Facts of the Case

The petitioner, M/s United Breweries Limited, a company incorporated under the Companies Act, 1956, represented by its authorised signatory, approached the High Court of Karnataka at Bengaluru under Article 226 against the Union of India, the GST Council, the Central Board of Indirect Taxes and Customs, and the Malt Manufacturers Association, seeking a direction that Entry S.No.26(ica) of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 be read to exclude job-work services for manufacture/conversion of malt from barley — that is, contesting the GST rate applicable to such job-work. While the petition was pending, the CBIC issued Circular No.206/18/2023-GST dated 31.10.2023 clarifying that job-work for processing barley into malted barley attracts GST at 5% where it relates to food and food products, and 18% where it relates to manufacture of alcoholic liquor for human consumption. Coram: Justice B.M. Shyam Prasad; order dated 9 November 2023.

Issues Involved

  1. Whether the disputed rate of GST applicable to job-work services for conversion of malt from barley continued to survive as a live controversy after issuance of CBIC Circular No.206/18/2023-GST.

Petitioner's Arguments

  • Entry S.No.26(ica) of Notification No.11/2017-Central Tax (Rate) should not be read to cover job-work services for manufacture/conversion of malt from barley, and sought a direction accordingly to resolve rate uncertainty for the malting industry.

Respondent's Arguments

  • Counsel for the Union of India and for the GST Council/CBIC jointly submitted that the grievance no longer survived, given the intervening CBIC Circular No.206/18/2023-GST dated 31.10.2023, which itself clarified the applicable rate.

Court Order/Findings

  • Counsel for both sides submitted in unison that the petitioner's grievance would not survive given the CBIC's clarificatory Circular dated 31.10.2023.
  • The Court took Circular No.206/18/2023-GST on record, which clarifies that job-work for processing barley into malted barley attracts 5% GST for food and food products and 18% GST where it relates to manufacture of alcoholic liquor for human consumption, and disposed of the petition on that basis without adjudicating the challenge on merits.

Important Clarification

  • CBIC Circular No.206/18/2023-GST dated 31.10.2023 clarifies that job-work services for converting barley into malted barley are taxed at a differential GST rate depending on end-use: 5% where the malt is used for food/food products, and 18% where used in manufacture of alcoholic liquor for human consumption.
  • Where a subsequent CBIC circular directly resolves the rate-classification grievance raised in a pending writ petition, courts will dispose of the matter by taking the circular on record rather than deciding the underlying interpretation question themselves.

Sections Involved

  • Notification No.11/2017-Central Tax (Rate), Entry S.No.26(ica) — prescribes GST rate for job-work services, the entry under challenge.
  • Circular No.206/18/2023-GST dated 31.10.2023 — CBIC clarification on GST rate for job-work of malting barley, which resolved the dispute.
  • Article 226, Constitution of India — writ jurisdiction invoked.

Decision – In Favour of

Disposed of with the grievance resolved via the CBIC clarification, effectively in favour of the Assessee to the extent the clarification confirms a differentiated, lower 5% rate for food-use job-work; the Court did not record an independent merits 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)
  • CNR: Not available on record
  • Coram: Justice B.M. Shyam Prasad
  • Decision Date: 09.11.2023
  • Disposal Nature: Disposed of — grievance resolved in light of CBIC Circular No.206/18/2023-GST dated 31.10.2023 clarifying GST rate on job-work of malting barley

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