Bombay HC Refuses Writ of Coca -Cola India That Challenged SCN of GST Dept

Yet another setback to one of the Corporate Giant Coca-Cola, India who tries to play tricky games with tax authorities due to the influence they have in the society. The writ of Hindustan Coca-Cola Beverages Private Limited (HCCBPL), a subsidiary of Coca-Cola India that challenged the show-cause notice issued to it by GST authorities relating to the undue advantage of CENVAT credit on the service tax taken by HCCBPL was quashed by the honourable Bombay High Court. The honourable commented that the company is not eligible to CENVAT as per rule 2(l) of the CENVAT Credit Rules post amendment.

The CENVAT Credit was availed by HCCBPL on transportation charges for moving its product from its factories and depots to its customers’ places which it was not entitled to as per GST rules. A similar writ was filed by HCCBPL in the Gujarat High Court in India in the year 2019 and that too was quashed.

“In the show-cause notice issued by the GST Directorate, the department claimed that the unit of HCCBPL took advantage of CENVAT credit on service tax that is payable on the transportation charges done for moving its products from its factories and depots to its points of customers, which it was not permitted to as per GST rules.”

“That petitioner had intentionally and deliberately suppressed the fact of taking CENVAT credit of outward GTA service, and with mala fide intent to avail ineligible CENVAT credit, had fraudulently contravened various statutory provisions, the court observed.”

“The GST argument was as follows: Had the investigation not been initiated, such ineligible CENVAT credit by the petitioner would not have been unearthed. Therefore, section 11A (4) of the Act would be applicable to enable invocation of the extended period of limitation.”

“The company claimed that it has taken the advantage of CENVAT credit on services that are utilized in the manufacturing of the final products according to rule 2(k) and (l) of the CENVAT Credit Rules, 2004.”

The investigation was started by the Investigation wing of GST, Mumbai Zone against HCCBPL in the year 2018.

“In a show-cause notice, the GST department The Central Board of Indirect Taxes and Customs (CBIC) states that its offices so as not to give show-cause notices (SCNs) for service tax defaults. Read also wanted to know, Why irregular CENVAT credit of Rs.2.02 crore for the period from April, 2014 to June, 2017 wrongly availed of, should not be recovered under Section 11A(4) of the Act read with Rule 14 of the CENVAT Credit Rules together with recovery of interest and imposition of penalty.”

HCCBPL is in the trade and business of making and supplying beverages and packaged drinking water. It sells and distributes beverages under popular brand names such as Coca-Cola, Thumbs Up, Sprite, Fanta and Limca.