxpayers.
  • Flavoured milk is to be treated as falling under HSN 0402 99 90 (dairy produce) rather than HSN 2202 99 30 (beverages) — a clarification of practical value to dairy manufacturers facing similar classification disputes across multiple tax periods.

Sections Involved

  • Central Goods and Services Tax Act, 2017 — governs the levy and administration of GST underlying the classification dispute.
  • Andhra Pradesh Goods and Services Tax Act, 2017 — the corresponding State enactment under which parallel proceedings were initiated.
  • Notification No. 1/2017-Central Tax (Rate), dated 28.06.2017 — prescribes the 5% GST rate under Entry Sl. No. 8 of Schedule-I for goods falling under HSN 0402 99 90.
  • Article 226 of the Constitution of India, 1950 — invoked for the writ remedy before the High Court.

Decision – In Favour of

The batch of writ petitions was allowed in favour of the Assessee (Srichakra Milk Products LLP and Sangam Milk Producer Company Limited). The impugned assessment orders and DRC-07 summaries were set aside, with a direction to redo the assessments applying the Tariff Heading 402 classification, and no costs were imposed on either side.

Related Case Laws

No directly on-point case notes on flavoured milk's HSN classification are currently published on this site.

Case Details

  • Court: High Court of Andhra Pradesh at Amaravati
  • Case No.: W.P. No. 10296 of 2023 & Batch (W.P. Nos. 20807/2020, 2453/2022, 10294/2023, 10324/2023)
  • CNR: APHC010180852023
  • Coram: Justice R. Raghunandan Rao and Justice Maheswara Rao Kuncheam
  • Date of Registration: 21-04-2023
  • Decision Date: 30-12-2024

Link to Download the Order

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