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Informist, Wednesday, Feb. 25, 2026

 

NEW DELHI – The Supreme Court Wednesday held that Hamdard (Wakf) Laboratories' Rooh Afza was classifiable under a fruit drink or processed fruit product category under Uttar Pradesh Value Added Tax Act, 2008 and hence liable to pay a lower value-added tax of 4%. The apex court rejected Uttar Pradesh commercial tax department's argument that Rooh Afza belonged to the residuary entry category under the 2008 Act and was liable for a value-added tax of 12.5%.

 

The bench of Justice B.V. Nagarathna and Justice R. Mahadevan said that Hamdard's product contained declared fruit juice and derived its essential beverage identity from fruit-based constituents. The 2008 Act relating to the fruit juice category was illustrative and inclusive in character and did not prescribe any quantitative threshold of fruit content, the bench said. Regulatory or licensing classification cannot control or curtail the interpretation of a fiscal entry, it said.

 

The department has failed to discharge the burden of proving that the product falls within the residuary entry, the court said. "The material placed on record, including tax invoices evidencing payment of VAT at 5% in several states, namely Delhi, Gujarat, West Bengal, Madhya Pradesh, and Andhra Pradesh, demonstrates that the trade and tax authorities in those jurisdictions have consistently treated the product as falling within fruit-based beverage entries," the court said.

 

The expression "fruit drink" occurring in the Act cannot be confined solely to ready-to-consume bottled beverages, the court said. In common trade understanding, fruit squashes, concentrates, and sharbat preparations intended for dilution are all capable of being understood as fruit drink preparations, the court said. The nomenclature "sharbat" does not strip the product of its essential character as a fruit-based beverage concentrate, particularly where its composition and intended use align with that understanding, it said.

 

The dispute pertains to the period from 2008 to 2012, during which the tax department made provisional assessments holding that Hamdard's Rooh Afza was an unclassified item taxable at 12.5% under the residuary entry. The tax department argued that Hamdard held a licence to manufacture a "non-fruit syrup/sharbat" and that, under the governing statutory regime, any beverage containing less than 25% fruit juice must be mandatorily described as "non-fruit".

 

Hamdard said that Rooh Afza was a non-alcoholic summer drink consumed by the general public in India for several decades, and that the product contained not less than 10% fruit juice. Hamdard said its product was classified as a fruit drink taxable at the lower rate in all other states across the country, except Uttar Pradesh and Haryana.  End

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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