The Chhattisgarh HC emphasized that ice cream shouldn’t be classified as a luxury item. Additionally, it directed the GST Council to review the exclusion of small-scale ice cream manufacturers from the composition scheme.The GST Council listed ice cream manufacturers as ineligible for the scheme without providing reasoning, prompting the petition.
Chhattisgarh: The Chhattisgarh High Court stated that ice cream, not a luxury item and instructed the GST Council to review the exclusion of small-scale ice cream manufacturers from the composition scheme. Ice cream is subject to a GST rate of 18 percent.
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A single judge bench, presided by Rakesh Mohan Pandey, emphasized that taxation laws must adhere to the principles outlined in Article 14 of the Constitution, requiring reasonable classification.
The court noted,
“Ice cream is being widely consumed by the people of India. It cannot be termed a luxurious item. The Council ought to have taken into consideration the socio-economic effect as mentioned in the Constitution”
The Small Scale Ice Cream Manufacturer Association petitioned the Court to overturn the GST Council’s decision to exclude ice cream manufacturers from the Composition Scheme, which aids small and medium businesses by allowing them to pay taxes at a flat percentage of turnovers every quarter instead of the normal monthly rate. Originally, the turnover limit for this scheme was Rs.50 lakh, later revised to Rs.1.5 crore.
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To prevent revenue loss, the GST Council created a list of items ineligible for the composition scheme, including ice cream manufacturing. The petitioners argued that the Council provided no justification for this decision.
The court emphasized,
“The Council should have considered the socio-political impact when subjecting ice cream to the 18 percent tax regime.”
As a result, it instructed the GST Council to review the exclusion of Small-Scale Ice Cream Manufacturers from the Composition scheme’s benefits.
The bench stated,
“The Council is expected to reach a decision, preferably within three months from the date of receiving a copy of this order,”