Bombay High CourtWP/340/2025disposed off

Merck Kgaa v. State Of Maharashtra

2025-08-26Hon'Ble Shri Justice Jitendra Shantilal Jain , Hon'Ble Shri Justice M.S. Sonak6 pages

Sayyed 905-WP.340.2025.docx IN IN THE THE HIGH HIGH COURT COURT OF OF JUDICATURE JUDICATURE AT AT BOMBAY BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.340 OF 2025 WRIT PETITION NO.340 OF 2025 Merck KGaA Merck KGaA

...Petitioner

Versus

State of Maharashtra & Ors.

...Respondents

WITH WITH WRIT PETITION NO.5311 OF 2024 WRIT PETITION NO.5311 OF 2024 Merck KGaA Merck KGaA

...Petitioner

Versus

State of Maharashtra & Ors.

...Respondents

WITH WITH WRIT PETITION NO.504 OF 2025 WRIT PETITION NO.504 OF 2025 Merck KGaA Merck KGaA

...Petitioner

Versus

State of Maharashtra & Ors.

...Respondents

_____________________________________________________ Mr. Sushanth Murthy for the Petitioner.

Mr. Sushanth Murthy for the Petitioner.

Ms. Jyoti Chavan, Addl. G. P. for the Respondent-State in WP/340/2025 Ms. Jyoti Chavan, Addl. G. P. for the Respondent-State in WP/340/2025 & WP/5311/2024.

& WP/5311/2024.

Mr. Amar Mishra, AGP for Respondent Nos.1 & 3-State in WP/504/2025 Mr. Amar Mishra, AGP for Respondent Nos.1 & 3-State in WP/504/2025 _____________________________________________________ CORAM :

M. S. Sonak & Jitendra Jain, JJ.

DATED : 26 August 2025 ORAL ORDER:-(Per M. S. Sonak, J.) 1.

Heard learned counsel for the parties.

The learned counsel for the parties state that these three The learned counsel for the parties state that these three petitions can be disposed of by a common judgment and order. petitions can be disposed of by a common judgment and order. Accordingly, we issue a Rule in each of these petitions. With the consent Accordingly, we issue a Rule in each of these petitions. With the consent of and at the request of learned counsel for the parties, we make the of and at the request of learned counsel for the parties, we make the Rule returnable immediately.

Rule returnable immediately.

Sayyed 905-WP.340.2025.docx 3.

These three petitions challenge assessment orders passed by These three petitions challenge assessment orders passed by the Deputy Commissioner of State Tax levying tax under the the Deputy Commissioner of State Tax levying tax under the Maharashtra Value Added Tax Act, 2002 (hereafter "the MVAT Act") on Maharashtra Value Added Tax Act, 2002 (hereafter "the MVAT Act") on payments of royalty made by the subsidiary company (Merck Life payments of royalty made by the subsidiary company (Merck Life Science Pvt. Ltd.) to the Petitioner for the financial years FY 2015-16, Science Pvt. Ltd.) to the Petitioner for the financial years FY 2015-16, FY 2016-17 and FY 2017-18 on the allegation that the said royalties FY 2016-17 and FY 2017-18 on the allegation that the said royalties amount to consideration for the transfer of right to use of trademarks. amount to consideration for the transfer of right to use of trademarks. 4.

These petitions have been filed invoking the writ jurisdiction These petitions have been filed invoking the writ jurisdiction of this Hon'ble Court despite an appeal being available in terms of of this Hon'ble Court despite an appeal being available in terms of Section 26(1)(b) of the MVAT Act to the Appellate Authority, viz. The Section 26(1)(b) of the MVAT Act to the Appellate Authority, viz. The Joint Commissioner.

Joint Commissioner.

A similar issue arose in the case of A similar issue arose in the case of M/s. Mestra A. G. M/s. Mestra A. G.

