HC orders lower GST on fruit-based fizzy drinks, not 28%

Consumers may soon see lower prices on their favourite juice-based carbonated drinks after the Gauhati High Court ruled that these beverages should be taxed at 12% GST instead of the steep 28% imposed by tax authorities.

The decision comes as a big win for X’SS Beverage, a manufacturer of carbonated juice drinks, which had been fighting a tax demand that included penalties and interest, ToI reported.

GST officials had argued that since the drinks contained carbonated water, they should be taxed at the higher rate applicable to soft drinks. However, X’SS Beverage maintained that fruit juice was the predominant ingredient, giving the drinks their essential character and making them eligible for the lower tax rate.

The high court referred to the Rules for Interpretation of the Customs Tariff Act, 1975, which state that if a product does not fit neatly into a single category, it should be classified based on its essential nature. It also cited scientific principles and past judicial rulings, including a case involving Parle Agro’s ‘Appy Fizz’.

Legal experts say the judgment will serve as an important precedent. "There have been few adverse rulings on the classification of carbonated fruit drinks... In this case, the HC has rightly looked at all key aspects such as the ingredients, their proportion and role in manufacture, common parlance of the product, how the products are marketed, their label etc. to decide the classification and consequently a lower GST rate," said Harpreet Singh, Partner, Indirect Tax, Deloitte-India.