The Gauhati High Court ruled that juice-based carbonated drinks should be taxed at 12% GST instead of the previously high 28% imposed by tax authorities. As a result, consumers may see a decrease in the cost of their preferred beverages.
The decision arrives as a big win for X’SS Beverage, a manufacturer of carbonated juice drinks, which had been battling a tax demand that contained penalties and interest.
It was claimed by the GST officials that as the drinks carry carbonated water, they must be taxed at a higher rate subjected to the soft drinks.
The X’SS beverage kept fruit juice as the predominant ingredient, giving the drinks their essential character and making them eligible for the lower tax rate.
The high court directed to the Rules for Interpretation of the Customs Tariff Act, 1975, which state that if a product does not conform neatly into a single category, it should be classified based on its essential nature. It also mentioned scientific principles and past judicial rulings, including a case involving Parle Agro’s Appy Fizz.
It was mentioned by legal experts mentioned that the ruling will provide a significant precedent. Only a few adverse rulings are there on the classification of carbonated fruit drinks.
In the same case, the HC has looked at all the major aspects like 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.
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Via the same judgement, Fruit pulp and juice-based carbonated drinks now have a tax advantage, making them more inexpensive for consumers and providing relief to manufacturers facing high taxation.
| Case Title | X’SS Beverage CO. vs The State of Assam |
| Citation | W.P. (C) NO. 5347/2022 |
| Date | 04.03.2025 |
| For the Petitioners | Mr. A. Saraf, Mr. P.K. Bora |
| For the Represented by | Mr. B. Gogoi |
| Gauhati High Court | Read Order |
