The Supreme Court has said in a decision on Wednesday (February 25, 2026) that Sharbat Rooh Afza should be considered a fruit drink. The court said that marketing labels cannot determine the tax category of a product. He said that ‘Rooh Afza’ is a fruit based beverage which is diluted in water or milk and drunk. The court said that the rate of VAT (Value Added Tax) on this will not be 12.5 percent, but the lower rate of 4 percent VAT will be applicable.
According to the report of Live Law, the court said that Sharbat Rooh Afza of Hamdard (WAKF) should be classified as fruit drink under the Uttar Pradesh VAT Act. He said that even though it is sold as sherbet, which attracts 12.5 percent tax, it should be considered a fruit drink and kept in the 4 percent tax category.
A bench of Justices BV Nagarathna and R Mahadevan said, ‘Once it is established that the product is a fruit drink which is meant to be diluted and consumed, then there is a reasonable and solid basis for classifying it as a fruit drink under Entry 103.’ Accepting the appeal of Hamdard Laboratories, the bench set aside the decisions of the Allahabad High Court in which Rooh Afza was kept under the VAT rate of 12.5 percent.
The issue regarding Rooh Afza was that it contains 10 percent fruit juice, herbal extracts and sugar syrup, so whether it should be taxed as fruit drink or 12.5 percent VAT should be charged like unclassified items. Income tax officials justified the imposition of 12.5 per cent VAT on the basis of the information given on its label that it was non-fruit syrup or sharbat and it was classified as a higher rate item under food rules.
The Supreme Court acknowledged that the true commercial and physical nature of a product matters in its tax classification. Not just its marketing label or name. Applying the essential characteristic test, the court held that even though Rooh Afza is high in sugar syrup, it acts as a carrier and preservative. Even though the amount of invert sugar syrup is approximately 80 percent, its main function is to add sweetness to the drink and does not determine its commercial or beverage identity.
He said that its taste, flavor and drinking qualities come from the fruit juice and the distillates derived from it, which together give the product its distinctive identity as an aromatic sherbet. The court said that its classification should be based on the component that gives it its essential drinking properties. Furthermore, the Court also noted that many states, such as Delhi, Gujarat, West Bengal, Madhya Pradesh and Andhra Pradesh, have categorized Rooh Afza as fruit-based fruit drinks.
