Aavin set for GST notice as prices don't budge; dealers, consumers cry foul

Tamil Nadu’s state-run dairy cooperative Aavin is under fire after refusing to reduce maximum retail prices (MRPs) of its products despite the Union government’s recent GST reduction on dairy products from 12 per cent to 5 per cent, effective September 22, 2025. While other major cooperatives like Amul, Milma, and Nandini quickly passed on the benefit with price cuts of Rs 20 to Rs 40 per kg on ghee and butter, Aavin chose to maintain MRPs unchanged.

Notice likely from GST Bhavan

Sources confirmed to The Federal that officials in GST Bhavan in Chennai will serve notice to Aavin for non-compliance. Sources said the GST office is likely to question why Aavin did not pass on tax benefits to consumers, as mandated under GST regulations, and may direct the cooperative to revise its MRPs in line with the reduced rate. A notice from GST Bhavan would mean that the cooperative would have to appear before the GST tribunal.

Also Read: Amul slashes prices of 700 products from Sept 22, pouch milk rates unchanged

Dealers' body files complaint

Meanwhile, SA Ponnusamy, head of the Tamil Nadu Milk Dealers’ Welfare Association, criticised Aavin for not implementing the GST reduction. Along with him, a group of milk dealers filed a complaint with the GST officials on Wednesday (September 24) on the non-implementation of the GST cut by Aavin.

Speaking to The Federal, Ponnusamy said, “We had filed a complaint with GST Bhavan against Aavin for not reducing the price. The officials promised to take action against Aavin. This decision betrays both consumers and retailers. Dealers have not received formal instructions to alter their retail pricing. Customers are asking why Amul and Nandini reduced rates, but Aavin hasn’t. We have no answers.”

Also Read: GST 2.0 comes into effect; kitchen staples, electronics, cars to be cheaper from today

Aavin’s defence

On the other hand, Aavin officials argue that compared to other private and cooperative dairies, it sells its products at the lowest price, and further reduction would affect the production cost.

Aavin officials said, “Since prices are calculated inclusive of GST, a formal state order is required before any reduction can be implemented. Instead, Aavin has announced temporary festival discounts on select value-added products till November 2025."

"Aavin butter is priced at Rs 10 to Rs 50 lower than that of private and other cooperative dairies. Aavin sells 500 gm of butter at Rs 275. Paneer prices remain reduced: 200 gm at Rs 110 (down from Rs 120), and 500 gm at Rs 275 (down from Rs 300). We have consistently kept milk and by-product prices lower than market rates to benefit consumers. Ninety percent of sales revenue goes directly to milk producers. Further reduction of price would affect the production cost.”

In a press release, Aavin officials added that the state government had cut milk prices by Rs 3 a litre in 2021, saving an estimated Rs 1,073 crore for 1.5 crore consumers. Since 2023, the government has given Rs 635 crore in incentives to milk producers and provided Rs 675 crore in share capital to strengthen the dairy infrastructure.

Also Read: After Karnataka, Tamil Nadu asks Amul to stop procuring milk from state

Festival discounts

Aavin has announced temporary festival discounts on select value-added products until November 30, 2025. The price of one-litre ghee cartons was reduced from Rs 690 to Rs 650; 50 ml ghee jars that earlier cost Rs 48 are now available at Rs 45; and the price of a 15 kg ghee tin has been reduced from Rs 11,880 to Rs 10,725. The price of 200 g paneer was reduced from Rs 120 to Rs 110, and 500 g from Rs 300 to Rs 275. UHT (Ultra High Temperature) milk 150 ml packs continue at Rs 10 though the MRP is Rs 12.

The fallout is particularly sensitive because Aavin’s Deepavali sales last year touched Rs 126 crore, nearly a fifth of its annual Rs 600 crore revenue from value-added products. With ghee, butter, and paneer in high demand during festivals for cooking and sweets, pricing missteps risk driving customers towards competitors.

Also Read: Aavin vs Amul: Tamil Nadu's dairy cooperative row

Consumer resentment

Already, consumer resentment is evident. Consumers compared Aavin’s prices with Amul’s cuts and called the cooperative’s stance “unfair.” Some also question - when private brands can cut prices, why not Aavin, which is owned by the people of Tamil Nadu?

Opposition parties like the BJP and PMK have condemned Aavin’s inaction in reducing the prices. PMK leader Anbumani Ramadoss accused Aavin of “betraying the public trust” by holding back GST benefits, contrasting it with Amul and Nandini, which immediately cut retail prices.

He said, “One kg ghee pack that cost Rs 700 earlier should have dropped to about Rs 656 after the GST cut. Instead, Aavin hiked the base price and kept the MRP intact.”