Rooh Afza Classified as Fruit Drink – 4% VAT Applicable | SC

Case Details: Hamdard (Wakf) Laboratories vs. Commissioner, Commercial Tax, U.P. (2026) 39 Centax 418 (S.C.)

Judiciary and Counsel Details

• B.V. Nagarathna & R. Mahadevan, JJ.
• S/Shri Arvind P. Datar, Sr. Adv. Aditya Bhattacharya, Ritwik Tyagi, Ms Simran Tandon, Ms Akriti Sharma & Vipin Upadhyay, Advocates & Abhishek Kumar Singh, AOR, for the Petitioner.
• S/Shri Vikas Singh Jangra, Samar Vijay Singh, Pawan Kishore Singh, J. Tarun Kumar & Sandeep Singh Somaria, Advocates & Bhakti Vardhan Singh, AOR, for the Respondent.

Facts of the Case

In the instant case, the appellant was the manufacturer of the product “Sharbat Rooh Afza”, a non-alcoholic sweetened beverage prepared from invert sugar and blended with fruit juices, vegetable extracts and added flavours. During the assessment years in question, the appellant paid VAT at the rate of 4% on the sales thereof, treating the product as “Fruit Drink” or “Processed Fruit” covered under Entry 103 of Part A of Schedule II of the UPVAT Act. However, the Assessing Authority (AA) treated the product as an unclassified item taxable at 12.5% under the residuary entry in Schedule V. Consequently, the appellant contended that the product contains declared fruit juice and derives its essential beverage identity from fruit-based constituents. The Revenue failed to discharge the burden of proving that the product falls outside Entry 103 and within the residuary entry.

Supreme Court Held

The Supreme Court held that the product was a non-alcoholic sweetened beverage prepared from invert sugar and blended with fruit juices, vegetable extracts and added flavours. The product contained not less than 10% fruit juice. The product derived its essential beverage identity from fruit-based constituents. Entry 103 of Schedule II, Part A of the UPVAT Act is illustrative and inclusive in character and does not prescribe any quantitative threshold of fruit content. The reliance placed upon licensing norms and the nomenclature “sharbat” was misplaced. Such material, without more, cannot substitute the evidentiary burden required to displace classification under a specific entry. It is no doubt true that VAT is a State subject under Entry 54 of List II of the Seventh Schedule to the Constitution and classifications adopted by one State are not binding upon another. However, they are not wholly irrelevant. Where similarly worded entries across multiple jurisdictions have been construed in a particular manner, such uniformity assumes evidentiary value in determining commercial understanding of the product, and whether the assessee’s interpretation is at least a reasonably plausible view.

List of Cases Reviewed

• Hamdard (Wakf) Laboratories v. Commissioner of Commercial Taxes — 2019 (20) G.S.T.L. 46 (All.) — Reversed [Paras 2, 4.1, 5.4, 5.6, 5.7, 5.9, 5.12, 14, 39, 40]

List of Cases Cited

• A. Nagaraju Bros v. State of Andhra Pradesh — 1994 (72) E.L.T. 801 (S.C.) — Referred [Para 17]
• Alladi Venkateswarlu v. State of Andhra Pradesh — (1978) 2 SCC 552 — Relied on [Para 31]
• Ashutosh Trading Company — Referred [Para 6.8]
• Commissioner v. Connaught Plaza Restaurant (P) Ltd. — 2012 (286) E.L.T. 321 (S.C.) — Referred [Para 18]
• Commissioner v. Dilip Kumar and Company — 2018 (361) E.L.T. 577 (S.C.) — Referred [Para 5.9]
• Commissioner v. Wockhardt Life Sciences Ltd. — 2012 (277) E.L.T. 299 (S.C.) — Referred [Para 19, 19.1
• CST v. Jaswant Singh Charan Singh — 1967 SCC OnLine SC 154 — Referred [Para 6.4]
• Deputy Commissioner v. G.S. Pai — (1980) 1 SCC 142 — Referred [Para 6.4]
• Dilworth v. Stamps Commissioners — Relied on [Para 28]
• Dunlop India Ltd v. Union of India — 1983 (13) E.L.T. 1566 (S.C.) — Relied on [Para 30]
• Hamdard (Wakf) Laboratories v. Commissioner of Sales Tax — 2005 NTN (Vol. 27)-351 — Referred [Para 11]
• Hamdard Dawakhana (Wakf) v. Commissioner of Trade & Taxes — Appeal Nos. 1109-1110 of 2013, dated 11-4-2022 by Delhi VAT Tribunal — Referred [Para 5.10]
• Hamdard Dawakhana (Wakf) v. Union of India — AIR 1965 SC 1167 — Referred [Paras 5.1, 6.8]
• Hindustan Ferodo Ltd v. Collector — 1997 (89) E.L.T. 16 (S.C.) — Relied on [Paras 21.1, 21.4]
• HPL Chemicals Ltd v. Commissioner — 2006 (197) E.L.T. 324 (S.C.) — Relied on [Paras 21.2, 21.4]
• Indo International Industries v. Commissioner of Sales Tax — (1981) 7 S.T.C. 359 — [Para 17]
• Indo International Industries v. CST — (1981) 2 SCC 528 — Referred [Para 6.4]
• Kemrock Industries and Exports Ltd. v. Commissioner — 2007 (210) E.L.T. 497 (S.C.) — Relied on [Paras 24, 25]
• Mauri Yeast India Private Limited v. State of Uttar Pradesh — 2008 (225) E.L.T. 321 (S.C.) — Referred [Para 5.8]
• Quinn India Ltd v. Commissioner — 2006 (198) E.L.T. 326 (S.C.) — Relied on [Paras 21.3, 21.4]
• Ramavatar Budhaiprasad v. Assistant Sales Tax Officer — (1961) 12 S.T.C. 286 — Referred [Para 17]
• Reserve Bank of India v. Peerless General Finance & Investment Co. Ltd. — (1987) 1 SCC 424 — Relied on [Para 28]