Appy Fizz classified as aerated drink for tax purposes, subject to 20% tax rate

The court upheld the classification of Appy Fizz as an aerated branded soft drink for tax assessment purposes under Section 6(1)(a) of the KVAT Act, subject to a 20% tax rate. The court determined that despite containing fruit juice as a flavoring agent, the product's predominant character was that of an aerated soft drink, falling outside the scope of fruit juices listed under Entry 71 of SRO No.82/2006. The court emphasized interpreting commodities based on common or commercial understanding, dismissing reliance on orders under the Central Excise Act and affirming the Tribunal's decision without interference.

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Issues:
1. Interpretation of whether the product Appy Fizz is classified as a fruit juice or an aerated branded soft drink under the KVAT Act.

Analysis:
The judgment pertains to a revision filed under Section 63 of the Kerala Value Added Tax Act challenging the order passed by the Kerala Value Added Tax Appellate Tribunal. The key issue revolves around determining the classification of the product Appy Fizz for tax purposes. The petitioner claimed that the product should be treated as a fruit juice falling under entry 71(2) of SRO No.82/2006, attracting a tax rate of 12.5%. However, the authorities proposed to levy tax at 20% considering the product as an aerated branded soft drink under Section 6(1)(a) of the KVAT Act. The petitioner's objections based on previous orders were rejected, leading to the final assessment of 20% tax, confirmed by the Tribunal.

The primary question before the court was whether Appy Fizz should be classified as a fruit juice or an aerated branded soft drink for tax assessment. Section 6(1)(a) of the KVAT Act specified the tax rates for different goods, including aerated branded soft drinks at 20%. Entry 71 of SRO No.82/2006 listed non-alcoholic beverages, including fruit juices, fruit concentrates, and soft drinks. The court analyzed the content of Appy Fizz, noting that although it contained fruit juice as a flavoring agent, the predominant character remained that of an aerated soft drink. The court emphasized that aerated products not specifically included in entry 71 are considered outside the scope of SRO No.82/06, leading to the classification of Appy Fizz as an aerated branded soft drink under Section 6(1)(a) of the KVAT Act.

Regarding the interpretation of entries without HSN code numbers, the court referred to the Rules of Interpretation under the KVAT Act. It highlighted that such commodities should be understood in common or commercial parlance. The court concluded that since Appy Fizz met the description of an aerated soft drink under Section 6(1)(a), the absence of HSN code did not alter its classification. The court dismissed reliance on orders under the Central Excise Act due to the inapplicability of HSN code in the present case. Ultimately, the court upheld the Tribunal's decision, stating that no interference was warranted, and dismissed the revision accordingly.

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