Authorities in New Delhi barred AB InBev in July from selling its beer in the New Delhi market on allegations of evading local state taxes. The company has denied the allegations.
The state's excise commissioner, who is already hearing an appeal against the ban order, had rejected a request from the company to hold off implementing the ban, Reuters reported last month.
The company's plea against the city government was heard at the Delhi High Court on Tuesday, where Justice Navin Chawla declined to give any immediate relief and said the appeals process before the state authorities must first be completed.
"Why have two parallel proceedings," said Chawla.
The city government's ban order followed a three-year investigation which found that beer maker SABMiller — acquired by AB InBev in 2016 for around $100 billion — used duplicate barcodes on its beer bottles supplied to city retailers that year, allowing it to pay lower levies.
AB InBev, which counts popular beer brands such as Budweiser, Hoegaarden and Stella Artois in its portfolio, said on Tuesday it was contesting the allegations which were dated back to 2016, before its takeover of SABMiller.
"It is our understanding that appropriate excise duty payments were made. We are committed to operating with integrity and high ethical standards," the company said in a statement to Reuters.
On Tuesday, the Delhi city government's counsel referred to the case as one involving "clandestine" dealings, arguing that the brewer had not completed its appeals proceedings with the state which will next be heard on 9 September.
AB InBev's counsel Rajiv Nayar, however, argued for immediate relief, saying the brewer was suffering due to the ban as it could not apply for state licences for the next year.
Though Justice Chawla did not agree to give any relief for now, he said he viewed the case as one in which the city government acted beyond its authority in banning AB InBev. He will next hear the case on 16 September.
AB InBev is the second biggest player in India’s $7 billion beer market, accounting for a 17.5% market share, according to research firm IWSR Drinks Market Analysis.
Among those sitting in a packed New Delhi courtroom was AB InBev's vice president for legal & corporate affairs for South Asia, John K. Johnson, who took notes and flipped through legal documents during the hearing.
Industry executives have said the Delhi ban would be a major setback for AB InBev, which is also battling a separate Indian antitrust probe concerning alleged beer price fixing by SABMiller and other companies.