India Supreme Court classifies Rooh Afza as fruit drink for VAT purposes
Tax authorities must apply 4% VAT classification instead of higher residuary rate
Change
The Supreme Court of India ruled that Rooh Afza qualifies as a fruit drink under VAT law and is subject to a 4% tax rate.
Why it matters
The judgment limits tax authorities from applying higher residual tax rates where product classification is determined by ingredient composition rather than licensing or labels.
Implications
- — Tax authorities must apply correct classification — misclassification risks legal reversal
- — Businesses can rely on ingredient-based classification — disputes may be reduced
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