Karnataka High Court
M/S. Anheuser Busch Inbev India Limited vs The Joint Commissioner Of on 23 June, 2023
Author: P.S.Dinesh Kumar
Bench: P.S.Dinesh Kumar
CRP No.526/2022
C/W CRP No.527/2022
CRP No.530/2022
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 23RD DAY OF JUNE 2023
PRESENT
THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
C.R.P No. 526 OF 2022
C/W
C.R.P No. 527 OF 2022
C.R.P No. 530 OF 2022 (TAX)
IN CRP No.526 OF 2022
BETWEEN:
M/s. ANHEUSER BUSCH INBEV INDIA LIMITED
(FORMERLY KNOWN AS SAB MILLER INDIA LIMITED)
A COMPANY UNDER COMPANIES ACT (1), 1956
AND HAVING ITS OFFICE AT 6TH FLOOR
MFAR GREEN HEART BUILDING
MANYATA TECH PARK, NAGAVARA
BENGALURU-560 045.
AND REPRESENTED BY ITS
SENIOR MANAGER
MR. DINAKAR .R ....PETITIONER
(BY Mr. PRASAD PARANJAPE, ADVOCATE FOR
Mr. BHARATH JANARTHANAN, ADVOCATE)
AND:
1. THE JOINT COMMISSIONER OF
COMMERCIAL TAXES, (APPEALS-6)
BENGALURU, TTMC, B BLOCK
CRP No.526/2022
C/W CRP No.527/2022
CRP No.530/2022
2
BMTC BUILDING
SHANTHINAGAR
BENGALURU-560 027.
2. THE DEPUTY COMMISSIONER OF
COMMERCIAL TAXES, (AUDIT)-6.6
DVO-VI, KIADB BUILDING, B-BLOCK
THIRD FLOOR, PEENYA INDUSTRIAL AREA
PEENYA SECOND STAGE
BENGALURU-560 058.
3. STATE OF KARNATAKA
BY ITS CHIEF SECRETARY
TO THE GOVERNMENT
VIDHANA SOUDHA
BENGALURU-560 001. ...RESPONDENTS
(BY SHRI. JEEVAN J. NEERALGI, AGA)
THIS CRP IS FILED UNDER SECTION 15-A(1) OF THE
KARNATAKA TAX ON ENTRY OF GOODS ACT, 1979, AGAINST THE
ORDER DATED 23.05.2022 PASSED IN STA NO.232/2017 ON THE FILE
OF THE KARNATAKA APPELLATE TRIBUNAL, BENGALURU, ALLOWING
THE APPEAL AND SETTING ASIDE THE ORDER DATED 06.02.2017
PASSED IN KTEG AP NO.15/15-16 ON THE FILE OF THE JOINT
COMMISSIONER OF COMMERCIAL TAXES (APPEAL-6), BANGALORE.
DISMISSING THE APPEAL AND UPHOLDING THE RE-ASSESSMENT
ORDER DATED 11.12.2015 PASSED BY THE DEPUTY COMMISSIONER
OF COMMERCIAL TAXES (AUDIT)-6.6, DVO-6, BANGALORE FILED
UNDER SECTION 5(4) R/W SEC.7(2) AND 7(3) OF THE KTEG ACT, 1979
FOR THE TAX PERIODS FROM APRIL 2011 TO MARCH 2012.
IN CRP No.527 OF 2022
BETWEEN:
M/s. ANHEUSER BUSCH INBEV INDIA LIMITED
(FORMERLY KNOWN AS SAB MILLER INDIA LIMITED)
A COMPANY UNDER COMPANIES ACT (1), 1956
AND HAVING ITS OFFICE AT 6TH FLOOR
MFAR GREEN HEART BUILDING
MANYATA TECH PARK, NAGAVARA
CRP No.526/2022
C/W CRP No.527/2022
CRP No.530/2022
3
BENGALURU-560 045.
AND REPRESENTED BY ITS
SENIOR MANAGER
MR. DINAKAR R ....PETITIONER
(BY Mr. PRASAD PARANJAPE, ADVOCATE FOR
Mr. BHARATH JANARTHANAN, ADVOCATE)
AND:
1. THE JOINT COMMISSIONER OF
COMMERCIAL TAXES, (APPEALS-6)
BENGALURU, TTMC, B BLOCK
BMTC BUILDING, SHANTHINAGAR
BENGALURU-560 027.
