2026-VIL-20-SC
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VAT Supreme Court Cases

Uttar Pradesh VAT Act, 2008 - Classification of product "Sharbat Rooh Afza", “Fruit Drink” or “Processed Fruit” - The appellant-assessee manufactures and sells the product "Sharbat Rooh Afza" which contains 10% fruit juice. The appellant claimed the product as a "fruit drink" classifiable under Entry 103 of Schedule II Part A of the UPVAT Act, attracting 4% VAT – The authorities classified it under the residuary entry in Schedule V, levying 12.5% VAT – Vide the impugned order the High Court affirmed the classification under the residuary entry - HELD - The product "Sharbat Rooh Afza" is classifiable as a "fruit drink" under Entry 103 of Schedule II Part A of the UPVAT Act, attracting 4% VAT. The Revenue failed to discharge the burden of proving the product falls outside Entry 103, which is a specific and inclusive entry. The expression “fruit drink” occurring in Entry 103 cannot be confined solely to ready-to-consume bottled beverages – Applying the common parlance test and the essential character test, the fruit content and traditional beverage character of the product reasonably fit within the description of a "fruit drink", despite the sugar syrup being the predominant ingredient. The product has been classified as a fruit drink and taxed at concessional rates in several other States, indicating a commercially recognized interpretation – Regulatory classification under food safety legislation cannot solely govern interpretation of an undefined fiscal entry under the UPVAT Act. It is well settled that where the Revenue seeks to classify a product under a residuary or entry different from that claimed by the assessee, the burden lies squarely upon it. Classification relates directly to chargeability; therefore, the onus of establishing applicability of a taxing entry rests upon the Department - The recourse to a residuary clause is permissible only when the goods cannot reasonably be brought within the ambit of any specific entry. Such inability must be established by the Revenue on the basis of relevant material; the residuary entry cannot be invoked merely because the specific entry is construed narrowly or because some ambiguity is perceived - Once it is demonstrated that the product is a fruit-based beverage preparation intended for dilution and consumption, it bears a reasonable and substantial claim to classification as a “fruit drink” within Entry 103. It cannot be relegated to the residuary entry merely because it is marketed as a “sharbat” - The “Sharbat Rooh Afza” is classifiable under Entry 103 of Schedule II, Part A of the UPVAT Act as a fruit drink / processed fruit product and is exigible to VAT at the concessional rate of 4% during the relevant assessment years. The impugned judgments affirming classification under the residuary entry and levy at 12.5% are set aside – The appeal is allowed
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