In a major relief to Hamdard (Wakf) Laboratories, the Supreme Court on Wednesday ruled that the company’s popular ‘Sharbat Rooh Afza’ is classifiable as a fruit drink/processed fruit product and will attract only 4 per cent VAT under the Uttar Pradesh Value Added Tax Act, 2008.
Hearing Hamdard (Wakf) Labs vs Commissioner of Commercial Tax matter, a bench of Justices BV Nagarathna and R Mahadevan held that it was “neither artificial nor untenable, but a bona fide and commercially recognised interpretation”.
The bench also noted the Rooh Afza’s similar classification across several States.
Ruling that the product is classifiable under Entry 103 of Schedule II of the Act as a fruit drink/processed fruit product and taxable at the concessional rate of 4 percent, the bench also set aside the Allahabad High Court judgment which had ruled that Rooh Afza is a non-fruit drink.
Hamdard paid VAT at the rate of 4 per cent on Rooh Afza sales for the assessment years 2007-08 and 2008-09.
However, the Uttar Pradesh tax authorities treated the product as an unclassified product liable to 12 per cent VAT.
The earlier appeals by Hamdard before the Commercial Tax Tribunal against this were rejected as the tribunal held the product was “sharbat” and not fruit drink.