United Spirits Receives Major Relief in Long-standing Service Tax Case

United Spirits Limited (USL), one of India’s prominent alcoholic beverage companies, has announced a significant development in a long-standing service tax matter. The case relates to tax demands raised for the period between September 2004 and June 2017.

According to a regulatory filing dated April 10, 2025, USL has received favourable orders from the Office of the Commissioner of Central Tax, Bengaluru. This order, issued on March 31, 2025 and received by the company on April 9, 2025, grants the company major relief on previously levied service tax demands.

The share price of USL was trading higher by 1.33% as of 1:38 PM. 

Substantial Reduction in Demand

Originally, the service tax demand against USL totalled ₹527.7 crore, which also included applicable interest and penalties. The dispute mainly centred on income from Contract Bottling Units (CBUs) being classified under Intellectual Property Rights (IPR) Services and on matters related to CENVAT credit availment.

However, after adjudication, the Commissioner granted complete relief from the ₹194.5 crore component of the demand. The overall demand has now been significantly reduced to ₹0.88 crore plus applicable interest and penalties.

Company’s Future Course of Action

Despite the favourable order, USL has stated its intention to appeal the residual demand. The company plans to file an appeal with the appropriate higher authority to contest the remaining ₹0.88 crore tax demand and related liabilities.

Financial Implications

According to the company’s risk assessment, no material financial impact is anticipated from the residual demand. The filing indicates that the company believes it has a strong case and, thus, does not foresee any significant financial burden arising from the remaining dispute.

Conclusion

This development marks a substantial milestone in a dispute spanning over a decade. While United Spirits has received considerable relief, its decision to pursue an appeal demonstrates its commitment to addressing even the residual liabilities thoroughly.

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