Switzerland Vs. The State of Maharashtra & Ors. Switzerland Vs. The State of Maharashtra & Ors.1 wherein the wherein the petitioner, by a writ petition, called in question an assessment order petitioner, by a writ petition, called in question an assessment order passed by the Deputy Commissioner of Sales Tax levying tax under the passed by the Deputy Commissioner of Sales Tax levying tax under the MVAT Act on payments of royalty made by the subsidiary companies to MVAT Act on payments of royalty made by the subsidiary companies to the petitioner.

the petitioner.

The Petitioner therein argued that the adjudication order The Petitioner therein argued that the adjudication order impugned in the petition had been passed by relying upon a judgment impugned in the petition had been passed by relying upon a judgment of the Sales Tax Tribunal. As the issue in dispute had already been of the Sales Tax Tribunal. As the issue in dispute had already been decided against the Assessee by the Tribunal, therefore exploring the decided against the Assessee by the Tribunal, therefore exploring the remedy of first appeal provided by section 26(1) of the MVAT Act to the remedy of first appeal provided by section 26(1) of the MVAT Act to the Joint Commissioner, being the first appellate authority, would be a mere Joint Commissioner, being the first appellate authority, would be a mere ritual since the Joint Commissioner was bound by the aforesaid decision ritual since the Joint Commissioner was bound by the aforesaid decision of the Tribunal.

of the Tribunal.

By an order dated 16 February 2022, this Hon'ble Court did By an order dated 16 February 2022, this Hon'ble Court did not entertain the petition on merits, holding that the Petitioner could not entertain the petition on merits, holding that the Petitioner could Writ Petition No.12297 of 2021 dated 16.02.2022

Sayyed 905-WP.340.2025.docx invoke Tribunal appellate jurisdiction under section 27 of the MVAT Act invoke Tribunal appellate jurisdiction under section 27 of the MVAT Act at the appropriate time. This Court nonetheless observed that it was at the appropriate time. This Court nonetheless observed that it was inclined not to relegate the Petitioner to the first appellate remedy but inclined not to relegate the Petitioner to the first appellate remedy but to give it the opportunity to prefer an appeal before the Tribunal to give it the opportunity to prefer an appeal before the Tribunal directly, if it so chooses, subject to making the requisite pre-deposit. directly, if it so chooses, subject to making the requisite pre-deposit.

This This Court further held that in the event the Petitioner preferred an appeal Court further held that in the event the Petitioner preferred an appeal before the Tribunal within six weeks from the date of the order, before the Tribunal within six weeks from the date of the order, limitation would not be a bar for entertaining and trying such appeal on limitation would not be a bar for entertaining and trying such appeal on merits.

merits.

A Co-ordinate Bench of this Hon'ble Court in the case of A Co-ordinate Bench of this Hon'ble Court in the case of Kellogg Company Vs. The State of Maharashtra & Ors. Kellogg Company Vs. The State of Maharashtra & Ors.2 held that it was held that it was bound by the findings of the Judgment in bound by the findings of the Judgment in M/s Mestra A. G. Switzerland M/s Mestra A. G. Switzerland (supra) (supra), and disposed of a group of petitions in terms of the directions , and disposed of a group of petitions in terms of the directions as contained in paragraph Nos 27 and 28, which read as under:- as contained in paragraph Nos 27 and 28, which read as under:- "27. However, in the peculiar facts and circumstances, viz. "27. However, in the peculiar facts and circumstances, viz.

pendency of this writ petition on the file of this Court for quite pendency of this writ petition on the file of this Court for quite some time and that a Constitutional issue touching Article 286 of some time and that a Constitutional issue touching Article 286 of the Constitution is sought to be raised, we are inclined not to the Constitution is sought to be raised, we are inclined not to relegate the Petitioner to the first appellate remedy but to give it relegate the Petitioner to the first appellate remedy but to give it opportunity to prefer an appeal before the Tribunal directly, if it so opportunity to prefer an appeal before the Tribunal directly, if it so chooses, so that any infirmity in the impugned order can be chooses, so that any infirmity in the impugned order can be brought to its notice, including he decision of this Court in the case brought to its notice, including he decision of this Court in the case of of Mahyco Monsanto Biotech (India) Pvt.

