IN THE BOMBAY HIGH COURT

K. R. SHRIRAM & DR. NEELA GOKHALE, JJ.

Sun Tan Trading Co. Ltd. v. Dy. CIT

Writ Petition No. 806 of 2016 with Writ Petition No. 261 of 2016 with Writ Petition No. 271 of 2016

2 February, 2024

Petitioner by: P.J. Pardiwalla, Senior Advocate a/w. Madhur Agrawal i/b. Atul K. Jasani in all petitions.

Respondents by: P.C. Chhotaray Revenue in all petitions.

K.R. Shriram, J.

Writ Petition No. 806 of 2016

Petitioner is engaged in the business of import and distribution of alcoholic beverages in India. By this petition petitioner is challenging notice dated 28-3-2014 issued by respondent no. 1 under section 148 of the Income Tax Act, 1961 (the Act) to reopen the assessment for the assessment year 2007-2008 and an order dated 29-9-2015 passed by respondent no. 1 rejecting the objections of petitioner objecting to the reassessment proceedings.

2. Petitioner had entered into Distribution Agreement dated 30th July 2001 with various entities, who are collectively referred to as Diageo group companies, for distribution, marketing and sale of imported alcoholic beverages in India. As per the Distribution Agreement, petitioner was under an obligation to distribute, market and sell alcoholic beverages in India. Petitioner was also required to engage or maintain adequate and properly trained personnel, effective distribution network, etc. The Distribution Agreement also provided the rates at which alcoholic beverages would be sold to petitioner. It also provided that petitioner shall undertake appropriate advertisements, merchandising promotion, packing and consumer research with respect to the products sold in India.

3. Petitioner also had entered into an Agreement dated 20-9-2001 with UDV India Limited, now known as Diageo India Pvt. Ltd. (DIPL) by which DIPL was to render services to petitioner with respect to the marketing and sales of imported alcoholic beverages (Bottled in Origin/BIO).

4. As and when the alcoholic beverages were imported by petitioner, petitioner paid the customs duty based on the transaction value of the goods imported. The Customs Authority alleged that the transaction values were under stated and orders were issued to enhance the transaction value of the goods imported by petitioner in India.