IN THE COURT OF COMMISSIONER
DEPARTMENT OF TRADE AND TAXES
GOVERNMENT OF N.C.T. OF DELHI
VYAPAR BHAVAN, NEW DELHI
No. 308/CDVAT/2012/55 Date: 09.07.2012
M/s Red Bull India Pvt. Ltd.,
D-38, Okhla Industrial Area, Phase-I
DELHI-110020.
ORDER
Present for the Applicant : Shri Rakesh Garg, Advocate
Present for the Department : Shri T.C.Sharma, DR
The above named applicant has filed this application u/s 84 of the
Delhi Value Added Tax Act, 2004 (hereinafter referred to as the
"Act") and the question put up before this Court for determination
under the aforesaid provision of law is as under -
"What is the rate of tax that is payable on a sale or
import of Energy Drinks and inter-alia what is the
appropriate classification of Energy Drinks under the
Schedules to the Act?"
2. Application for determination has been made in the prescribed
format DVAT-42 and the requisite fee of INR 500/- paid through
E-payment challan No. 000433702/03/1240105 dated March 2,
2012.
3. The Applicant is engaged in nationwide marketing and
distribution of the `Red Bull' brand of Energy Drinks.
2
4. The Applicant has approached this Court for determination as to
whether the item Energy Drink is covered under the residuary
Entry (chargeable at 12.5 percent) or whether it constitutes
`aerated waters' and therefore shall be classifiable under Entry no
11 of the Fourth Schedule to the Act and be accordingly,
chargeable to tax at 20 percent.
5. Shri Rakesh Garg, Advocate appeared on behalf of the applicant
and stated that the Applicant company is currently charging VAT
on `Energy Drinks' at the rate of 12.5 percent. But there is some
confusion in trade with regard to the rate of VAT on the said
item, hence clarification is sought under section 84 of the Act.
The applicant has submitted the following documents:
(i) A copy of notification F 3 (30)/Fin (T&E)/ 2009-10/ jsfin/
285 dated April 1, 2010 regarding levy of VAT @ 20
percent on aerated drinks;
(ii) A copy of order dated October 5, 2007 regarding
classification of imports of Energy Drinks as a `proprietary
food' by the Commissioner (Appeals) in the matter of
Narang Hospitality Services Pvt. Ltd., rejecting Revenue's
plea that the Energy Drinks are classifiable as aerated
drinks;
(iii) Documents showing classification of energy drinks as
distinct product/ proprietary food item finds acceptance in
international trade practice;
(iv) Copy of judgement dated December 20, 2005 wherein
differentiation between the Energy Drinks and `aerated
waters' has been recorded by the Division Bench of
Madras High Court;
(v) Documents showing that as opposed to Carbonated
Water which has specified standards under the FSSAI
Regulations, Energy Drinks are classified as Proprietary
Food under the FSSAI Regulations.
3
6. The Departmental Representative accepted that in common
parlance "energy drinks" do not qualify as "aerated drinks" and
are not used as the substitute of each other.
7. I heard both the parties and also went through the submissions
placed on record by the counsel for applicant in support that
"Energy Drinks" are `Proprietary Foods' which is not covered
under the category of aerated drinks. After due consideration, I
am of the considered opinion that the `Energy Drinks' are distinct
from aerated drinks and therefore cannot be covered under Entry
No 11 of the Fourth Schedule appended to the Act. Keeping in
view the fact that there is no other potential entry within realm of
which energy drinks could fall, therefore, it has to be classified as
an unspecified item under the residual category provided under
Section 4 (1)(e) of the Act and thus would be taxable at the rate
of 12.5 percent.
Held accordingly.
(Rajendra Kumar)
Commissioner, VAT.
Copy for information and necessary action to:
1. The Applicant.
2. The Addl. Commissioner (Law & Judicial).
3. The Value Added Tax Officer (Policy Branch).
4. President, Sales Tax Bar Association (Regd.).
5. Guard File.
(Rajendra Kumar)
Commissioner, VAT.
