HC to GST Council: Decide about inclusion of ice cream within 3 months

New Delhi | Updated on February 15, 2021 Published on February 15, 2021

The Delhi High Court has said that the GST Council should reconsider exclusion of ice cream from the list of manufacturers eligible for composition scheme within three months.

A Division Bench of Justices Rajiv Sahai Endlaw and Sanjeev Narula while disposing a petition filed by more than 50 small scale ice cream manufacturing units operating in the National Capital Territory of Delhi, said that the Council should take up the aforesaid aspect in its next meeting and decide at the earliest, keeping in view that the ice cream season has just begun.

The Court said the decision should be taken preferably within three months of February 9 (date of the ruling).

Under the composition scheme, the assesses are required to pay tax at the rate (of turnover) of 1 per cent (manufacturers and traders of goods), 5 per cent (restaurants not serving alcohol) and 6 per cent (other service providers). Businesses with annual turnover of up to ₹1.5 crore can opt for composition scheme. Manufacturers of goods, Dealers, and Restaurants (not serving alcohol) and small service providers can opt for composition scheme.


The petitioners had approached the High Court stating that exclusion of ice cream from the benefits of Composition Scheme is in violation of the spirit of Articles 14 and 19 of the Constitution of India and against the principles of natural justice. “There is no reason for clubbing ice cream with sin goods like pan masala and tobacco,” they argued.

The Court wanted to know whether GST Council has conducted any study on finding tax effect of benefit being extended under composition scheme. According to the government, no such study has been done. The Counsel for the government contended that besides the tax effect, several other factors including socio political and are taken into consideration when taking such decisions.

The Bench said under the circumstances, it was of the view that the only direction which can be issued in this petition was to direct the GST Council to reconsider the exclusion of small scale manufactures of ice cream from the benefit of Section 10(1) of the Act, including on the aforesaid two parameters – the components used in the ice cream and the GST payable thereon and other similar goods having similar tax effect continuing to enjoy the benefit.

According to Divakar Vijayasarathy, Founder of DVS Advisors, the government has stated that ice cream has been excluded from the benefit of composition scheme since the major raw material in preparation – milk – is exempt from GST and hence the government could not afford to provide the benefit of composition scheme to ice creams.

“With this stand, the respondent has clarified that exclusion of ice cream from the benefit of composition scheme is not because it being treated as sin good but major raw material is already exempt from GST,” he said.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on February 15, 2021
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.