1. Classification of product for sales tax under statute — Whether fruit beverage containing specified fruit content qualifies as fruit drink or unclassified residuary item. (Para 2 , 4 )
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2026 Supreme(SC) 210
SUPREME COURT OF INDIA
B.V. NAGARATHNA, R. MAHADEVAN, JJ.
M/S Hamdard (Wakf) Laboratories – Appellant
Versus
Commissioner, Commercial Tax, U.P. Commercial – Respondent
Civil Appeal No(s). 2557-2578 of 2026 [Arising out of SLP (C) Nos. 6074 – 6095 of 2019]
with
M/S Hamdard (Wakf) Laboratories – Appellant
Versus
Commissioner, Commercial Tax, U.P. Commercial – Respondent
Civil Appeal No. 2579 of 2026 [Arising out of SLP (C) No. 16125 of 2022]
Decided On : 25-02-2026
Important Points
The classification of beverages under VAT must align with common understanding; 'Sharbat Rooh Afza' qualifies as a fruit drink under Entry 103 based on its essential character.
Subject
Tax Law - Value Added Tax
Act Referred
FRUIT PRODUCTS ORDER: R.2(j)
Headnote
(A) Uttar Pradesh Value Added Tax Act, 2008 - Entry 103 - Classification of 'Sharbat Rooh Afza' as fruit drink - The product, having 10% fruit juice, deemed to fall under Entry 103, which encompasses processed or preserved fruit drinks, thus, liable for VAT at 4% and not under the residuary entry for 12.5% - The interpretation of fiscal statutes mandates common parlance understanding. (Paras 8, 10, 30, 40)
(B) The principle of essential character test emphasizes the importance of the ingredient providing a product's distinct identity, rather than the predominant ingredient. (Paras 23, 27)
(C) The Revenue failed to discharge the burden of evidence to prove the product falls under a residuary entry. (Paras 21, 38)
(B) The principle of essential character test emphasizes the importance of the ingredient providing a product's distinct identity, rather than the predominant ingredient. (Paras 23, 27)
(C) The Revenue failed to discharge the burden of evidence to prove the product falls under a residuary entry. (Paras 21, 38)
Legal Category Hierarchy
Advocates appeared:
For the Appellant(s) : Mr. Arvind P. Datar, Sr. Adv. Mr. Aditya Bhattacharya, Adv. Mr. Abhishek Kumar Singh, AOR Mr. Ritwik Tyagi, Adv. Ms. Simran Tandon, Adv. Mr. Simran Tandon, Adv. Ms. Akriti Sharma, Adv. Mr. Vipin Upadhyay, Adv.
For the Respondent(s): Mr. Bhakti Vardhan Singh, AOR Mr. Vikas Singh Jangra, Adv. Mr. Samar Vijay Singh, Adv. Mr. Pawan Kishore Singh, Adv. Mr. J. Tarun Kumar, Adv. Mr. Sandeep Singh Somaria, Adv.
For the Appellant(s) : Mr. Arvind P. Datar, Sr. Adv. Mr. Aditya Bhattacharya, Adv. Mr. Abhishek Kumar Singh, AOR Mr. Ritwik Tyagi, Adv. Ms. Simran Tandon, Adv. Mr. Simran Tandon, Adv. Ms. Akriti Sharma, Adv. Mr. Vipin Upadhyay, Adv.
For the Respondent(s): Mr. Bhakti Vardhan Singh, AOR Mr. Vikas Singh Jangra, Adv. Mr. Samar Vijay Singh, Adv. Mr. Pawan Kishore Singh, Adv. Mr. J. Tarun Kumar, Adv. Mr. Sandeep Singh Somaria, Adv.
Table of Contents
2. Appellant contended product is a fruit drink under specific entry; Revenue argued it is non-fruit syrup taxable under residuary entry based on licensing and low fruit content. (Para 5 , 6 )
3. Regulatory classifications under food laws are not decisive for fiscal entries; common parlance and essential character of the commodity determine proper tax classification. (Para 16 , 17 , 19 , 25 , 29 )
4. When a product reasonably fits a specific entry, it cannot be consigned to the residuary entry, and classification must be determined by common parlance and essential character. (Para 30 , 32 , 38 )
5. Appeals allowed; product is classified as a fruit drink under the specific entry, and authorities must grant consequential relief including refund or adjustment of tax. (Para 40 , 41 )
6. Does regulatory classification under food safety legislation determine fiscal entry classification?
No. Regulatory enactments such as the Fruit Products Order or standards of the Food Safety and Standards Authority govern quality and safety, not tax classification, unless the taxing statute expressly incorporates those definitions. (Para 15 , 16 )
