M/s Hamdard (Wakf) Laboratories v. Commissioner, Commercial Tax, U.P.

 

Sharbat Rooh Afza” is classifiable as a ‘fruit drink’ under Entry 103 Schedule II, Part A of the UPVAT Act and not under the residuary entry.

Background

The dispute concerned classification of “Sharbat Rooh Afza” under the Uttar Pradesh Value Added Tax Act, 2008 (UPVAT Act) for the period 01.01.2008–31.03.2012.

The appellant paid VAT at 4% treating the product as “fruit drink” under Entry 103, Schedule II, Part A UPVAT Act. The Department classified it under the residuary entry in Schedule V, attracting 12.5%. The High Court affirmed the Department’s view.

Issues Framed

  1. Whether “Sharbat Rooh Afza” qualifies as “fruit drink” under Entry 103, Schedule II, Part A UPVAT Act.
  2. Whether it is taxable under the residuary entry in Schedule V.

Court’s Reasoning

1. Interpretation of Fiscal Entry

“Fruit drink” is undefined under the UPVAT Act. Therefore, classification must follow the common parlance test—how the product is understood in commercial trade. Regulatory classifications under food laws are not determinative for fiscal purposes.

2. Essential Character Test

Though invert sugar syrup forms ~80% of composition, it functions as a carrier/preservative. The fruit juice and flavouring components impart the beverage’s essential character. Hence, quantitative predominance is not decisive.

3. Nature of Entry 103

Entry 103 is inclusive and illustrative (“including fruit drink & fruit juice”) and does not prescribe any minimum fruit content. Reading a 25% threshold into the entry was impermissible.

4. Burden on Revenue

The burden lay on the Revenue to prove applicability of the residuary entry. No trade surveys or commercial evidence were produced to show the product was not understood as a fruit-based beverage.

5. Residuary Entry

Resort to residuary entry is impermissible when a product reasonably fits a specific entry. At least two plausible views existed; the one favouring the assessee must prevail.

Decision / Disposition

Appeals allowed. High Court judgments set aside. “Sharbat Rooh Afza” held taxable at 4% under Entry 103 Schedule II, Part A UPVAT Act. Consequential refund/adjustment directed.

Ratio

Where a fruit-based beverage preparation reasonably answers the commercial description of “fruit drink” under an inclusive entry, and the Revenue fails to discharge the burden of proving otherwise, classification under the residuary entry is impermissible.

Case Details

Citation: 2026 INSC 195
Decided on: 25 February 2026
Case Title: M/s Hamdard (Wakf) Laboratories v. Commissioner,Commercial Tax, U.P.
Court: Supreme Court of India
Bench: B.V. Nagarathna, J.; R. Mahadevan, J.

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