On Wednesday, the Supreme Court of India made a significant ruling regarding the popular drink Rooh Afza produced by Hamdard (Waqf) Laboratories. The court determined that Rooh Afza should be classified under the category of fruit drink/processed food product, leading to a reduced Value Added Tax (VAT) of 4% instead of the previously applicable rate of 12.5%. This decision pertains to the Uttar Pradesh Value Added Tax Act, 2008 and has implications for how such products are taxed across different states.

The ruling was issued by a bench comprising Justice B. V. Nagarathna and Justice R. Mahadevan, who noted that several states had already been applying a reduced tax rate to Rooh Afza, thereby bolstering Hamdard's argument. The judges emphasized that the interpretation of the product as a fruit drink was not only feasible but also commercially valid and realistic, reflecting the broader consumer market.

Furthermore, the court stated that Rooh Afza could be classified as a fruit drink under Entry 103 of Schedule II of the Act. This classification means that during the relevant assessment year, the product will be subject to a reduced VAT rate of 4%. This ruling not only impacts Hamdard's financial obligations but also sets a precedent for how similar products might be categorized and taxed in the future, potentially influencing market practices in the beverage industry in India.