Last Updated on January 16, 2026 by Satish Mishra

An income tax appeal to the High Court is the fourth tier, filed against an Income Tax Appellate Tribunal (ITAT) order, requiring a substantial question of law, within 120 days, on a prescribed form (Form 36) with a memorandum specifying the legal issue, with the High Court (HC) only hearing such significant legal points.

This case digest discusses interpretation of tax statutes wherein two different interpretations are possible, the one favouring the assessee should be preferred. Herein this case the assessee prayed the interpretation of fruit drinks under different heads as contemplated by the government. The court favoured the assessee in clearing the difference of definitions between the fruit drinks and the energy drinks.

Requirements for Appeal to High Court (Section 260A):

Aggrieved Party: You must be a taxpayer or revenue officer unhappy with an ITAT order.
Substantial Question of Law: The appeal must involve a significant legal issue, not just facts.
Time Limit: File within 120 days from receiving the ITAT order.
Form & Memorandum: Submit a formal Memorandum of Appeal in Form 36, clearly stating the question(s) of law.
Fee: Pay the prescribed court fee.

Judgement digest- Saluja And Company vs State Of Haryana And Ors

Procedure:

Identify Legal Issue: Pinpoint the substantial question(s) of law in the ITAT order.
Draft Memorandum: Prepare the appeal document, detailing the facts and grounds, focusing on the legal aspect.
File with HC: File the memorandum with the relevant High Court within 120 days.
HC Formulation: The High Court will formulate the question(s) of law it intends to hear.
Hearing: The appeal is generally heard only on these formulated questions, though the court can allow other questions if necessary.

Stages of Appeal (Briefly):

AO to CIT(A): Form 35 to Commissioner (Appeals).
CIT(A) to ITAT: Form 36 to Income Tax Appellate Tribunal (ITAT).
ITAT to High Court: Section 260A appeal on substantial question of law.
High Court to Supreme Court: Further appeal to the Supreme Court on substantial questions of law (if certified).

High Court Of Punjab And Haryana at Chandigarh, March 13, 2020

The present article deals with the judgement delivered by High Court Of Punjab And Haryana in the case of Saluja And Company vs State Of Haryana And Ors. It deals with interpretation of “fruit drinks” under the Haryana Value Added Tax Act, 2003.

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The facts of the case are as follows- the Appellant is a dealer in aerated drinks, mineral water and a fruit based drink ‘Slice’. The undertaking is registered under Haryana Value Added Tax Act, 2003. The Assessing Authority calculated the tax at the rate of 5.25% tax for Slice . The Revisional Authority claimed that the item should be taxed at the rate of 13.125%. The authorities argued that Slice is an energy drink and not a fruit based drink as it contains only 17 % mango pulp, rest is added minerals, water and sugar content. Therefore, it does not come under any exception laid down in Entry100 D of Schedule C of the Haryana Value Added Tax Act, 2003. Hence, it should be taxed at the rate of 12.5% with applicable surplus charges.

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The appellant on the other hand contends that Slice is a non-aerated drink and its main essence is mango pulp along with sugar and water. Therefore, it is covered under Entry 100 D of Schedule Cof the Haryana Value Added Tax Act, 2003. Hence it should be taxed at the rate of 5%. It was also contended that Slice is a fruit based drink and usually such drinks contain sugar for increasing the taste value and water for adding solubility. Therefore, it cannot be considered as an energy drink. The respondents’ counter argument was that fruit-based drinks contain a substantial amount of fruit pulp but in the case of Slice, it has only 16% mango pulp and therefore it has to be taken as an energy drink. There is a difference between concentrate of fruit, which usually has high fruit content and just a normal drink of fruits. The respondents also contended that Slice is made of mango concentrates after a lot of processing and it cannot be said to be just a mango-based drink.

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The issue before the court was that –

Whether Slice is covered under Entry 100 D of Schedule C of the Haryana Value Added Tax Act, 2003 and hence 5% tax should be applicable or it is an energy drink which would attract tax at the rate of 12.5%?

The court decided in the favour of the appellants. The court observed that if two views are likely then the one that favours the Assessee should be preferred. And, therefore the court her agreed with the point put up by appellants. This reasoning was laid down in the case of Bihar State Electricity Board v. Usha Martin Industries. The court also relied on the reasoning laid down in the case ofPepsico India Holding Pvt. Ltd. v. State of Assam, wherein the court held that the definition of ‘processed vegetable’ should be taken in a more inclusive and broad manner. Similarly, here the court held that the definition of ‘fruit drink’ should be taken in a broad manner and it would therefore include Slice also.

This case is very important as it shared the proposition that when two interpretations are likely then the one favouring the assessee should be taken. It also discusses cases surrounding the interpretation of such phrases laid down in other tax laws.

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For case specific advice please contact best/top/expert Income Tax Lawyers Advocates of Punjab Haryana High Court Chandigarh in Panchkula Mohali Zirakpur Baltana Mullanpur Kharar etc.

Post Written by – Research Team of LegalSeva (LawFirm) of Satish Mishra Advocate. Responses from Google’s AI Overview included in Post.