Vedanta Limited Vs Union of India & others (Orissa High Court)
Demand of Rs. 231 Crore stayed on SCN issued for multiple years where Constitutionality and fairness of ISD provisions is under challenge
The Hon’ble Orissa High Court in Vedanta Limited v. Union of India & Ors [W.P.(C) No. 23286 of 2025, order dated August 25, 2025] held that there is a prima facie case concerning the challenge to GST Input Service Distributor (ISD) provisions, and, citing Karnataka High Court precedent, stayed the operation of a show cause notice for GST demand issued for multiple financial years until further orders.
Facts:
Vedanta Limited (“the Petitioner”) is engaged in manufacturing with a centralized Input Service Distributor (ISD) mechanism for allocating input service credits to its units. The Petitioner challenged a GST demand of Rs. 231 crores arising out of ISD credit distribution, issued via show cause notice dated June 20, 2025, for multiple financial years.
The Union of India and GST authorities (“the Respondents”) raised the demand based on Section 21 of the CGST Act and relevant ISD rules, holding Vedanta liable as a recipient for alleged inaccuracies in ISD credit distribution. The Respondents maintained that recovery against recipients is legally valid under the scheme.
