Facts of the Case

M/S United Breweries Limited filed a writ petition under Article 226 seeking a direction that Entry Sl. No.26(ica) of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 be read to exclude job-work services rendered in relation to the manufacture/conversion of malt from barley from its ambit. The petitioner's grievance concerned the applicable GST rate on job-work services undertaken for converting barley into malted barley, which is subsequently used in the manufacture of malt-based food products as well as alcoholic beverages. While the writ was pending before the Karnataka High Court, the Central Board of Indirect Taxes and Customs (CBIC) issued Circular No.206/18/2023-GST dated 31.10.2023, specifically clarifying the GST rate applicable to such job-work activity.

Issues Involved

  1. Whether job-work services for converting barley into malted barley fall within the higher-rate entry under Notification No.11/2017-Central Tax (Rate), or attract the concessional job-work rate applicable to food processing.
  2. Whether the intervening CBIC clarificatory circular resolved the petitioner's grievance, obviating the need for adjudication on merits.

Petitioner's Arguments

  • Job-work services for manufacture/conversion of malt from barley ought not to be classified under the residuary/higher-rate entry Sl. No.26(ica) of Notification No.11/2017-Central Tax (Rate).
  • Absent clarity, the petitioner and similarly placed job-workers in the malt industry faced uncertainty and potential higher tax exposure.

Respondent's Arguments

  • The Union of India and the GST Council, through counsel, did not contest the petition on merits once the CBIC issued its clarificatory circular addressing the rate applicable to malt job-work.
  • Counsel for both sides jointly submitted that the circular resolved the controversy, rendering further adjudication unnecessary.

Court Order / Findings

  • The counsel for the parties submitted in unison that the petitioner's grievance would not survive in view of CBIC Circular No.206/18/2023-GST dated 31.10.2023.
  • The circular clarifies that job work for processing barley into malted barley attracts GST at 5% insofar as it relates to food and food products, and 18% where the job work relates to manufacture of alcoholic liquor for human consumption.
  • The Court took the circular on record and disposed of the petition without recording independent findings on the classification dispute, since the parties agreed the circular had addressed the grievance.

Important Clarification

  • Job-work services converting barley into malted barley are not to be uniformly taxed at the highest applicable rate; the end-use determines the rate — 5% where the malt is destined for food/food products, and 18% where it is destined for manufacture of alcoholic liquor for human consumption.
  • Assessees with pending rate-classification disputes on similar job-work activity may rely on CBIC Circular No.206/18/2023-GST dated 31.10.2023 for the applicable rate bifurcation.

Sections Involved

  • Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 — prescribes GST rates for services, including job-work entries.
  • Article 226, Constitution of India — writ jurisdiction invoked to challenge the rate-entry's scope.

Decision – In Favour of

Disposed of without adjudication on merits, following the CBIC's clarificatory circular that substantially addressed the petitioner's rate-classification grievance — effectively a practical resolution in favour of the Assessee, though the Court itself did not render an independent finding.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: WRIT PETITION No.20741 of 2023 (T-CUS)
Coram: B M Shyam Prasad, J.
Decision Date: 09.11.2023
Disposal Nature: Disposed of in view of CBIC clarificatory circular

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