United Breweries Confronts Over Rs 263 Crore Tax Demand from Maharashtra GST

In a recent regulatory filing, United Breweries Ltd (UBL) disclosed receiving a substantial tax demand from the Maharashtra State Goods & Service Tax Department. The demand, exceeding Rs 263.70 crore, encompasses additional tax, interest, and penalties for the financial year 2019-20. This development marks a significant financial challenge for the company, which is a leading player in the beverage industry.

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The Deputy Commissioner of State Tax, Raigad Division, Maharashtra, has issued an order demanding Rs 1,19,82,34,560 in additional tax. This is accompanied by an interest charge of Rs 1,15,03,04,218 and a penalty of Rs 28,86,97,379, cumulatively amounting to Rs 2,63,72,36,156. The basis for this substantial demand lies in the levy of 60 per cent Central Sales Tax (CST) on debit notes issued by UBL to various state beverage corporations including Telangana State Beverage Corporation (TSBCL), Karnataka State Beverage Corporation (KSBCL), and Andhra Pradesh State Beverage Corporation (APBCL). These notes were for the reimbursement of state excise duties that UBL had paid on behalf of these corporations between April 2019 and March 2020.

Additionally, the tax demand has been exacerbated by UBL's failure to submit declaration forms required for availing a concessional rate of tax. Despite this setback, UBL remains confident in its legal position. The company has expressed its belief in having a strong case to present before the relevant appellate authority. It anticipates no significant financial impact from this issue apart from a minimal statutory pre-deposit required during the appeal's admission process.

This is not the first instance where UBL has faced such a financial challenge from tax authorities. The company recalled a similar situation for the financial year 2018-19 when a demand of Rs 275 crore was raised against it. Despite these recurring tax-related challenges, UBL's stance suggests a resilient approach towards resolving such disputes through the legal avenues available.

As this situation unfolds, it will be crucial for stakeholders and observers to monitor how UBL navigates this complex tax dispute. The outcome could have implications not only for UBL but also for the broader beverage industry's interaction with state tax regulations.