Recipient Unit Authorities Cannot Question ISD Credit Distribution Accepted by Jurisdictional ISD Authorities

Abbott Healthcare Pvt. Ltd. Vs Union of India & Ors. (Himachal Pradesh High Court)

Recipient Unit Authorities Cannot Question ISD Credit Distribution Accepted by Jurisdictional ISD Authorities

The petitioner is a leading pharmaceutical MNC. It has its head office at Mumbai. The said office is registered as an “input service distributor”. The ISD distributed credit to the Shimla plant. Similarly; there was a cross charge by Mumbai office to Shimla. The officer at Shimla questioned such credit on the ground that ISD has not correctly distributed the credit. Demand of over Rs.80 crores with interest and penalty was confirmed. Hence; petition came to be filed.

The Hon’ble Himachal Pradesh High Court set aside the order and allowed the petition. It noted: (i) there is a fundamental jurisdictional objection: the ISD distributing credit was registered in Mumbai, whereas the Shimla adjudicating authority proceeded to question and deny such ISD-distributed ITC at the recipient unit; (ii) the petitioner placed on record audit report of the Mumbai ISD by the jurisdictional authorities; which, after detailed verification of records, accepted the correctness of the credit distribution, thereby undermining the very basis of the Shimla proceedings; (iii) the court notes that the Revenue authorities at Shimla has no reply to the said audit report; (iv) notes that the adjudicating authority had failed to address the jurisdictional objection and accordingly; remands the matter back to the adjudicating authority; to pass fresh order; leaving all issues on merits open.

Argued by Adv. Bharat Raichandani a/w Adv. Ishaan Kashyap i/b UBR Legal

FULL TEXT OF THE JUDGMENT/ORDER OF HIMACHAL PRADESH HIGH COURT

This petition has been preferred against the impugned order dated 29.12.2023 passed by respondent No.4, i.e. Additional Commissioner, Central Goods & Services Tax, Shimla, H.P

2. On 22.05.2025, following order was passed by this Court in this matter:-

“Learned counsel for the petitioner on instructions states that the petitioner is mainly agitating the findings recorded by the Additional Commissioner, regarding wrong availment of ITC amounting to Rs.17,67,81,453/- on invoices issued by the ISD during 2018-19 and 2019-20.

A perusal of the order goes to show that adjudicating authority has specifically held in para 4.6.12 of its finding that a credit of Rs.17,67,81,453/- has been wrongly distributed by the ISD to the Noticee as such is recoverable from the Noticee in terms of the provisions of CGST Act, 2017 and HPGST Act, 2017 read with Section 20 of the IGST Act, 2017.

In furtherance to his submissions, today learned counsel for the petitioner has placed before us a copy of the Audit Report under Section 65(6) of the CGST Act, wherein, a clean chit has been given to the petitioner with regard to the aforesaid amount.

Confronted with this, learned counsel for the respondents pray for and are granted time to seek instructions.

List on 05.06.2025.”

3. Till date, respondents have not placed any material on record to rebut the aforesaid plea. Impact of Audit Report being relied upon by the petitioner is required to be adjudicated by the concerned Authority.

4. In view of the above, impugned order dated 29.12.2023 is set aside with a direction to the Additional Commissioner, Central Goods & Services Tax, Shimla, H.P., to decide the matter afresh by taking into consideration the submissions made and material placed on record on behalf of the appellant as well as the Revenue Department.

5. Needful be done within two months.

6. Necessary exercise by the concerned officer(s) be completed as expeditiously as possible, preferably within two months from today.

7. Needless to say, we have not adjudicated any issue on merit including the merits of the show cause notice as well as objections raised by petitioner. Concerned Authority shall adjudicate the matter afresh without being influenced by this order or any other observations made by this Court.

Accordingly, petition stands disposed of being infructuous along with pending miscellaneous application(s), if any.