The Karnataka High Court stayed the operation of an adjudication order that sought to levy Goods and Services Tax (GST) at the rate of 28% retrospectively on fruit juice-based beverages for the period from April 2021 to September 2021.
The bench of Justice B.M. Shyam Prasad observed that the matter requires consideration and granted interim protection to the petitioner pending final adjudication.
The writ petition was filed challenging an adjudication order dated December 20, 2025 issued under Section 73(9) of the Central Goods and Services Tax Act, 2017 and the Karnataka Goods and Services Tax Act, 2017.
The dispute centres on the applicable GST rate for beverages supplied during the period between April 2021 and September 2021.
According to the tax department, the petitioner ought to have discharged GST at the rate of 28% even during this six-month period, despite the fact that Notification No. 8/2021, which prescribed the higher rate, was issued only on September 30, 2021 and expressly stated that it would come into force from October 1, 2021.
The adjudication order proceeded on the basis that the revised tax classification applied even to transactions undertaken prior to the notification becoming effective, thereby raising a substantial tax demand.
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Appearing for the petitioner, counsel Raghavendra B. Hanjer argued that the notification clearly specifies its effective date as October 1, 2021 and therefore cannot be applied retrospectively.
The petitioner submitted that for the period up to September 2021, GST had been discharged at the rate of 12% in accordance with the notification that was then in force. It was further argued that the applicable notification during the relevant period did not distinguish between fruit pulp or fruit juice-based drinks and carbonated fruit drinks or fruit juice-based beverages. Consequently, there was no legal basis to demand GST at the enhanced rate of 28% for transactions undertaken before October 1, 2021.
The petitioner also informed the Court that it has been paying GST at the rate of 28% after the new notification came into force on October 1, 2021.
After considering the submissions and examining the records, the Karnataka High Court granted an interim order staying the effect of the adjudication order until further orders.
At the same time, the Court granted liberty to the respondents to complete their pleadings and seek vacation of the interim order or request early disposal of the writ petition. The Additional Government Advocate accepted notice on behalf of the respondents.
The High Court has directed that the writ petition be listed for further hearing on August 18, 2026, when the State is expected to file its response and the legality of the retrospective tax demand will be examined in greater detail.
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