The Gauhati High Court allowed the petition, ruling that carbonated fruit drinks qualify as fruit beverages under Tariff Item 2202 99 20 and are taxable at 12% GST under Schedule-II of the CGST/IGST Rate Notification.
The Gauhati High Court has ruled that carbonated fruit drinks qualify as fruit beverages and are taxable at 12% GST. This landmark decision clarifies the tax classification of carbonated fruit drinks, offering relief to manufacturers and setting a clear precedent for future cases.
Background of the Case
The case involved X’s Beverage Co. (the petitioner), which is engaged in the manufacture and sale of carbonated fruit drinks and ready-to-serve fruit drinks. The petitioner argued that carbonated fruit drinks, containing a minimum of 10% fruit juice (or 5% in the case of lime or lemon) and total soluble solids not less than 10%—as per Regulation 2.3.30 of the Food Safety and Standards (Food Products Standards and Food Additives) Regulation, 2011—should be classified as fruit beverages.
According to the petitioner, these products should fall under Tariff Item 2202 99 20 of the Customs Tariff Act, 1975, which includes “fruit pulp or fruit juice-based drinks.” These items are specified under Serial No. 48 of Schedule-II in Notification No. 1 of 2017 – Integrated Tax (Rate) dated 28.06.2017 and are taxable at 12% GST.
Revenue’s Argument
The Revenue Department contested the petitioner’s claim, asserting that the finished products were manufactured from fruit concentrates rather than fruit pulp or fruit juice. They argued that since the drinks also contained carbonated water, sugar, sweeteners, and added flavors (natural and nature-identical), they should not be classified under Tariff Item 2202 99 20. Instead, the Revenue argued that these products should be taxed under Tariff Heading 2202 10, which applies to beverages prepared with flavors.
Court’s Observation and Ruling
Justice Soumitra Saikia of the Gauhati High Court noted that the subject products contained soluble solids and fruit content as verified by the State Food Laboratory. The court ruled that the mere presence of carbon dioxide or carbonated water does not alter the classification of these products as fruit beverages. The court emphasized that the classification under fruit pulp or fruit juice-based drinks was justified and correct.
The bench further clarified that Tariff Heading 2202 10 applies to beverages prepared with flavors, while Tariff Item 2202 99 20 explicitly covers fruit pulp or fruit juice-based drinks. The court referred to previous judgments and concluded that even if a fruit juice-based drink is aerated or branded as a soft drink, it would still fall under the classification of fruit beverages.
Final Verdict
Based on the above findings, the Gauhati High Court allowed the petition, ruling that carbonated fruit drinks qualify as fruit beverages under Tariff Item 2202 99 20 and are taxable at 12% GST under Schedule-II of the CGST/IGST Rate Notification.
Case Details
- Case Title: X’S Beverage Co. v. The State of Assam
- Case Number: W.P(C) No. 5347/2022
- Petitioner’s Counsel: A. Saraf
- Respondent’s Counsel: B. Gogoi
Key Takeaway
This ruling provides much-needed clarity for manufacturers of carbonated fruit drinks, confirming that such products qualify as fruit beverages and are subject to 12% GST. The decision will have a significant impact on the beverage industry and future tax classifications.
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