In a face-off between fizzy beverages and fiscal interpretations, Hindustan Coca-Cola Beverages has landed temporary relief as the Bombay High Court hit pause on a staggering ₹2,500 crore GST demand.
The massive tax claim had its roots in allegations that Coca-Cola’s discounting strategy—where distributors got breaks based on prior deals and passed those onto retailers—was less of a business tactic and more of a tax-dodging maneuver. Authorities alleged this pricing structure led to chronic undervaluation of goods over seven years, effectively shrinking the tax the company owed.
But the Court wasn’t buying that logic, at least not yet.
Justices BP Colabawalla and Firdosh P Pooniwalla, presiding over the case, found the tax department’s argument to be on shaky ground. Their April 1 order described the reasoning as prima facie flawed and temporarily blocked the GST demand. They pointed out that the revenue’s interpretation of how discounts should be treated under Section 15(3)(a) of the CGST Act seemed to run afoul of the Act’s primary valuation clause, Section 15(1).
Put simply: the Court saw trouble in the taxman’s math.
Coca-Cola fired back against the August 2024 show-cause notice that sparked the case, saying not only was it time-barred, but also misapplied the law. The company contended its discounting was all above board—logged transparently in its Distributor Management System, and part of its legitimate transaction value.
The revenue’s counter? That the discounts weren’t real-time adjustments but retroactive tweaks meant to sneak around tax liability. The authorities doubled down in January 2025 with an order reaffirming their stance, followed by a corrigendum. Coca-Cola scrapped its earlier petition and came back with a fresh challenge.
In the interim, the court has told the tax authorities to hold off on any coercive action. The revenue has until April 15 to respond, and Coca-Cola gets its turn by April 22. The legal soda will pop again on April 29, when the next hearing is slated.
For now, Coca-Cola has a cap on the bottle—but the fizz of this legal showdown is far from flat.
