- 1 - HC-KAR NC: 2025:KHC:34999 WP No. 25944 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 25944 OF 2025 (T-RES) BETWEEN: 1. KARNATAKA STATE BEVERAGES CORPORATION LIMITED (A GOVERNMENT OF KARNATAKA UNDERTAKING) 4TH FLOOR, TTMC "A" BLOCK BMTC BUILDING, K.H ROAD, SHANTHI NAGAR, BENGALURU - 560 001. REPRESENTED BY THE EXECUTIVE DIRECTOR (O) KSBC LTD., 2. THE EXECUTIVE DIRECTOR (O) THE KARNATAKA STATE BEVERAGES CORPORATION LTD., 4TH FLOOR, TTMC A, BLOCK BMTC BUILDING, K H ROAD SHANTHI NAGAR, BENGALURU - 560 001. …PETITIONERS (BY SRI. MADHU N RAO, ADVOCATE) AND: 1. M/S. SHREE RENUKA SUGARS LTD., ADMINISTRATIVE OFFICE, NO.7, 1ST CROSS KUMAR KOT ROAD, RACE COURSE ROAD CROSS, Digitally signed by NAGAVENI Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:34999 WP No. 25944 of 2025 BENGALURU - 560 001 REPRESENTED BY ITS DEPUTY GENERAL MANAGER (FINANCE) SRI. RAHUL PATIL COMPANY REGISTERED UNDER COMPANIES ACT, 1956. 2. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT) 4,3, DVO-IV, 4TH FLOOR VTK-2, KORAMANGALA BENGALURU - 560 047. 3. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT AND RECOVERY ) BELAGAVI - 590 001. 4. KARNATAKA APPELLATE TRIBUNAL REPRESENTED BY ITS REGISTRAR, 1ST GATE, 2ND FLOOR, M.S. BUILDING BENGALURU - 560 001. …RESPONDENTS (BY SRI. K. HEMA KUMAR, AGA) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF MANDAMUS IN THE FORM OF DIRECTIONS TO THE RESPONDENT NO.4 TO ADHERE TO THE ORDER DATED 21.10.2024 PASSED BY THIS HONBLE COURT IN WRIT PETITION NO. 9571/2017(EXCISE) AT ANNEXURE-A AND ETC., THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: - 3 - HC-KAR NC: 2025:KHC:34999 WP No. 25944 of 2025 CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA ORAL ORDER The petitioners are before this court seeking the following prayers: "(a) Issue a writ of mandamus in the form of directions to the respondent No.4 to adhere to the order dated 21.10.2024 passed by this Hon'ble Court in Writ petition No. 9571/2017 (Excise); AT ANNEXURE A; (b) Issue a writ of mandamus / direction to the Respondent No.4 to pass the order in a time bound manner; (c) Grant such other order or direction as deemed fit by this Hon'ble Court in the facts and circumstances of the case." 2. Heard Shri Madhu N. Rao, learned counsel appearing for the petitioners and Shri K. Hema, learned Additional Government Advocate appearing for the respondents. 3. The petitioners were the respondents in WP.No.9571/2017, which comes to be disposed by the co-ordinate bench, by the following order: "1. The petitioner – M/s.Shree Renuka Sugars Limited is before this Court seeking for a direction to the 1st respondent to refund Rs.56,07,738/- which has been realized by the 1st respondent on the basis of the - 4 - HC-KAR NC: 2025:KHC:34999 WP No. 25944 of 2025 indemnity bond dated 17.08.2013 executed by the petitioner. 2. A further prayer is also made to direct the 1st respondent to release a sum of Rs.1,32,97,074/- which the petitioner is entitled to receive from the 1st respondent. 3. The following facts are not in dispute: On 23.07.2013, an export order was placed by Kolmar Group from Switzerland on the petitioner. The export order was for supply of denatured ethanol anhydrous. 4. Pursuant to the receipt of this export order, the petitioner sought for grant of No Objection Certificate (“NOC”) from the Excise Commissioner. The Excise Commissioner by his order dated 03.08.2013 issued a NOC to the petitioner for export of 40,00,000 bulk litres (3,000 MT) of undenatured ethanol anhydrous, 20,00,000 bulk litres (1,540 MT) of denatured ethanol anhydrous and 37,25,000 bulk litres (2,960 MT) of denatured ethanol anhydrous. 5. On the basis of the said NOC, the petitioner has sought for issuance of the order for supply from the 1st respondent on 19.08.2013 vide Annexure-E. In this request, the petitioner informed the 1st respondent that it had received the NOC from the Excise Commissioner and the validity of NOC was till 17.09.2013. 