The Allahabad High Court stayed a Goods and Services Tax (GST) show cause notice of Rs 110 crore issued to Dabur India Ltd. concerning the classification of its popular Hajmola Candy Tablets. The Division Bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla passed the interim order in a writ petition filed by Dabur challenging the notice issued by the Directorate General of GST Intelligence (DGGI).
The dispute concerns the proper tax classification of Hajmola Candy Tablets under the GST regime. The DGGI alleged that Dabur misclassified the product to attract a lower rate of tax, resulting in a proposed demand of Rs 110.39 crore for six financial years from 2018–19 to 2023–24, including interest and penalties.
Dabur’s counsel, Senior Advocate, submitted that the issue was not new and had been conclusively settled in the company’s favour under the earlier excise and customs regime. He pointed out that under the Central Excise Act and the Customs Act, the question of the applicable rate of duty on “Dabur Hajmola Candy Tablets” was adjudicated multiple times, ultimately reaching the Supreme Court. The apex court, in Civil Appeal Nos. 5172–5177 of 2002 decided on 12 April 2022, ruled in favour of Dabur.
He argued that the introduction of GST did not change the legal position already settled by the Supreme Court. He argued that international developments, such as changes made by the World Customs Organization (WCO) in classification norms, do not automatically alter domestic taxation rules within India. He argued that Dabur had made full disclosure of facts and that there was no concealment or misrepresentation on its part.
The Bench took note of these submissions and observed that the issue raised significant questions of judicial consistency and limitation. The court noted that since the classification dispute had already been examined and decided by the Supreme Court, any attempt to reopen it without change in statutory law warranted careful judicial scrutiny.
Counsel for the government, Dhananjay Awasthi, appeared for the respondents and sought time to file a counter affidavit. Granting the request, the court allowed the government four weeks to file its response, with two additional weeks given to Dabur to submit a rejoinder. The Bench then listed the matter for hearing after the completion of pleadings.
In the meantime, the court ordered that “till the next of listing, the proceedings pursuant to the impugned show cause notice shall remain stayed.” This stay order effectively puts on hold the Rs 110 crore tax demand until the matter is finally heard and decided.