2. THE DEPUTY COMMISSIONER OF
COMMERCIAL TAXES, (AUDIT)-6.6
DVO-VI, KIADB BUILDING, B-BLOCK
THIRD FLOOR, PEENYA INDUSTRIAL AREA
PEENYA SECOND STAGE
BENGALURU-560 058.
3. STATE OF KARNATAKA
BY ITS CHIEF SECRETARY
TO THE GOVERNMENT
VIDHANA SOUDHA
BENGALURU-560 001. ...RESPONDENTS
(BY SHRI. JEEVAN J. NEERALGI, AGA)
THIS CRP IS FILED UNDER SECTION 15-A(1) OF THE
KARNATAKA TAX ON ENTRY OF GOODS ACT, 1979, AGAINST THE
ORDER DATED 23.05.2022 PASSED IN STA NO.231/2017 DISMISSING
THE APPEAL AND CONFIRMING THE ORDER DATED 06.02.2017 PASSED
IN KTEG AP NO.18/15-16 ON THE FILE OF THE JOINT COMMISSIONER
OF COMMERCIAL TAXES (APPEAL-6) BANGALORE, DISMISSING THE
APPEAL AND UPHOLDING THE REASSESSMENT ORDER DATED
06.11.2015 PASSED BY DEPUTY COMMISSIONER OF COMMERCIAL
TAXES (AUDIT)6.6, DVO-6, BENGALURU FILED U/S 6(1), SEC.7(2) AND
7(3) OF THE KTEG ACT, 1979 FOR THE TAX PERIOD OF 2008-09.
CRP No.526/2022
C/W CRP No.527/2022
CRP No.530/2022
4
IN CRP No.530 OF 2022
BETWEEN:
M/s ANHEUSER BUSCH INBEV INDIA LIMITED
(FORMERLY KNOWN AS SAB MILLER INDIA LIMITED)
A COMPANY UNDER COMPANIES ACT (1), 1956
AND HAVING ITS OFFICE AT 6TH FLOOR
MFAR GREEN HEART BUILDING
MANYATA TECH PARK, NAGAVARA
BENGALURU-560 045.
AND REPRESENTED BY ITS
SENIOR MANAGER
MR. DINAKAR .R ....PETITIONER
(BY Mr. PRASAD PARANJAPE, ADVOCATE FOR
Mr. BHARATH JANARTHANAN, ADVOCATE)
AND:
1. THE JOINT COMMISSIONER OF
COMMERCIAL TAXES, (APPEALS-6)
BENGALURU, TTMC, B BLOCK
BMTC BUILDING, SHANTHINAGAR
BENGALURU-560 027.
2. THE DEPUTY COMMISSIONER OF
COMMERCIAL TAXES, (AUDIT)-6.6
DVO-VI, KIADB BUILDING, B-BLOCK
THIRD FLOOR, PEENYA INDUSTRIAL AREA
PEENYA SECOND STAGE
BENGALURU-560 058.
3. STATE OF KARNATAKA
BY ITS CHIEF SECRETARY
TO THE GOVERNMENT
VIDHANA SOUDHA
BENGALURU-560 001. ...RESPONDENTS
(BY SHRI. JEEVAN J. NEERALGI, AGA)
THIS CRP IS FILED UNDER SECTION 15-A(1) OF THE
KARNATAKA TAX ON ENTRY OF GOODS ACT, 1979, AGAINST THE
CRP No.526/2022
C/W CRP No.527/2022
CRP No.530/2022
5
ORDER DATED 23.05.2022 PASSED IN STA NO.230/2017 ON THE FILE
OF THE KARNATAKA APPELLATE TRIBUNAL, BENGALURU, DISMISSING
THE APPEAL AND CONFIRMING THE ORDER DATED 06.02.2017 PASSED
IN KTEG AP NO.16/15-16 ON THE FILE OF THE JOINT COMMISSIONER
OF COMMERCIAL TAXES APPEAL-6, BANGALORE, DISMISSING THE
APPEAL AND UPHOLDING THE REASSESSMENT ORDER DATED
06.11.2015 PASSED BY THE DEPUTY COMMISSIONER OF COMMERCIAL
TAXES (AUDIT)6.6, DVO-6, BENGALURU FILED U/S 6(1) R/W SEC.7(2)
AND 7(3) OF THE KTEG ACT, 1979 FOR THE TAX PERIOD OF 2006-07.