7. What is the appropriate test for classifying an article under a specific fiscal entry versus a residuary entry?
The common parlance test and the essential character test are paramount. If an article has a reasonable claim to be classified under an enumerated entry, it should not be consigned to the residuary entry; the burden of proving otherwise lies on the Revenue. (Para 17 , 30 )
8. How does an 'inclusive entry' in a tax statute affect the scope of categorization?
The use of the expression 'including' in a legislative entry enlarges its scope, indicating an intent to encompass a broad category of related preparations without requiring rigid quantitative thresholds unless expressly stated. (Para 27 , 28 )
9. Is the commercial understanding in other jurisdictions relevant to interpreting a VAT entry?
Yes. While classifications in other jurisdictions are not binding, consistent concessional classification of the same product as a fruit drink across multiple states provides evidentiary value for commercial understanding. (Para 35 , 36 )
JUDGMENT :
R. MAHADEVAN, J.
Leave granted.
2. The present batch of appeals arises out of the common judgment and order dated 02.07.2018 passed by the High Court of Judicature at Allahabad1[Hereinafter referred to as “the High Court”] in Sales / Trade Tax Revision Nos. 617 of 2012, 527 of 2015, 383 of 2017, 410 of 2017, 47 of 2018, 528 of 2015, 529 of 2015, 7 of 2018, 8 of 2018, 9 of 2018, 457 of 2012, 458 of 2012, 459 of 2012, 460 of 2012, 461 of 2012, 462 of 2012, 464 of 2012, 465 of 2012, 466 of 2012, 467 of 2012, 468 of 2012 and 469 of 2012, whereby the High Court dismissed the revisions preferred by the appellant and affirmed the order of the Commercial Tax Tribunal, Ghaziabad2[For short, “Tribunal”] holding that the appellant’s product “Sharbat Rooh Afza” was liable to Sales Tax / Value Added Tax at the rate of 12.5% under the residuary entry contained in Schedule V of the Uttar Pradesh Value Added Tax Act, 20083[For short, “UPVAT Act”].
2.1. The connected appeal has been filed against the judgment and order dated 03.08.2022 passed by the High Court in Sales / Trade Tax Revision Defective No. 38 of 2022, wherein the High Court, following its earlier judgment dated 02.07.2018 in the aforesaid revisions, dismissed the revision and held that the appellant’s product “Sharbat Rooh Afza” does not qualify as a fruit drink and is exigible to Value Added Tax at the rate of 12.5% under the residuary entry.
3. The dispute pertains to the period from 01.01.2008 to 31.03.2012. Since the issue involved in all these appeals is identical and the parties are the same, they were heard analogously and are being disposed of by this common judgment.
4. The appellant is the manufacturer of the product “Sharbat Rooh Afza” which is a non-alcoholic sweetened beverage prepared from invert sugar and blended with fruit juices, vegetable extracts and added flavours. According to the appellant, the fruit juice content in “Rooh Afza” is 10%. During the assessment years in question, the appellant manufactured and sold the said product and paid VAT at the rate of 4% on the sales thereof along with its monthly returns, treating the product as “Fruit Drink” or “Processed Fruit” covered under Entry 103 of Part A of schedule II of the UPVAT Act.
4.1. The Joint Commissioner (Corporate Circle), Commercial Tax, Ghaziabad4[For short, “the Assessing Authority”], however, made provisional assessments holding that “Sharbat Rooh Afza” was an unclassified item taxable at 12.5% under the residuary entry in Schedule V. Aggrieved thereby, the appellant preferred first appeals which were dismissed by the Additional Commercial (Appeals), Commercial Taxes Range, Ghaziabad5[For short, “the Appellate Authority”]. The second appeals before the Tribunal also came to be dismissed. Challenging the orders of the Tribunal, the appellant preferred revisions before the High Court. By the impugned judgments, the High Court dismissed the revisions and affirmed the concurrent findings of the authorities below. Hence, the appellant has preferred the present appeals before this court.
CONTENTIONS OF THE PARTIES
5. The learned senior counsel for the appellant submitted that the product “Sharbat Rooh Afza” is a non-alcoholic summer drink which has been consumed by the general public in India for several decades. It is manufactured primarily from pineapple and orange juice blended in a specific formulation along with fruit extracts and herbs such as tarbooz, lemon, keora, gajar, munaqqa, dhania, khurfa, rose, palak, pudina, hara ghia, kasni, sandal sufed, khas hindi, chharila, gul nilofar, and berg gaozaban. The product contains not less than 10% fruit juice.
5.1. It was submitted that pursuant to the mandate of this Court in Hamdard Dawakhana (Wakf), Delhi and another v. Union of India, AIR 1965 SC 1167, the appellant has since 1965 classified the product under the FRUIT PRODUCTS ORDER , 1955 as a fruit product / sharbat containing the prescribed minimum fruit juice content.
5.2. The learned senio
