Supreme Court classifies popular summer cooler as fruit drink
Hamdard Laboratories just secured a major legal victory regarding its iconic summer beverage. Generations of families relying on this sweet treat to beat the scorching heat can now see its legal status clarified. Delivering a significant judgment, India's highest judicial body determined that the famous red syrup qualifies for a much lower taxation bracket. By reversing previous orders from the Allahabad High Court and state revenue officials, this landmark decision drops the applicable Value Added Tax on the product from a hefty 12.5 percent down to a mere 4 percent for the specific 2008-2012 assessment window.
Massive Relief For Hamdard Laboratories
Judges BV Nagarathna and R Mahadevan led the bench that evaluated the true nature of this household staple. They noted that consumers always dilute the concentrated syrup with water or milk before drinking it. More importantly, its core characteristics come directly from its natural fruit-based components. Consequently, justices placed the item under Entry 103 of Schedule II Part A of the UPVAT Act. This ruling firmly recognises it as a processed fruit product rather than tossing it into the expensive "unclassified" or residuary tax category.
Fruit Content Explains Lower Tax Rate
To understand the root of the legal dispute, one must look at the exact recipe inside the bottle. The beverage contains a 10 percent fruit juice blend, specifically relying on 8 percent pineapple juice and 2 percent orange juice. Makers then combine this base with herbal distillates and invert sugar syrup. Government tax collectors originally argued that this 10 percent fruit ratio was completely insufficient to grant a tax break.
Rejecting Food Safety Definitions For Taxation
State revenue authorities heavily relied on food safety regulations during their arguments. Those specific rules mandate a minimum 25 percent juice content for any product officially marketed as a pure "fruit syrup." Because Hamdard’s traditional formulation fell short of this strict 25 percent mark, tax officials insisted on treating it as a generic, non-fruit item.
However, the Supreme Court completely dismissed this logic. The distinguished bench clarified that strict ingredient percentages set by food and health safety boards do not automatically dictate how items should be categorised under complex fiscal and tax laws. Unless a tax statute explicitly adopts those external definitions, products must be evaluated on their own merits, effectively ending this long-running financial dispute over the popular sharbat.
