Ice-cream not a luxury item, says HC; asks GST Council to relook exclusion
The Chhattisgarh High Court has said that icecream is not a luxury item and has directed the GST Council to reconsider the exclusion of smallscale manufacturers of icecream from the composition scheme.
Icecream attracts GST of 18 per cent.
In its order dated April 1, a single judge Bench of Rakesh Mohan Pandey said the taxation law should pass the test of Article 14 (equality) of the Constitution and there should be reasonable classification. “Icecream is being widely consumed by the people. It cannot be termed a luxury item. The council ought to have taken into consideration the socioeconomic effect as mentioned in the
Constitution,” the court observed. The Small Scale Ice Cream Manufacturer Association had moved the Court with a plea to quash the notification and recommendation of the GST Council regarding the exclusion of icecream manufacturers from the composition scheme.
The main feature of the scheme is that the business or person opting to pay tax under this scheme can pay tax at a flat percentage of turnover every quarter, instead of at a normal rate every month. Initially, the turnover limit for this scheme was ₹50 lakh, and later revised to ₹1.5 crore.
NEGATIVE LIST
To control revenue loss, the GST Council introduced a negative list of items on which benefits of the composition scheme shall not be extended. Accordingly, the council recommended that manufacturers of icecream will not be eligible for the composition scheme. The petitioners argued that the GST Council assigned no reason for the inclusion of ice cream manufacturers in the negative list.
The court said, “The council ought to have taken into consideration the sociopolitical effect while putting icecream within the tax regime of 18 per cent.”
Accordingly, it directed the GST Council to reconsider the exclusion of smallscale manufacturers of icecream from the benefit of the composition scheme. “It is expected that the council shall take a decision preferably within a period of three months from the date of receipt of a copy of this order,” the Bench said.