THESE CRPs HAVING BEEN HEARD AND RESERVED FOR ORDERS
ON 17.03.2023, COMING ON FOR PRONOUNCEMENT OF ORDERS THIS
DAY, P.S. DINESH KUMAR J., PRONOUNCED THE FOLLOWING:-
ORDER
These Revision Petitions by the assessee, directed against the common order dated May, 23 2022, in STAs No. 227 to 232/2021 for A.Ys1. 2009-10, 2010-11, 2011-12 passed by Full Bench of KAT2, Bengaluru have been filed to consider following questions of law:
1. Whether the Impugned Order upholding the assessment orders passed under Section 5(4) of the KTEG Act in STA 232/2017 for F.Y. 2011-12 is in accordance with law?
2. Whether the Impugned Order has erroneously upheld the non-speaking Tribunal Order which confirmed the levy of tax against the Petitioner on Hops pellets and incorrect calculation of turnover of entry tax on maize flakes and 1 Assessment Year 2 Karnataka Appellate Tribunal CRP No.526/2022 C/W CRP No.527/2022 CRP No.530/2022 6 confirmed entry tax liability on goods purchased within the same local area for F.Y. 2011-12?
3. Whether the Impugned Order has erroneously confirmed the levy of interest for F.Y. 2011-12 against the Petitioner even when there has been no 'default' in the payment of taxes as mandated by Section 7(2) of the KTEG Act?
4. The Impugned Order has erroneously confirmed the levy of penalty for F.Y. 2011-12 against the Petitioner as per the provisions of Section 7(3) of the KTEG Act?
2. Heard Shri. Prasad Paranjape, learned Advocate for the Assessee and Shri. Jeevan Neeralgi learned AGA for the Revenue.
3. Briefly stated the facts of the case are, assessee-
M/s. Anheuser Busch Inbev India Ltd., is a company3 engaged in the manufacture and sale of beer under various brands. It procures agricultural produce such as barley/malt, maize flakes, hops pellets which are used as raw material in the manufacture of beer. Pursuant to order of this Court dated September 14, 2015 in State of Karnataka Vs. United 3 Registered under the Companies Act, 1956 CRP No.526/2022 C/W CRP No.527/2022 CRP No.530/2022 7 Breweries Limited4 (hereinafter referred to as 'United Breweries' for short), a notice dated November 26, 2015 was issued to the assessee proposing to impose tax under Karnataka Tax On Entry of Goods Act, 19795 on barley/malt, maize flakes and hops pellets. The said demand has been confirmed by the DCCT6, the KAT and a larger bench of KAT. Hence, these petitions by assessee.
4. Shri. Prasad Paranjape, for the Assessee, praying to allow the petitions submitted that:
tax has been levied on the basis of the order of this Court in United Breweries and the facts of that case are not similar to assessee's case;
assessee is not carrying out any activity which is outside the scope and ambit of cleaning, grading, sorting or drying which are excluded under Section 2A(1) of the KTEG Act;
4 CRP Nos. 204, 230 and 103 of 2011 5 KTEG Act for short 6 Deputy Commissioner of Commercial taxes (Audit)-6, Bangalore CRP No.526/2022 C/W CRP No.527/2022 CRP No.530/2022 8 maize flakes and malted barley are already 'fit for consumption' even before subjected to any process. The aspect of goods being 'fit for consumption' was not under consideration in United Breweries; assessee had already paid Entry Tax on 'hops pellet' under Section 7(1) of the KTEG Act as the law then existed. The Revenue has imposed additional tax based on the judgment of this Court and interest thereon under Section 7(2) of the KTEG Act. Thus assessee had not committed any 'default' in payment of advance tax during A.Y. 2011-12. Therefore, the view taken by AO7, FAA8 and KAT are unsustainable in law.
5. In support of his submission, Shri. Paranjape has placed reliance upon following authorities:
State of Karnataka Vs. Jayce Trading Corporation9; State of Karnataka Vs. Rane (Madras) Ltd.10; 7 Assessing Officer 8 First Appellate Authority 9 STRP No.1 of 2017 dated 2.02.2021 CRP No.526/2022 C/W CRP No.527/2022 CRP No.530/2022 9
6. Opposing the petitions, Shri. Neeralgi, for the Revenue submitted that:
issue whether Maize, Malt and Hop pellets could be classified as 'agricultural produce' has been answered in the negative in United Breweries.; provisions of Section 7(2) and 7(3) of the KTEG Act has been rightly invoked by the Revenue since assessee has not paid Entry Tax as and when the Scheduled Goods caused entry into local area;
in support of his contentions, Shri. Neeralgi has placed reliance on Forsoc Chemicals (India) Pvt. Ltd Vs. The State of Karnataka11.
