Legal Provisions Involved: Entry 103, Schedule II, Part A and Schedule V of the Uttar Pradesh Value Added Tax Act, 2008; Fruit Products Order, 1955; Central Excise Tariff Act, 1985
Judgement by: Supreme Court of India
Judge/Bench: Justice B.V. Nagarathna and Justice R. Mahadevan
Facts
The Appellant is a manufacturer of ‘Sharbat Rooh Afza’ and paid VAT at 4% treating the product as a ‘fruit drink’ under Entry 103. The assessing authorities classified it under the residuary entry at 12.5%, which was affirmed by the Tribunal and Allahabad High Court.
Key Legal Provisions
Entry 103, Schedule II, Part A and Schedule V of the Uttar Pradesh Value Added Tax Act, 2008; Fruit Products Order, 1955; Central Excise Tariff Act, 1985
Issues raised
- Whether ‘Sharbat Rooh Afza’ qualifies as a ‘fruit drink’ under Entry 103 or falls under the residuary entry?
- Whether regulatory classification under food safety laws governs fiscal classification under VAT statutes?
Arguments of the case
The Appellant argued that Entry 103 is inclusive and encompasses fruit-based beverages; the essential character test mandates classification based on the ingredient imparting distinctive identity. The Respondent on the other hand, argued that the product contains only 10% fruit juice and is licensed as ‘non-fruit syrup’; under the common parlance test, it cannot be regarded as a fruit drink
Judgement
The Supreme Court allowed the appeals, holding that ‘Sharbat Rooh Afza’ is classifiable as a ‘fruit drink’ under Entry 103 at 4% VAT.
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