Facts of the Case

Five connected writ petitions were disposed of by a common order of the High Court of Andhra Pradesh at Amaravati: W.P.Nos. 10296 of 2023, 20807 of 2020, 2453 of 2022, 10294 of 2023 and 10324 of 2023. The lead petitioners were M/s. Srichakra Milk Products LLP, Eluru (represented by its partner, R.M. Ramakrishna) in W.P.Nos. 10296, 10294 and 10324 of 2023, and M/s. Sangam Milk Producer Company Limited, Guntur, in W.P.Nos. 20807 of 2020 and 2453 of 2022, arrayed against the Deputy Assistant Commissioner (ST), the State of Andhra Pradesh and the Union of India. The petitions challenged assessment orders and accompanying Form GST DRC-07 demand notices for tax periods spanning July 2017 to March 2021, issued under the CGST/APGST Act, 2017 (and, in one matter, the erstwhile APVAT Act, 2005), on the ground that they were uploaded on the GST portal without manual signature or Digital Signature Certificate. Substantively, the petitioners sought a declaration that flavoured milk was taxable under HSN Code 0402 9990 at 5% GST (2.5% CGST and 2.5% SGST) under Sl. No. 08 of Schedule-I to Notification No. 1/2017-Central Tax (Rate), rather than under the higher tariff heading applied by the assessing authorities. In W.P. No. 20807 of 2020, the disputed tax stood at Rs. 38,21,975/-, of which Rs. 33,44,228/- remained under stay pending disposal. By order dated 30 December 2024, a Division Bench (Justice R. Raghunandan Rao and Justice Maheswara Rao Kuncheam) disposed of all five petitions together, following its own earlier ruling of 10 December 2024 in W.P. No. 254 of 2024, which had already decided the identical classification question between tariff headings 0402 9990 and 2202 9930.

Issues Involved

  1. Whether flavoured milk supplied by the petitioners is classifiable under tariff heading 0402 9990 or under the higher tariff heading 2202 9930 for GST purposes.
  2. Whether assessment orders and Form GST DRC-07 demand notices uploaded on the GST portal without a manual or digital signature are legally enforceable.

Petitioner's Arguments

  • Flavoured milk is essentially milk with added flavouring and falls squarely within HSN Code 0402 9990, attracting GST at 5% (2.5% CGST + 2.5% SGST) under Sl. No. 08 of Schedule-I to Notification No. 1/2017-Central Tax (Rate) and the corresponding State notification.
  • The impugned assessment orders and Form GST DRC-07 notices were uploaded on the GST portal without any manual signature or Digital Signature Certificate, rendering them legally unenforceable.
  • The classification adopted under the higher tariff heading 2202 was contrary to the applicable rate notifications and ought to be set aside, with assessments redone under heading 402.

Respondent's Arguments

  • Because the identical classification issue stood already covered by the Court's own decision of 10 December 2024 in W.P. No. 254 of 2024, the Government Pleader for Commercial Tax did not press any distinguishing contention in this batch.
  • The common order does not separately record the Revenue's earlier defence of the tariff classification adopted in the impugned orders, the matter having been disposed of on the strength of the Court's own precedent.

Court Order/Findings

  • The Court noted that the identical issue — 0402 9990 or 2202 9930 — had already been decided by the same Court in its order dated 10.12.2024 in W.P. No. 254 of 2024.
  • Following its earlier ruling, the Court held that flavoured milk falls under tariff heading No. 402 and ought to be taxed under that heading, not the higher heading 2202.
  • All five writ petitions were allowed; the contrary orders were set aside, and the Assessing Authority was directed to redo the assessments in accordance with this classification.
  • No order as to costs was passed, and pending interlocutory applications were closed as a sequel.

Important Clarification

  • Flavoured milk is to be classified and taxed as a milk product under HSN 0402 9990 (5% GST), not the residual beverage heading 2202, per this consistent line of Andhra Pradesh High Court orders.
  • Assessees with similar classification disputes on flavoured/sweetened milk products can rely on this batch order and the underlying decision in W.P. No. 254 of 2024.

Sections Involved

  • Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 — Prescribes GST rates; Sl. No. 08 of Schedule-I covers specified milk products taxable at 5%.
  • HSN Heading 0402 9990 — Covers milk and cream products, held applicable to flavoured milk.
  • Tariff Heading 2202 — Covers waters and other non-alcoholic beverages; urged by the Revenue as the applicable heading.
  • Form GST DRC-07 — Summary of a demand order under the CGST/SGST Rules, separately challenged here for want of signature.

Decision – In Favour of

The decision is in favour of the Assessee. Flavoured milk was held classifiable under tariff heading 0402 9990, taxable at 5% GST, and the contrary assessment orders were set aside for fresh assessment. As this is a direction for reassessment rather than a final quantification, it is more precisely allowed with directions, substantially in favour of the assessees.

Related Case Laws

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Case Details

  • Court: High Court of Andhra Pradesh at Amaravati
  • Case No.: W.P.Nos. 10296 of 2023, 20807 of 2020, 2453 of 2022, 10294 of 2023 and 10324 of 2023
  • CNR: APHC010180852023
  • Coram: Hon'ble Sri Justice R. Raghunandan Rao and Hon'ble Sri Justice Maheswara Rao Kuncheam
  • Decision Date: 30.12.2024
  • Disposal Nature: Allowed – impugned orders set aside, assessments to be redone

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