The Bombay High Court has granted interim relief to Hindustan Coca-Cola Beverages Pvt. Ltd by staying a ₹2,500 crore GST demand issued by the tax authorities.
The court observed that the basis of the demand appeared to be flawed.
Allegations Of Undervaluation
The case began with a show-cause notice issued on August 4, 2024, alleging that the company undervalued goods supplied over seven assessment years. Authorities said the company used a retrospective discounting model to lower the taxable value of its supplies.
According to the GST department, distributors first gave discounts to retailers. Based on those past discounts, Hindustan Coca-Cola later adjusted its own discounts to the distributors.
The tax authorities argued this approach was designed to reduce the transaction value and evade taxes.
Company’s Legal Argument
Hindustan Coca-Cola challenged the tax department’s claim, arguing that its discount practices were legitimate and transparent. The company said the discounts were properly recorded in its Distributor Management System and were in line with Section 15(1) of the CGST Act, which bases the taxable value on actual transaction values.
A division bench of Justice B.P. Colabawalla and Justice Firdosh P. Pooniwalla noted that the revenue’s interpretation of Section 15(3)(a) of the CGST Act appeared “prima facie incorrect.” The court added that the department’s logic could contradict the broader principles outlined in Section 15(1).
Fresh Petition Filed After Modified Order
After the GST department passed an order confirming its position on January 23, 2025—and issued a corrigendum on January 30 Hindustan Coca-Cola withdrew an earlier writ petition and filed a fresh one challenging both the show-cause notice and the order.
Court Grants Interim Relief
In its April 1 order, the court stated: “We find that a strong prima facie case is made out for staying the effect and implementation of the impugned order.” It also restrained the GST authorities from taking any coercive action against the company during the interim period.
The Court has directed the tax department to submit its reply by April 15, while Hindustan Coca-Cola may file its rejoinder by April 22. The next hearing in the matter is scheduled for April 29.
Legal Representation
Senior Advocate S. Ganesh, along with advocates Ajay Aggarwal, Jitendra Motwani, Rinkey Jassnja, and Diva Devarsha—briefed by Economic Laws Practice—appeared for Hindustan Coca-Cola. Advocate Maya Mazumdar and Advocate Suman Kumar Das represented the Joint Commissioner of CGST.
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