Nescafé Premix Is 'Instant Coffee', Attracts Lower Sales Tax Rate: Bombay High Court
The Bombay High Court in a matter concerning classification of Nescafé Premix and if it was exigible to sales tax at the rate of 8% or 16%, has held that a premix resulting in 'Coffee and Instant drinks' would be classifiable as such, attracting lower rate of tax. (8% not 16%). In a judgment dated November 27, 2025 the Bench comprising Justice M.S. Sonak and Justice Advait...
The Bombay High Court in a matter concerning classification of Nescafé Premix and if it was exigible to sales tax at the rate of 8% or 16%, has held that a premix resulting in 'Coffee and Instant drinks' would be classifiable as such, attracting lower rate of tax. (8% not 16%).
In a judgment dated November 27, 2025 the Bench comprising Justice M.S. Sonak and Justice Advait M. Sethna re-iterated the cardinal principle of taxation in the context of the Bombay Sales Tax Act, 1959 that specific entries in a tax schedule should prevail over general entries. On the classification of Nescafé Premix under by applying the common parlance test the High Court ruled that Nescafé Premix marketed, traded as such had created a consumer perception of 'Instant coffee'.
The Sales Tax Department sought to classify Nescafé Premix under Schedule Entry C-II-3 of the Bombay Sales Tax Act, 1959 as Powders/tablets/crystals for non-alcoholic beverages citing low coffee content viz. Soluble Coffee Powder 8.5%. On appeal, the Maharashtra Sales Tax Tribunal (the Tribunal) held that ingredient percentage was not decisive. The Tribunal relied on Supreme Court dicta in a 1999 case of Forage & Co. v. Municipal Corporation of Greater Bombay.
The High Court referred to the two competing entries, C-II-3 attracting tax sales tax of 8% and C-II-18 (2) attracting sales tax of 16% in terms of the Schedule to the Bombay Sales Tax Act and perused the product literature to uphold the decision of the Tribunal that the concept of instant coffee must conform to the modern development and modern perceptions.
As opposed to the view of Commissioner of Sales Tax that Nescafé Premix contains ingredient which resulted in “coffee a beverage”, the High Court conclusively held that the Premix was used for preparing 'Instant Coffee' through a vending machine by simply pouring hot water into it. It outlined product literature relating to Nescafé Premix , 8.5% Soluble Coffee Powder, 54% Sucrose, 37% Partially Skimmed Milk Powder, 0.5% Maltodextrin. Thereafter, the High Court relied on a bevy of decisions including harat Forge & Press Industries v. Collector of Central Excise, Connaught Plaza Restaurant, La Bella Products, Ajay Industrial Packing Pvt. Ltd. which dealt with interpretation of tax schedules illustrating that even small quantities (like salt in food) don't change classification of a certain kind of preparation.
In view of the above, the Sales Tax Reference was answered in favour of Nestlé India Ltd. and against Sales Tax Department.
Case Name: The Commissioner of Sales Tax, Maharashtra vs. Nestle India
Case No. : Sales Tax Reference NO. 24 OF 2010
For Applicant: Additional Government Pleader Jyoti Chavan
For Respondent: Advocates Nikita Badheka, Lata Nagal