7. We have carefully considered rival contentions and perused the records.
10
CRP No. 44 of 2017 dated 25.09.2021 11 STRP Nos.130,136-168 & 169-170 of 2014 dated 05.11.2014 CRP No.526/2022 C/W CRP No.527/2022 CRP No.530/2022 10
8. In substance, Shri. Paranjape's contention is, Revenue has imposed tax based on the decision in United Breweries. Assessee had paid applicable tax for A.Y. 2011-12 and decision in United Breweries was delivered Subsequently. Therefore, Revenue's claim is unsustainable because the period under consideration is prior to the date of judgment in United Breweries.
9. Undisputed facts of the case are, assessee purchases Maize Flakes, Malted Barley, Malt conversion and Malt extract and these products are used as raw materials in manufacture of beer.
10. The two main issues that arise in these petitions are:
Whether Maize Flakes, Malted Barley, Malt conversion and Malt extract are taxable under KTEG Act?CRP No.526/2022
C/W CRP No.527/2022 CRP No.530/2022 11 If taxable, whether the interest and penalty could be imposed for the period prior to the decision in United Breweries?
11. In United Breweries, one of the issues under consideration was:
"In the facts and circumstances of the case whether the Tribunal is justified in giving a finding that malted barley/barley malt is an agricultural produce falling under II Schedule to the K.T.E.G. Act and is exempted from the levy of tax under the K.T.E.G. Act?"
12. This Court has answered the above question in the negative which means that the above goods are taxable.
13. Admittedly, the decision in United Breweries is rendered on September 14, 2015. Hence, Maize Flakes, Malted Barley, Malt conversion and Malt extract became taxable pursuant to the decision in United Breweries. Assessee was paying tax on hops pallets prior to the said decision.
CRP No.526/2022C/W CRP No.527/2022 CRP No.530/2022 12
14. Revenue has sought to impose tax, interest and penalty on Maize Flakes, Malted Barley, Malt conversion and Malt extract for the period prior to the decision in United Breweries i.e. September 14, 2015. The same is not sustainable and this view is in consonance with the decision of this Court in Jayce Trading Corporation wherein it is held as follows:
"7. In the light of the aforesaid decision of the Supreme Court passed on 12.09.2013, the Commissioner clarified the issue with regard to tax liability in respect of cutting tools on 07.07.2014. In these appeals, the subject matter pertains to Assessment Years 2001-02 to 2008-09. The dealer admittedly paid the taxes and the amount of penalty between the period from 03.03.2010 to 31.03.2011 i.e. prior to passing of the order dated 07.07.2012 and much prior to issuance of clarification by the Commissioner with regard to tax liability on 07.07.2014. Therefore, the provisions of Section 7(2) of the Act could not be invoked in the case of the assessee."
(Emphasis Supplied)
15. In Jayce Trading Corporation, the assessee therein had paid taxes for period between 03.03.2010 and 31.03.2011 prior to the date on which the Commissioner CRP No.526/2022 C/W CRP No.527/2022 CRP No.530/2022 13 had clarified the issue on 07.07.2014. In the case on hand, the basis to impose tax is the decision in United Breweries which has been rendered on 15.09.2015. Therefore, imposition of tax prior to the decision in United Breweries is not sustainable. For the same reason, interest and penalty are also not sustainable.
16. It was urged by Shri. Paranjape that the aspect of 'fit for consumption' was not considered in United Breweries. We have carefully perused the said authority. We may record that the aspect of 'fit for consumption' has been considered by this Court in paragraphs No. 25 to 29 in United Breweries. Therefore, this contention is untenable and accordingly, rejected.
17. In light of above discussion, the following:
ORDER
(a) Revision Petitions are allowed;
(b) Order in STAs No.227 to 232/2021 dated May, 23 2022 passed by the KAT, Bengaluru confirming the CRP No.526/2022 C/W CRP No.527/2022 CRP No.530/2022 14 demand of tax on malt, maize flakes and hops pellets, so far as imposing tax, interest and penalty under Sections 7(1), 7(2) and 7(3) of the KTEG Act for the period prior to 14.09.2015 is set-aside.
No costs.
Sd/-
JUDGE Sd/-
JUDGE SPS