Ltd. (supra) Mahyco Monsanto Biotech (India) Pvt. Ltd. (supra), for its , for its correction. It is ordered accordingly.

correction. It is ordered accordingly.

28. We make it clear that such appeal may not be entertained

28. We make it clear that such appeal may not be entertained unless the requisite pre-deposit is made by the Petitioner for unless the requisite pre-deposit is made by the Petitioner for preferring an appeal before the Tribunal. There is a statement in preferring an appeal before the Tribunal. There is a statement in the writ petition that the requisite pre-deposit for approaching the the writ petition that the requisite pre-deposit for approaching the first appellate authority has already been made. If indeed that is so, first appellate authority has already been made. If indeed that is so, it would constitute half of the pre-deposit for filing an appeal it would constitute half of the pre-deposit for filing an appeal before the Tribunal. The balance pre-deposit together with an before the Tribunal.

The balance pre-deposit together with an acknowledgment of the amount of pre-deposit that has been made, acknowledgment of the amount of pre-deposit that has been made, may be filed along with any appeal that the Petitioner may wish to may be filed along with any appeal that the Petitioner may wish to prefer before the Tribunal. In the event the Petitioner prefers an prefer before the Tribunal. In the event the Petitioner prefers an appeal before the Tribunal within six weeks from today, as prayed appeal before the Tribunal within six weeks from today, as prayed Writ Petition No.1661 of 2019 dated 27.07.

Sayyed 905-WP.340.2025.docx by Mr. Sridharan, limitation shall not be a bar for entertaining and by Mr. Sridharan, limitation shall not be a bar for entertaining and trying such appeal on merits."

trying such appeal on merits."

The said common order in the case of The said common order in the case of Kellogg Company Kellogg Company (supra) (supra) disposes of 3 Writ Petitions No.2934, 2038 and 2925 of 2021 disposes of 3 Writ Petitions No.2934, 2038 and 2925 of 2021 filed by the Petitioner (in the case of another subsidiary, Merck India). filed by the Petitioner (in the case of another subsidiary, Merck India). 10.

Both the aforesaid orders were not interfered with by the Both the aforesaid orders were not interfered with by the Hon'ble Supreme Court in Hon'ble Supreme Court in M/s. Mestra A. G. Switzerland Vs. The State M/s. Mestra A. G. Switzerland Vs. The State of Maharashtra & Ors.

of Maharashtra & Ors.3 wherein the Hon'ble Apex Court granted liberty wherein the Hon'ble Apex Court granted liberty to the petitioner(s) to approach the Tribunal as stated by this Hon'ble to the petitioner(s) to approach the Tribunal as stated by this Hon'ble High Court. The Court further observed that if the Petitioner files High Court. The Court further observed that if the Petitioner files appeals before the Tribunal within a period of eight weeks from the appeals before the Tribunal within a period of eight weeks from the date of the order, the issue of limitation would not be raised by the date of the order, the issue of limitation would not be raised by the Tribunal.

Tribunal.

11.

Mr.

Mr. Murthy learned counsel for the Petitioner submits that this Murthy learned counsel for the Petitioner submits that this Court may consider following the same course of action as was adopted Court may consider following the same course of action as was adopted by the Co-ordinate Bench of this Court in the case of by the Co-ordinate Bench of this Court in the case of Kellogg Company Kellogg Company (supra) (supra). He states that pursuant to the decision of the Co-ordinate .

He states that pursuant to the decision of the Co-ordinate Bench of this Court in Bench of this Court in Kellogg Company (supra), Kellogg Company (supra), appeals which were appeals which were permitted to be instituted directly before the Tribunal are likely to be permitted to be instituted directly before the Tribunal are likely to be taken up for final disposal on 10 September 2025. He states that if leave taken up for final disposal on 10 September 2025.

