7 hours Ago
Fruit pulp or fruit juice based drinks or carbonated drinks would attract 12 per cent GST and not 28 per cent, Gauhati High Court has said. This could give various companies a sigh a relief as many of them are pushing for lower rates. “Where the subject product contains soluble solids and fruit content as per the report of the State Food Laboratory, it cannot be said to be akin to water, mineral water or aerated water,” a single judge bench of Justice Soumitra Saikia said while disposing pf petitions by X’SS Beverage on March 4.
The firm is in the business of manufacture and sale of carbonated fruit drinks and ready to serve fruit drinks. It manufactures and sells as many as 10 different products such as ‘XSS Orange’ and ‘Thirst Cola’ beside others. The bench further said that mere presence of carbon dioxide or carbonated water cannot be used to classify the subject items under water or carbonated water.
Therefore, the classification sought to be made by the Revenue cannot be accepted. “The classifications by the petitioner of the items under the subject head Fruit Pulp or Fruit Based Drink appear to be correct to this Court,” the bench said. To determine classification, the bench weighed-in ‘dominant nature of product’ since “.
..classification is seen to be determined by the nature of the beverage, particularly by the presence of the fruit juice to an extent that it attributes the essential character to the beverage, not merely as a flavouring agent.
It favoured assessee’s claim of classification for the reason that “...
presence of the total soluble solids of more than 10 per cent fruit juice content being found to be present, it cannot be considered to be water or carbonated water alone” and “cannot be said to be akin to water, mineral water or aerated water.” Commenting on the matter, Harpreet Singh, Partner at Deloitte called the matter as a classic case where the court has applied key rules of interpretation, to determine the correct classification of the product. “The HC looked into critical aspects like proportion of key ingredient which is fruits/ fruit pulp, common parlance of the product i.
e., whether the drink is bought as fruit juice or water/ aerated beverage, marketing and label of the product and the specific tariff entry applicable to the product vis-à-vis the general entry, to conclude on the lower rate of GST,” he said. Comments.
