Supreme Court: Tax goods by form at sale, not end use

Commercial Tax Act, 1994, specifically whether they should be taxed as 'Non-Alcoholic Drinks and Beverages' (10%) or under the residuary entry (8%).

Who it concerns: Appellants: Additional Commissioner of Commercial Tax and others; Respondents: Cadila Health Care Ltd and another; Bench: Justice Manmohan.

What the court decided

• The Court held that tax classification must be based on the form of the good at the time of sale, not its end use.
• The Court determined that 'GRD Powder' and 'GRD Mix' do not fall under Entry 20(ii) for 'Non-Alcoholic Drinks and Beverages' because the entry refers to liquids.
• The Court upheld the High Court's classification of the goods under the residuary entry, subjecting them to an 8% tax rate.
• The Court rejected the application of the 'common parlance' or 'functional character' tests to override the statutory requirement of classifying goods by their physical form at the point of sale.

Also in the document

• The judgment is marked as 'REPORTABLE'.
• The Court clarified that the taxable event is the act of supply, and liability is determined at the point of supply based on the nature of the good in the form it is sold.
• The Court noted that Entry 20(ii) lists items like syrups and cordials, which are liquids, establishing a common thread that the entry applies to liquid preparations.