Tax Classification Based on Form of Goods at the Time of Sale{ Additional Commissioner, Commercial Tax & Ors. v. Cadila Health Care Ltd. & Anr. Civil Appeal Nos. 9788–9789 of 2013 decided on October 5, 2026}
Facts:
Cadila sold GRD Powder and GRD Mix in powder/biscuit form, with instructions to mix them with milk or water. The Revenue classified the products as “non-alcoholic drinks and beverages” under Entry 20(ii) of the M.P. Commercial Tax Act, attracting 10% tax. Cadila contended that the products were sold as powder/biscuit and therefore fell under the residuary entry, attracting 8% tax. The Madhya Pradesh High Court upheld Cadila’s classification.
Issue:
Whether the products should be classified as beverages based on their subsequent use after mixing with water/milk, or based on their form at the time of sale.
Held:
The Supreme Court held that classification must be based on the form and nature of the goods at the time of sale and not on their subsequent end use. Since GRD Powder and GRD Mix were sold in powder/biscuit form, they could not be classified as beverages merely because they could subsequently be used to prepare a drink. The goods were therefore classifiable under the residuary entry and the Revenue’s appeals were dismissed.
