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2011 DIGILAW 142 (KAR)

Skol Breweries Ltd. v. Union of India

2011-02-03

H.G.RAMESH

body2011
ORDER Huluvadi G. Ramesh, J.— Petitioner has sought for a declaring the Petitioner's arrangement of its brands at Contract Bottling Units (CBU) which is in the form of a contract manufacturing arrangement does not fall within the purview of intellectual property service as defined under Section 65(55a) and (55b) and 65(105) (zzr) of the Finance Act, 1994 and the same is not applicable in so far as Petitioner's arrangement for manufacturing of their brands at the CBU and cannot be treated as Brand Licensing Arrangement and, to declare that the technical know-how received from foreign company i.e., SAB Miller Management (IN) BV, Netherlands is not liable to service tax and, to issue a writ of certiorari to quash the show cause notice dated 31-3-2009 - annexure K and, to declare the above sections mentioned in the Finance Act, 1994 as ultra vires in so far as it relates to Petitioner's business of getting liquor manufactured by CB Us and obtaining technical know-how from a foreign company and, also for a direction to first adjudicate whether it has the jurisdiction to tax liquor business. 2. According to the Petitioner, it is a public limited company engaged in the business of brewing beer apart from marketing and sale of non-alcoholic beverages and mineral water and, operating its business in the entire country including Karnataka under the license issued by the State Excise Authorities. Petitioner is challenging the validity of levy of service tax by the Respondents on the subject, which according to the Petitioner, falls in the domain and realm of State levy under List II of the Seventh Schedule to the Constitution and that Union of India has no role to play in the matter of business concerning liquor to include levy of tax, duty, fee, etc. According to the Petitioner, for production or manufacture of beer, they have obtained technical know-how from a foreign company and, based on the same, have entered into bottling agreements with Contract Bottling Units for brewing and bottling of beer and using such technology has a nexus with production, manufacture and sale which falls within the State subject and not under the Central Excise Act or under the Service Tax Act and no parallel entries are provided so as to exercise power or domain over the nature of the activity carried by the Petitioner. 3. 3. After having heard the Petitioner's counsel and the Standing Counsel for the Central Government, what is noticed is, at the threshold Petitioner is questioning annexure K which is in the form of a show cause notice proposing to impose service tax on the basis of the technical know-how said to have been borrowed by the Petitioner in its manufacturing activity and utilising the same for manufacturing beer or some other Indian made foreign liquor as per the agreement entered into between the Petitioner and its contract company. Annexure K is issued by the Officer of the cadre of Director General of Central Excise. 4. The main line of argument of the Petitioner is, whatever the manufacturing activity and the technical know-how which is being borrowed under the agreement entered into by it with the contracting company, for manufacturing and bottling of beer, comes within Entry 51 and 54 of List II to the Seventh Schedule of the Constitution and there is no such Entry either in the Union List or the Concurrent List to attract the nature of business to treat it as a service tax or on the technical know-how borrowed. 5. At the threshold, except the show cause notice issued at annexure K, there is no cause of action for the Petitioner to move this Court. Just an opinion is being formed by the Officer of the rank of Additional Director General of Central Excise proposing to impose service tax on the technical know-how said to be borrowed. It is very well open to the Petitioner to urge all contentions before any order is passed by the Officer concerned who has issued the show cause notice on 31-3-2009. Further, the Petitioner has not suffered any order except certain propositions which are stated in the show cause notice and, it is at liberty to suitably reply and have an opportunity of hearing so that appropriate order would be passed by the 3rd Respondent. If aggrieved by such order, it is open to the Petitioner to opt for recourse as is provided under law. Since there is no cause of action, it is too premature to approach this Court. All contentions are left open to be urged. 6. With the above observation, petitions are disposed of.