6. The 1st respondent, in turn, called upon the petitioner to furnish a letter of indemnity which was furnished by the petitioner as per Annexure-F. Pursuant to the letter of ndemnity, the order for supply was granted by the 1st respondent. The petitioner accordingly raised a tax invoice as per Annexure-G and the 1st respondent in turn issued an invoice-cum-delivery challan vide Annexure-H, on the basis of which, the above mentioned consignment was exported. 7. Three years thereafter, on 25.02.2016, it appears that the 1st respondent was issued with a notice under Section 9(2) of the Central Sales Tax Act, 1956 stating that the 1st respondent had claimed exemption in - 5 - HC-KAR NC: 2025:KHC:34999 WP No. 25944 of 2025 respect of deemed export of value of Rs.25,26,86,250/- against H-forms, but on verification, it had been found that it had not furnished H-forms and hence, the exemption claimed was disallowed. 8. On 21.10.2016, pursuant to this notice, the authority proceeded to pass an order of assessment in which the claim for exemption of deemed export was rejected on the ground that H-forms were not furnished. 9. As a consequence of the order of assessment disallowing the exemption claimed for deemed export by the 1st respondent, the 1st respondent in turn proceeded to issue a letter dated 25.11.2016 vide Annexure-K to the petitioner invoking the letter of indemnity dated 17.08.2013 which had been furnished by the petitioner. The said letter reads as under: “OPS 5 –FA1 -032 (C) Date: 25.11.2016 To The Director and President Sri Renuka Sugars Ltd., Reg Off; DC 105, Havelock Road Cantonment, Belgavi -590001. Sir/Madam Sub: Invoking of your indemnity dtd. 17.08.2013 * * * You had exported certain quantities of Denatured Ethanol Anhydrous to one M/s Kolmar Group AG, Switzerland in the year 2013. In this regard you had executed and indemnity bond dtd. 17.08.2013, wherein you are agreed to keep KSBCL indemnified in all respects due to the above export. Due to the above transaction a demand of Rs.1,86,92,460/- is raised on KSBCL by the Commercial Tax Authorities a copy of which is enclosed. KSBCL is preferring an appeal against the same. However, we need to deposit 30% of the demand amount, which amounts to Rs.56,07,738/-. Hence, your indemnity is hereby invoked and an amount of Rs.56,07,738/- is deducted from the amounts payable by KSBCL to you and the same will be - 6 - HC-KAR NC: 2025:KHC:34999 WP No. 25944 of 2025 deposited with the Commercial Tax Authorities. Take note that if KSBCL is held liable to pay any further taxes and the appeal is not accepted, you will be required to indemnify KSBCL to that extent. In case the appeal is allowed, the amount deducted will be credited to your account. As abundant caution it is advised that you also get impleaded in the proceedings if permitted by the authorities and contest the case. Thank you for Karnataka State Beverages Corporation Limited Sd/- Executive Director (O)” 10. The petitioner responded to the said demand vide Annexure-L stating that the deduction of Rs.56,07,738/- from the dues that it was legally entitled to was improper. It stated that it had fulfilled the export obligation with its overseas buyer and the proof of such export was also handed over to the 1st respondent for their reference and therefore, the claim against it, would be improper. 11. It appears that the 1st respondent has preferred a First Appeal as against the order of assessment which was dismissed, as against which a second appeal has been preferred in STA.297/2017 and the same is pending. 12. As stated above, the facts mentioned above are not in dispute. The fact that the petitioner received an export order and sought an NOC, to abide by said export order by the Excise Commissioner, is also not in dispute. The fact that the order for supply was also granted by the 1st respondent is also not in dispute. More importantly, the fact that the consignment order exported is also not in dispute. The only contention of the 1st respondent is that the requisite H-forms were not furnished by the petitioner and therefore, it suffered a tax liability. 