IN THE COURT OF COMMISSIONER
DEPARTMENT OF TRADE AND TAXES
GOVERNMENT OF N.C.T. OF DELHI
VYAPAR BHAVAN, NEW DELHI
No. 308/CDVAT/2012/55 Date: 09.07.2012
M/s Red Bull India Pvt. Ltd.,
D-38, Okhla Industrial Area, Phase-I
DELHI-110020.
ORDER
Present for the Applicant : Shri Rakesh Garg, Advocate
Present for the Department : Shri T.C.Sharma, DR
The above named applicant has filed this application u/s 84 of the
Delhi Value Added Tax Act, 2004 (hereinafter referred to as the
"Act") and the question put up before this Court for determination
under the aforesaid provision of law is as under -
"What is the rate of tax that is payable on a sale or
import of Energy Drinks and inter-alia what is the
appropriate classification of Energy Drinks under the
Schedules to the Act?"
2. Application for determination has been made in the prescribed
format DVAT-42 and the requisite fee of INR 500/- paid through
E-payment challan No. 000433702/03/1240105 dated March 2,
2012.
3. The Applicant is engaged in nationwide marketing and
distribution of the `Red Bull' brand of Energy Drinks.
2
4. The Applicant has approached this Court for determination as to
whether the item Energy Drink is covered under the residuary
Entry (chargeable at 12.5 percent) or whether it constitutes
`aerated waters' and therefore shall be classifiable under Entry no
11 of the Fourth Schedule to the Act and be accordingly,
chargeable to tax at 20 percent.
5. Shri Rakesh Garg, Advocate appeared on behalf of the applicant
and stated that the Applicant company is currently charging VAT
on `Energy Drinks' at the rate of 12.5 percent. But there is some
confusion in trade with regard to the rate of VAT on the said
item, hence clarification is sought under section 84 of the Act.
The applicant has submitted the following documents:
(i) A copy of notification F 3 (30)/Fin (T&E)/ 2009-10/ jsfin/
285 dated April 1, 2010 regarding levy of VAT @ 20
percent on aerated drinks;
(ii) A copy of order dated October 5, 2007 regarding
classification of imports of Energy Drinks as a `proprietary
food' by the Commissioner (Appeals) in the matter of
Narang Hospitality Services Pvt. Ltd., rejecting Revenue's
plea that the Energy Drinks are classifiable as aerated
drinks;
(iii) Documents showing classification of energy drinks as
distinct product/ proprietary food item finds acceptance in
international trade practice;
(iv) Copy of judgement dated December 20, 2005 wherein
differentiation between the Energy Drinks and `aerated
waters' has been recorded by the Division Bench of
Madras High Court;
(v) Documents showing that as opposed to Carbonated
Water which has specified standards under the FSSAI
Regulations, Energy Drinks are classified as Proprietary
Food under the FSSAI Regulations.
3
6. The Departmental Representative accepted that in common
parlance "energy drinks" do not qualify as "aerated drinks" and
are not used as the substitute of each other.
7. I heard both the parties and also went through the submissions
placed on record by the counsel for applicant in support that
"Energy Drinks" are `Proprietary Foods' which is not covered
under the category of aerated drinks. After due consideration, I
am of the considered opinion that the `Energy Drinks' are distinct
from aerated drinks and therefore cannot be covered under Entry
No 11 of the Fourth Schedule appended to the Act. Keeping in
view the fact that there is no other potential entry within realm of
which energy drinks could fall, therefore, it has to be classified as
an unspecified item under the residual category provided under
Section 4 (1)(e) of the Act and thus would be taxable at the rate
of 12.5 percent.
Held accordingly.
(Rajendra Kumar)
Commissioner, VAT.
Copy for information and necessary action to:
1. The Applicant.
2. The Addl. Commissioner (Law & Judicial).
3. The Value Added Tax Officer (Policy Branch).
4. President, Sales Tax Bar Association (Regd.).
5. Guard File.
(Rajendra Kumar)
Commissioner, VAT.
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