The Madras High Court has held that no Goods and Service Tax (GST) under Reverse Charge Mechanism (RCM) is applicable on procurement of “holographic stickers” for affixing on alcoholic liquor bottles.
The bench of Justice C.Saravanan has observed that procurement of “holographic labels” from Govt. for affixing in the alcoholic liquor bottles, is procurement of “goods”. Refund of GST wrongly paid by the taxpayer under RCM, treating it as supply of “service” is to be granted.
The petitioner/assessee is engaged in the manufacture and sale of “Beer” from its Brewery. As is required under the Excise Policy of the State Government, the petitioner has to affix “holographic stickers” on every bottle of Beer which is sold in the retail market through TASMAC. It is intended to ensure that no spurious liquor is sold in the market.
It also indicates payment of State Excise on every bottle of Beer sold by the petitioner.
The petitioner has drawn attention to liquor policy of the Government of Tamil Nadu as also some of the laboratories giving details of the purpose of Holographic Excise Adhesive Label (Heal) which indicates these “holographic stickers” are intended to ensure collection of tax and also to protect consumer and to curb sale of illicit liquor in the market.
The petitioner was under a bona fide belief that the petitioner was liable to pay tax on the “holographic stickers” purchased from the Prohibition and Excise Department of the State on Reverse Charge Basis (RCB) in terms of Section 9(3) of the respective GST enactments of 2017 read with Notification No.13/2017 Central Tax (Rate) dated 28.06.2017.
The petitioner contended that the “holographic stickers” purchased by the petitioner from the Prohibition and Excise Department was supply of goods and not service and therefore not liable to tax in terms of Notification No.13/2017 Central Tax (Rate) dated 28.06.2017.
The petitioner submitted that service by way of grant of alcoholic liquor licence, against consideration in the form of license fee or application fee or by whatever name it is called by the State Government in which it is engaged as public authorities shall be treated neither as a supply of goods nor a supply of service in terms of Notification No.25/2019 – Central Tax (Rate) dated 30.09.2019.
The petitioner submitted that the petitioner was entitled to refund of the amount paid on tax on Reverse Charge Basis under Notification No.13/2017 Central Tax (Rate) dated 28.06.2017.
The case of the petitioner is that since the petitioner is purchasing “holographic stickers” from the Prohibition and Excise Department, it is not taxable in the hands of the petitioner as there is no Notification issued under the provisions of the respective GST Enactment of 2017, which mandates payment of tax on Reverse Charge Basis (RCB) for sale of holographic stickers.
The court held that the question of treating the supply of “holographic stickers” (excise labels) cannot be treated as a “composite service” along with grant of liquor license under the provisions of the Tamil Nadu prohibition Act, 1937. In any event, supply of holographic stickers (excise labels) is supply of “goods” simplicitor and not a supply of “service”.
Case Details
Case Title: M/s.United Breweries Limited Versus The Joint Commissioner of GST and Central Excise
Case No.: W.P.No.14080 of 2021
Date: 24.01.2025
Counsel For Petitioner: G.Natarajan
Counsel For Respondent: Anu Ganesan
