Pakistan Beverage Ltd., Karachi v. DCIR-09, Audit DIvision-II, LTU [2014 PTD (Trib.) 347]

The Inland Revenue Appellate Tribunal of Pakistan issued a decision in this case that excise duty is applicable to payments made by a bottling company under a tripartite agreement to a sole supplier (Pepsi-Cola Hattar) for purchase of concentrate for beverages of specific brands, where such sole supplier is under supervision of another party (Pepsi-Cola USA) to the given agreement. The Tribunal held that such payments be treated a royalties, and are taxable, in the light of the fact that: (i) the bottling company did not bring on record any copy of the given agreement (on the pretext that its disclosure will be detrimental to competitive advantage of business in the market), and (ii) previously the bottling company had paid excise duty on direct payments (and acknowledged them as royalty payments) to the principal (Pepsi-Cola USA) for purchase of concentrate for beverages of the given brands.