Interesting, I can reproduce it. While the beautifier would beautify the code the way pagupta wants it if the file was batch-beautified, the editing code isn't honoring those settings. (and in this case, "Beautify while typing" only works for the second case, in some scenarios it would not adjust the label indent).
It may be a bug for the label indent, I could have swore we looked at the beautifier settings for that case.