REGULATORY · INDIA
India Supreme Court VAT classification for Rooh Afza under Uttar Pradesh VAT Act
Change
India’s Supreme Court held that Hamdard’s ‘sharbat rooh afza’ is classifiable as a fruit drink/processed fruit product under the Uttar Pradesh VAT Act, making it eligible for the lower 4% VAT rate rather than 12.5% under the residuary entry.
Why it matters
The Supreme Court rejected the Uttar Pradesh commercial tax department’s position that ‘sharbat rooh afza’ falls under the residuary category taxed at 12.5%. The court found the product’s essential beverage identity is derived from fruit-based constituents, supporting classification as a fruit drink/processed fruit product taxed at 4% under the Uttar Pradesh VAT Act. The bench stated that regulatory or licensing classification cannot control interpretation of a fiscal entry. It also held that the relevant fruit-juice entry (Entry 103, Schedule II, Part A of the 2008 Act) is illustrative/inclusive and does not set a quantitative threshold for fruit content, affecting how similar products may be assessed under that schedule.
Implications
- • Rooh Afza’s VAT exposure in Uttar Pradesh shifts from 12.5% to 4%.
- • Uttar Pradesh tax authority’s ability to apply residuary-rate treatment is constrained.
- • Fiscal classification disputes may hinge more on product identity than licensing labels.
- • No fruit-content minimum can be inferred for Entry 103 classification under the Act.
Who is affected
- • Hamdard (Wakf) Laboratories (Rooh Afza manufacturer)
- • Uttar Pradesh commercial tax/VAT authorities
- • Packaged beverage and sharbat/fruit-drink manufacturers selling in Uttar Pradesh
- • Distributors/retailers accounting for VAT on affected beverage categories
Source
Topics
Law & Public Safety Court Rulings Agriculture Food & Beverages