Kinley Water Falls Within Water, Not Aerated Or Mineral Water, Comes Within Tax Free List: Orissa High Court

The Orissa High Court held that the sale of packaged drinking water under the brand name Kinley Water falls within the expression "water but not aerated or mineral water sold in bottles or sealed containers," which is covered under Entry No.39 of the Tax-Free List.

The division bench of Chief Justice S. Murlidhar and Justice Murhari Sri Raman has observed that the packaged drinking water sold under the brand name "Kinley Water" is nothing but purified water.

The respondent, Hindustan Coca-Cola Beverages Pvt. Ltd., claimed exemption in respect of the sale of "packaged drinking water," which was sold under the brand name "Kinley Water," treating it as embraced within the meaning of entries in Serial No. 39 of the Schedule of Goods declared exempt from the levy of sales tax.

In the assessment for the year 2004-05 under Section 12(4) of the Odisha Sales Tax Act, 1947, the Assessing Authority rejected the claim of exemption.

The respondent contended that there are three different kinds of water, namely aerated water, mineral water, and water, contemplated in Entry 39 of the tax-free list and Entry 4 of the taxable list, and the words "in bottles or in sealed containers" used therein obviously mean "packaged form". The "packaged drinking water" sold by the company under the brand name Kinley Water does fall within the ambit of Entry 39 of the Tax-Free List and not Entry 4 of the Taxable List.

The department referred to the information available on the web portal of the company, which mentions that "every drop of Kinley goes through a rigorous and intensive 10-step purification process with various stages of filtration, disinfection, and mineralization". It demonstrates that "in the nutritional information of Kinley water, the ingredients of the water are treated water, salts of sodium, and magnesium. Therefore, the subject commodity is nothing but mineral water and would be within the scope of Entry 4 of the List of Goods subject to the Levy of Sales Tax, attracting a levy of 12% tax.

The court noted that the department has failed to appreciate that the processes described by the company are nothing more than the purification of water to make it more potable through the processes undertaken by the company for making water possible to reach the people for safe drinking purposes.

Case Title: State of Odisha Versus M/s. Hindustan Coca-Cola

Case No: STREV No. 26 of 2017

Citation: 2023 LiveLaw (Ori) 35

Date: 27.02.2023

Counsel For Petitioner: Susanta Kumar Pradhan and Sunil Mishra

Counsel For Respondent: Monish Panda, Anup Narayan Mohanty, Aditya Singh Mohanty

Click Here To Read The Order