13. In other words, it is the case of the 1st respondent that it had not received the H-forms from the petitioner and therefore it could not claim exemption. - 7 - HC-KAR NC: 2025:KHC:34999 WP No. 25944 of 2025 14. In light of the above submissions, the fact that the consignment was exported is not at all in dispute. If the consignment was in fact exported, it cannot be in dispute that both the petitioner as well as the 1st respondent are entitled for exemption from payment of tax especially when the Excise Commissioner had himself granted No Objection Certificate for export and the 1st respondent had also issued order for supply. Thus, the factum of export cannot be in dispute. 15. The Additional Commissioner of Commercial Tax was called upon to file an affidavit and state as to whether the transaction between the petitioner and the foreign buyer, in which the 1st respondent was also involved, was a revenue neutral transaction. The Additional Commissioner has filed an affidavit stating that the said transaction was not revenue neutral, since H-forms were not furnished, which was mandatory. 16. The Additional Commissioner does not dispute the fact that the export was made by the petitioner. In this view of the matter, the claim for exemption by the 1st respondent would have to be accepted and the authorities are therefore directed to consider the transaction between the petitioner and the 1st respondent as a deemed export and relieve the 1st respondent of tax liability in this regard. As a consequence, a sum of Rs.56,07,738/- shall be refunded to the petitioner. As a further consequence, the amount that the petitioner was entitled to and has been withheld by 1st respondent shall also be released. 17. It is also admitted by the 1st respondent that the sums which the petitioner was legally entitled to receive i.e., Rs.1,32,97,074/- has been invested in Fixed Deposit. In that view matter, the 1st respondent is directed to pay interest that has accrued on said fixed deposit amount to the petitioner since the said amount has been withheld incorrectly. 18. As a result of this order, it is needless to say that the second appeal i.e., STA.297/2017 filed by - 8 - HC-KAR NC: 2025:KHC:34999 WP No. 25944 of 2025 the 1st respondent will have to be disposed of in favour of the 1st respondent in terms of this order. 19. The petition is accordingly allowed." (Emphasis supplied) The co-ordinate bench directed that it is admitted by respondent No.1 that the sums which the petitioner was legally entitled to receive have been invested in fixed deposit. 4. In view of that, respondent No.1 - the petitioner herein, was directed to pay interest that is accrued in the fixed deposit as the said amount had been withheld incorrectly. As a result, the Appellate Tribunal was directed to dispose the petition, in favour of respondent No.1, therein i.e., the present petitioner. 5. The learned counsel for the petitioners submits that despite the passage of 10 months, the Tribunal has not passed an order in terms of the order passed by this court, which had specifically directed that the Tribunal will have to dispose the appeal pending before it in favour of respondent No.1. The respondent No.1, therein is petitioner No.1. - 9 - HC-KAR NC: 2025:KHC:34999 WP No. 25944 of 2025 6. The learned counsel appearing for the petitioners submits that due to the act of the Tribunal not passing an order, the petitioners are facing contempt proceedings before the division bench. 7. In that light, I deem it appropriate to direct the Tribunal to pass an order on or before 15.09.2025, in the light of the circumstance that the contempt petition is listed on 16.09.2025. 8. The prayer is for a direction to pass an order in terms of the order passed by the co-ordinate bench, in which all the parties were represented. Therefore, to grant this prayer which the co-ordinate bench had already granted, I deem felt it appropriate to dispense issuance of notice to other respondents. Ordered accordingly. Sd/- (M.NAGAPRASANNA) JUDGE JY/List No.: 3 Sl No.: 2 CT: BHK