The GST Advance Ruling Authority in Uttar Pradesh has ruled that sugarcane juice cannot be classified as an agricultural product. As a result, a 12% Goods and Services Tax (GST) must be paid on sugarcane juice.
In November 2022, Govind Sagar Mills, an Uttar Pradesh-based factory, sought clarification from the Advance Ruling Authority regarding whether GST would apply to their planned commercial sale of sugarcane juice. The Authority determined that sugarcane juice is produced by crushing sugarcane in a sugar factory, rather than by farmers and that it undergoes a transformation process to become raw material for the production of sugar and ethanol. Consequently, it does not fulfil all three requirements for classification as an agricultural product.
According to the ruling, sugarcane cannot be classified as an agricultural product because it is a type of grass or plant that is not produced from flowering plants or sowing seeds. Since it cannot be consumed as a fruit or a vegetable, it is not eligible for a lower tax rate. Therefore, the 12% GST will be applicable to sugarcane juice.
Advance Ruling Authority
The Advance Ruling Authority (ARA) is a legal body established under the Goods and Services Tax (GST) system in India. Its main function is to provide clarity and guidance to taxpayers regarding the interpretation and application of GST laws. The ARA receives and considers applications from taxpayers who seek clarification on various aspects of GST, such as the classification of goods and services, the applicability of GST rates, and the eligibility for input tax credit. The rulings made by the ARA are binding on both the taxpayer and the tax authorities, providing a level of certainty and predictability for businesses operating under the GST system.