In Brief
The State of Karnataka appealed against the dismissal of its demand that Hindustan Lever Limited (formerly Brooke Bond India Limited) had violated sales tax exemption conditions at its Dharwad tea factory. The State argued that by pricing exempted tea identical to non-exempted tea and declaring 'inclusive of all taxes' on packets, the company had impermissibly collected tax. The Court held that mere pricing equality, without separate tax designation or buyer agreement to pay tax, does not constitute tax collection. Statutory labelling requirements do not constitute tax collection admissions. Uniform pricing across tax jurisdictions is legitimate business policy. Finding no actual separate tax collection and no violation of exemption conditions, the Court dismissed the appeal and upheld the exemption benefit."
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