A summer essential and a festive favourite often enjoyed during Ramadan, Rooh Afza has been a part of Indian households for generations. On Wednesday, Hamdard Laboratories, the maker of Rooh Afza, received major relief after the Supreme Court of India settled a long-standing tax dispute. The court ruled that Sharbat Rooh Afza cannot be placed in a higher tax bracket simply because it is marketed as a “sharbat.”
Major Tax Relief For Rooh Afza
According to Hindustan Times, the Supreme Court of India observed that Rooh Afza derives its identity as a beverage from fruit-based ingredients and is meant to be diluted before consumption. A bench comprising Justices BV Nagarathna and R Mahadevan therefore held that it qualifies as a “fruit drink” under tax laws.
The court set aside the 2018 rulings of the Allahabad High Court and tax authorities, which had classified the product as an “unclassified” item taxable at 12.5% under the residuary entry of the Uttar Pradesh Value Added Tax (UPVAT) Act.
Instead, the apex court placed Rooh Afza under Entry 103 of Schedule II (Part A) of the UPVAT Act as a “fruit drink/processed fruit product”, making it eligible for a concessional VAT rate of 4% for the assessment period between January 1, 2008 and March 31, 2012.
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All You Need To Know About This
The Supreme Court settled a prolonged tax dispute, stating that Rooh Afza cannot be placed in a higher tax bracket merely because it is marketed as a “sharbat.” Reports suggest that for licensing purposes, Rooh Afza had long been described as a “non-fruit syrup containing 10% fruit juice.” This classification was used because the product did not meet the higher fruit content requirement set under food safety norms to be labelled as a “fruit syrup.”
However, the Supreme Court of India observed that the beverage gets its identity from fruit-based ingredients and is meant to be diluted before drinking. The court therefore ruled that Rooh Afza qualifies as a “fruit drink” under the applicable tax law.
The court has directed the Uttar Pradesh authorities to provide appropriate relief, including a refund or adjustment of the excess tax paid under protest, an amount exceeding ₹26 million, in accordance with the law, Hindustan Times reported.
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Cover Image Courtesy: Instagram/zaidsyedmohd & Canva Pro/mirzamlk (representative image)
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