He states that if leave is granted, even the Petitioner will file appeals before the Tribunal and is granted, even the Petitioner will file appeals before the Tribunal and urge the disposal of such appeals along with the other appeals filed in urge the disposal of such appeals along with the other appeals filed in pursuance to the orders in pursuance to the orders in Kellogg Company (supra). Kellogg Company (supra).

12.

Mr.

Mr. Murthy states that the Petitioner, if permitted, will Murthy states that the Petitioner, if permitted, will institute the appeals as soon as possible after complying with the institute the appeals as soon as possible after complying with the requirement of pre-deposit, so that such appeals are heard along with requirement of pre-deposit, so that such appeals are heard along with the other appeals by the Tribunal.

the other appeals by the Tribunal.

Special Leave to Appeal (C) No(s).10336/2022 dated 04.11.2024

Sayyed 905-WP.340.2025.docx 13.

Ms. Chavan, learned counsel for the Respondent, does not Ms. Chavan, learned counsel for the Respondent, does not oppose adoption of the course indicated by the Co-ordinate Bench of oppose adoption of the course indicated by the Co-ordinate Bench of this Court in this Court in Kellogg Company (supra) Kellogg Company (supra), however, she submits that there , however, she submits that there ought to be compliance with the requirement of pre-deposit, and further ought to be compliance with the requirement of pre-deposit, and further she states that all contentions of all parties will have to be explicitly she states that all contentions of all parties will have to be explicitly kept open for consideration by the Tribunal.

kept open for consideration by the Tribunal.

14.

Accordingly, by adopting the same course of action as was Accordingly, by adopting the same course of action as was adopted in the case of adopted in the case of Kellogg Company (supra) Kellogg Company (supra), we dispose of these , we dispose of these petitions by allowing the Petitioner to institute appeals directly before petitions by allowing the Petitioner to institute appeals directly before the Tribunal within three weeks from today, after complying with the the Tribunal within three weeks from today, after complying with the requirement of pre-deposit and other prescribed formalities. If such requirement of pre-deposit and other prescribed formalities. If such appeals are indeed instituted, the Tribunal is directed to dispose of such appeals are indeed instituted, the Tribunal is directed to dispose of such appeals on their own merits along with the other appeals without appeals on their own merits along with the other appeals without adverting to the issue of limitation.

adverting to the issue of limitation. Such a direction is consistent not Such a direction is consistent not only with the directions in only with the directions in Kellogg Company (supra) Kellogg Company (supra) but also but also M/s.

M/s.

Mestra A. G. Switzerland (supra).

15.

These Petitions are disposed of in the above terms by leaving These Petitions are disposed of in the above terms by leaving open all contentions of all parties on merits to the decision of the open all contentions of all parties on merits to the decision of the Tribunal in the first instance. Needless to add that upon the institution Tribunal in the first instance. Needless to add that upon the institution of the appeals within three weeks after making the pre-deposit, the of the appeals within three weeks after making the pre-deposit, the Respondent will not enforce their demands during the pendency of the Respondent will not enforce their demands during the pendency of the appeals before the Tribunal. Since the learned counsel for the Petitioner, appeals before the Tribunal.

Since the learned counsel for the Petitioner, on instructions, stated that the appeals would be instituted within three on instructions, stated that the appeals would be instituted within three weeks after making the necessary pre-deposit, we direct that no weeks after making the necessary pre-deposit, we direct that no coercive action should be taken for enforcing the demand even during coercive action should be taken for enforcing the demand even during this period of three weeks. However, if no appeals are instituted within this period of three weeks.

However, if no appeals are instituted within this period after making the necessary pre-deposit, the Respondent this period after making the necessary pre-deposit, the Respondent would be at liberty to recover their demands in accordance with the would be at liberty to recover their demands in accordance with the law.

law.

Sayyed 905-WP.340.2025.docx 16.

The Rule in these petitions is disposed of in the above terms The Rule in these petitions is disposed of in the above terms without any costs order.

without any costs order. All concerned are to act on an authenticated All concerned are to act on an authenticated copy of this order.

copy of this order.

(Jitendra Jain, J.) (M. S. Sonak, J.)