The Indian alcobev sector is witnessing a high-stakes legal and financial showdown. Hindusthan National Glass and Industries (HNGIL), a prominent container glass manufacturer, has issued a formal default notice under Section 8 of the Insolvency and Bankruptcy Code (IBC) to B9 Beverages, the parent company of the popular craft beer brand Bira 91. The notice demands the recovery of ₹11.77 crore in unpaid dues. This legal maneuver serves as a mandatory precursor to initiating the Corporate Insolvency Resolution Process (CIRP) under Section 9 of the IBC at the National Company Law Tribunal (NCLT).
While the headlines focus on the operational survival of Bira 91, this dispute highlights a much larger, systemic issue that plagues modern supply chains: the severe tax, GST, and financial compliance risks associated with customized manufacturing contracts. When transactions of this scale collapse, the tax implications can be as damaging as the commercial losses themselves.
The Core of the Dispute: Customised Inventory and Stranded Capital
The conflict between the two companies centers on over 51 lakh customized 650 ml amber glass bottles manufactured by HNGIL. These bottles were produced against three specific purchase orders placed by B9 Beverages in June and September 2024. Because the bottles carry B9 Beverages’ unique branding and were built to exact technical specifications, they cannot be sold to any other market buyer. Currently, this massive stock remains unlifted, occupying valuable warehouse space at HNGIL’s manufacturing facilities in Bahadurgarh (Haryana), Puducherry, and Rishra (West Bengal).
According to the default notice sent through HNGIL’s counsel, Nyaayam Associates LLP, the outstanding claim of ₹11.77 crore is broken down as follows:
- ₹7.03 crore: The direct value of the manufactured but unlifted glass bottles.
- ₹1.12 crore: Accrued storage and warehousing charges for holding the stock.
- Interest: Contractual interest calculated on both the goods and storage heads, adjusted against a minor credit of ₹13.72 lakh standing to B9 Beverages’ account.
Prior to this Section 8 notice, HNGIL had sent a legal notice on May 6, demanding payment and a pickup schedule within 15 days. Having received neither, the glassmaker has given B9 Beverages a final 10-day window to clear the dues or prove a pre-existing legal dispute, failing which NCLT proceedings will commence.
The GST Trap: No Relief for Bad Debts and Stranded Inventory
From a fiscal perspective, the HNGIL-B9 Beverages dispute is a classic case study in how supply chain disruptions trigger severe tax compliance issues. Under India’s Goods and Services Tax (GST) framework, the tax liability on the supply of goods is triggered by the “time of supply,” which is generally the date of issuance of the invoice or the date of delivery. If HNGIL issued tax invoices upon completing the customized production run, they would have been legally obligated to deposit the corresponding GST with the government.
In cases of buyer default, the selling manufacturer faces a double blow. Not only is their working capital blocked in unlifted inventory, but they have also paid GST on sales that yielded zero revenue. Unlike some global tax jurisdictions, India’s GST law does not provide a mechanism to claim a refund or write off GST paid on bad debts. This reality highlights the administrative challenges discussed in analyses of India’s mixed economic signals, where paper profits can mask severe underlying cash flow constraints.
Taxability of Storage and Demurrage Charges
The ₹1.12 crore claimed by HNGIL for storage charges introduces another complex GST compliance layer. Under GST, charges levied for the storage or warehousing of goods are taxable. The key question is whether these charges are treated as a “composite supply” or a separate “independent service.”
If the storage charges are viewed as ancillary to the main contract of supplying glass bottles, they may take on the tax rate of the principal supply (glass bottles). However, if they are classified as a separate service for tolerating an act of delay, they could attract a different rate of tax. In either scenario, both parties must ensure precise reconciliation of multi-tax liabilities to prevent tax department audits and ledger mismatches.
Input Tax Credit (ITC) Reversals and Restructuring Realities
The compliance fallout extends directly to B9 Beverages as well. Under Section 16(2) of the CGST Act, a buyer is eligible to claim Input Tax Credit (ITC) on inward supplies. However, the second proviso to this section mandates that if the recipient fails to pay the supplier the value of the goods plus tax within 180 days from the invoice date, the availed ITC must be reversed, along with interest at 18%.
For a company like B9 Beverages, which is reportedly carrying an estimated debt of ₹1,000 crore and has been out of production since September 2025, such ITC reversals add substantial weight to an already heavy compliance burden. If B9 had provisionally recorded these transactions or claimed associated credits, the failure to pay HNGIL within the 180-day window transforms a commercial default into an active tax liability.
Furthermore, if HNGIL eventually decides to scrap the 51 lakh branded bottles because they are unmarketable to third parties, they face the provisions of Section 17(5)(h) of the CGST Act. This section blocks ITC on raw materials used for goods that are written off, lost, or destroyed. Thus, HNGIL faces the threat of having to reverse the tax credits they claimed on the raw materials used to make Bira’s bottles, compounding their financial loss.
Looking Ahead: Recapitalisation and Statutory Clearance
B9 Beverages is currently undergoing a restructuring process led by alternative investment firm Anicut Capital, alongside existing major shareholders Peak XV Partners and Kirin Holdings. This restructuring follows the departure of founder Ankur Jain from the board and executive roles in July. The proposed recapitalization is explicitly aimed at clearing outstanding statutory liabilities, vendor payments, and employee dues before attempting to resume production.
As potential buyers like Varun Beverages (via its step-down subsidiary KIVA Spirits) circle the distressed brewer, resolving these operational debts is crucial. Any successful acquisition or restructuring plan must prioritize clearing tax and vendor liabilities to avoid inheriting a web of litigation. This case serves as a reminder to the manufacturing sector, especially under the national spotlight of global capital and local compliance, that commercial contracts must be structured with robust tax-safeguard clauses to weather the storm of corporate insolvency.
Frequently Asked Questions
The total amount claimed is ₹11.77 crore. This comprises ₹7.03 crore for the value of the manufactured goods, ₹1.12 crore for accrued storage charges on the unlifted stock, and contractual interest on both heads, after adjusting a credit of ₹13.72 lakh standing to the account of B9 Beverages.
The over 51 lakh 650 ml amber glass bottles were customized specifically for B9 Beverages, meaning they carry the brand's own logo and were manufactured to their specific technical requirements. Consequently, they are not readily marketable to any third-party buyer.
B9 Beverages has been out of production since September 2025 and is estimated to carry a debt of around ₹1,000 crore. Its founder, Ankur Jain, and his family stepped down from the board and all executive positions in July after settling with lenders and investors.
The restructuring and recapitalization process is being led by alternative investment firm Anicut Capital, alongside existing shareholders Peak XV Partners and Kirin Holdings. Companies like Varun Beverages, through its new step-down subsidiary KIVA Spirits, are reportedly in the race to acquire B9 Beverages.
