SICPA India Private Limited and Another Vs Union of India and Others (Sikkim High Court)
In a significant ruling, the Sikkim High Court has set aside an order by the Appellate Authority, allowing SICPA India Private Limited and another petitioner to claim a refund of Rs. 4,37,61,402/- in unutilized Input Tax Credit (ITC) following the discontinuation of their business operations. The judgment, delivered on June 11, 2025, by the Sikkim High Court, addresses the contentious issue of ITC refunds when a business ceases its activities, a scenario not explicitly covered under Section 54(3) of the Central Goods and Services Tax (CGST) Act, 2017.
Background of the Case:
SICPA India Private Limited, engaged in the manufacturing of security inks and solutions, had a GST registration in Sikkim. In January 2019, the company decided to discontinue its operations in the state, subsequently selling off its machinery and manufacturing facilities between April 2019 and March 2020. During this process, the petitioners appropriately reversed ITC as per GST law. However, they were left with an accumulated balance of unutilized ITC amounting to Rs. 4,37,61,402/-.
The petitioners sought a refund of this unutilized ITC, citing Section 49(6) of the CGST Act, which states that the balance in the Electronic Credit Ledger, after payment of tax, penalty, or other amounts, may be refunded in accordance with Section 54 of the CGST Act.
