Supreme Court of India rules Rooh Afza is a fruit drink, qualifies for 4% VAT
Rooh Afza's fiscal classification is constrained to the 4% VAT entry for fruit drinks/processed fruit products in Uttar Pradesh rather than the residuary 12.5% entry. Regulatory or licensing labels cannot determine fiscal classification, and the applicable fruit-juice VAT entry is illustrative and does not require a specified quantitative fruit-content threshold.
Change
Supreme Court of India held that Hamdard (Wakf) Laboratories' Sharbat Rooh Afza falls under the fruit drink/processed fruit product entry of the Uttar Pradesh Value Added Tax Act and is liable to a 4% VAT rate, rejecting the Uttar Pradesh commercial tax department's attempt to place it in a 12.5% residuary bracket.
Why it matters
The ruling prevents Uttar Pradesh tax authorities from using a product's regulatory licensing or label to override its ingredient-derived identity for VAT classification. Officials must treat the illustrative Entry 103 of Schedule II, Part A as determinative for products whose essential beverage identity derives from fruit-based constituents, narrowing grounds to invoke the higher residuary tax band.
Implications
- — Uttar Pradesh commercial tax department assessment units must classify Sharbat Rooh Afza under Entry 103 (fruit drink/processed fruit product) and apply the 4% VAT rate on future assessments.
- — Hamdard (Wakf) Laboratories' tax and finance teams must update their VAT treatment for Sharbat Rooh Afza in filings and internal tax records going forward.
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