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2025 Supreme(Online)(Mad) 29507
IN THE HIGH COURT OF JUDICATURE AT MADRAS
C.SARAVANAN, J
M/s.United Breweries Limited – Appellant
Versus
The Joint Commissioner – Respondent
W.P.No.14080 of 2021B | W.M.P.No.14955 of 2021
For the Appellants/Petitioners: Mr.G.Natarajan
For the Respondents: Ms.Anu Ganesan
The supply of holographic stickers is classified as goods, not services, under GST, and prior tax payments made under a mistaken belief are refundable.
Headnote:(A) Central Goods and Services Tax Act, 2017 - Sections 54 and 9(3) - GST refund claims - The petitioner sought a refund for GST paid on holographic stickers, asserting they were goods, not services, and thus not taxable under reverse charge mechanism - The court ruled that the supply of holographic stickers is a supply of goods, not a service, and the prior payment of tax was a mistake. (Paras 4.3, 7, 9, 51, 54)
(B) Composite Supply - The court clarified that the supply of holographic stickers is not part of a composite supply with the grant of a liquor license, as they are distinct activities. (Paras 40, 48)
Facts of the case:
The petitioner, engaged in the manufacture of beer, was required to procure holographic stickers from the Prohibition and Excise Department for compliance with state regulations, believing they were liable to pay GST on these stickers under the reverse charge mechanism.
Findings of Court:
The court found that the holographic stickers are goods and not services, allowing the petitioner's claim for a refund of the GST paid.
Issues: The primary issues addressed were whether the holographic stickers constituted goods or services and whether the supply was part of a composite supply with the grant of a liquor license.
Ratio Decidendi: The court held that the holographic stickers are classified as goods under the GST Act and that the supply of these stickers does not form a composite supply with the licensing service.
Result: The writ petition was allowed, and the impugned orders were quashed, directing the processing of refund claims.
| Table of Content |
|---|
| 1. petitioner's appeal against gst order (Para 1 , 2) |
| 2. original authority's rejection of refund claims (Para 3 , 4) |
| 3. petitioner's understanding of gst obligations (Para 5 , 6 , 7 , 8 , 9) |
| 4. government's notification on liquor license (Para 10 , 11 , 12) |
| 5. mistaken payment of gst by petitioner (Para 13 , 14 , 15) |
| 6. respondent's arguments against petitioner's claims (Para 16 , 17 , 18 , 19 , 20 , 21) |
| 7. court's examination of gst supply classifications (Para 22 , 23 , 24) |
| 8. legal definitions and implications of supply (Para 25 , 26 , 27 , 28 , 29 , 30) |
| 9. definition of 'label' under various laws (Para 31 , 32 , 33 , 34 , 35 , 36) |
| 10. court's finding on supply nature (Para 37 , 38 , 39 , 40 , 41 , 42) |
| 11. non-composite nature of supply (Para 43 , 44 , 45 , 46 , 47) |
| 12. court's conclusion on supply definitions (Para 48 , 49 , 50) |
| 13. petitioner's right to claim refund (Para 51 , 52 , 53) |
| 14. final order of the court (Para 54) |
ORDER
The petitioner is before this Court against the Impugned Order-in-Appeal No.03/2021 dated 21.01.2020 passed by the 1st respondent Joint Commissioner of GST & CE (Appeals II).
2. By the said Impugned Order-in-Appeal dated 21.01.2021, the 1st respondent has rejected the Appeal No.114/2020/GSTA-II/ADC/CO filed by the petitioner against Order-in-Original Notification No.13/2017 Central Tax (Rate) dated 20.08.2020 bearing reference: RFD-06 passed by the second respondent.
3. The 2nd respondent as the Original Authority had earlier rejected the refund claims of the petitioner with the following observations:-
“4.3 In the instant case, the excise labels supplied by the state prohibition department appeared to be in the nature of composite supply as the labels are supplied by the state excise department for affixing on the liquor bottles manufactured by the tax payer as per the relevant instructions / procedures prescribed by the State Government to indicate compliance and the labels are not for sale as such by the taxpayer. It, therefore, appears that the supply of labels by the Department of Prohibition and Excise, Government of Tamil Nadu is naturally bundled and supplied in conjunction with the service provided by the said department to the taxpayer to comply with the requirement to indicate the duty paid nature of the ultimate goods supplied by the taxpayer.
4.4 Further, on verification of the demand report ID No.DI2018041200004 and e-acknowledgement reference details of the Department of Prohibition and Excise, Government of Tamil Nadu furnished by the taxpayer, it appeared that the demand is in the form of "Fee Type" and the activity is also mentioned as a service I.e. "Service Name: Label cost". It, therefore, appeared that the supply of labels by the State Excise Department is 'not' goods as contended by the tax payer but only part of a composite supply where 'service' is the principal supply and the consideration is collected in the form of “Fee”.
13. It could be seen from the aforementioned reference that the Department of Prohibition have classified the supply of Polyster Excise Hologram labels under SAC code “999119-Other Administrative services of the Government nowhere else classified" and mentioned the rate of tax as 18% (CGST-9% SGST-9%) payable under RCM by the tax payer. Hence, It is apparent that the supply of Polyster Excise Hologram labels for a fee is not an independent activity and is supplied in the course of provisions related to affixing of the same on the Beer bottles before being supplied to Tasmac. It is, therefore, established beyond doubt that the supply of holograms by the Department of Prohibition & Excise, Govt. of Tamil Nadu to the taxpayer is predominantly only as service and not supply of goods.
14. Having determined the nature of activity involved in the supply of labels based on the factual position corroborated by the letter dated 26.09.2017 of the Department of Prohibition & Excise, Govt. of Tamil Nadu, I hold that the taxpayer is liable to pay GST on the subject
