Lupin Limited Vs Union of India And Others (Sikkim High Court)
Summary: The Sikkim High Court set aside the orders confirming recovery of ₹37,93,159 as alleged excess budgetary support from Lupin Limited, together with interest at 15% per annum, and directed the authorities to reconsider the matter afresh after giving the petitioner an effective opportunity of hearing. The dispute concerned budgetary support for July 2017 to March 2018 under the Budgetary Support Scheme notified by the Department of Industrial Policy and Promotion on 05.10.2017. Under the Scheme, eligible goods manufactured by the petitioner attracted budgetary support corresponding to 58% of Central Tax and 29% of Integrated Tax paid through the cash ledger after utilisation of eligible Input Tax Credit (ITC). The petitioner had been granted ₹12,48,27,999 against a claim of ₹12,63,99,662.
The authorities initially alleged excess support of ₹41,64,578. Following earlier proceedings and verification, the alleged excess was revised to ₹37,93,159. The impugned Order-in-Original dated 07.01.2025 confirmed its recovery with interest, and ₹75,40,592 was subsequently adjusted from refund otherwise payable to the petitioner for April to June 2024. The petitioner contended that an amount had inadvertently been disclosed in Table 8C of GSTR-9 and that this disclosure was relied upon for concluding that excess budgetary support had been received.
The High Court held that the material question was whether the ITC reflected in GSTR-2A was actually legally available and capable of utilisation. If reconciliation statements, invoices and account details demonstrated that such ITC was not eligible or available for utilisation, the authorities were required to consider those explanations and record the documents relied upon and reasons for accepting or rejecting them. The Court found that this exercise had not been properly undertaken.
Accordingly, the impugned orders were set aside. Lupin Limited was granted a further opportunity to demonstrate through necessary supporting documents why the ITC reflected in GSTR-2A was unavailable for utilisation. The respondents were directed to consider each explanation and supporting document and record reasons in the final order. The exercise is required to be completed within two months.
FULL TEXT OF THE JUDGMENT/ORDER OF SIKKIM HIGH COURT
1. The matter pertains to the alleged excess budgetary support received by the Petitioner, Lupin Limited, under the Budgetary Support Scheme notified by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industries, Government of India. Vide Notification dated 05.10.2017. The Petitioner Company is covered by the said Scheme and is entitled to budgetary support in accordance with the terms thereof. The issue in the present matter relates to the period from July 2017 to March 2018.
2. As per the Budgetary Support Scheme, goods manufactured by the Petitioner would be eligible for budgetary support to the extent of 58% of the Central Tax paid through debit in the cash ledger account and 29% of the Integrated Tax, paid through debit in the cash ledger account, after utilization of the eligible Input Tax Credit (ITC).
3. Based on the records, the Petitioner was granted budgetary support amounting to Rs. 12,48,27,999/- against its claim of Rs. 12,63,99,662/- for the period July 2017 to March 2018.
4. Thereafter, the Respondents alleged that the Petitioner had received excess budgetary support and initially sought recovery of ₹41,64,578/- (Rupees forty-one lakhs sixty-four thousand five hundred and seventy-eight only).
5. The Petitioner then approached this Court by filing W.P(C) No. 46 of 2022. This Court by order dated 19.05.2023, directed the Respondents to examine the additional documents furnished by the Petitioner and thereafter, by order dated 20.11.2023, permitted the Respondents to re-examine the recovery. Pursuant thereto, verification was conducted and the alleged excess amount was revised to Rs. 37,93,159/- (Rupees thirty-seven lakhs ninety-three thousand one hundred and fifty-nine only).
6. The Petitioner then filed the instant Writ Petition challenging the Order-in-Original dated 07.01.2025 passed by the Assistant Commissioner, Central Goods and Service Tax (CGST), Government of India, Gangtok Division and the consequential adjustment order dated 10.03.2025. The impugned orders challenged by the Petitioner confirmed recovery of the alleged excess budgetary support amounting to ₹37,93,159/- (Rupees thirty-seven lakhs ninety-three thousand one hundred and fifty-nine only) along with interest at the rate of 15% per annum. Subsequently, an amount of ₹75,40,592/- (Rupees seventy-five lakhs forty thousand five hundred and ninety-two only), was adjusted from the refund otherwise payable to the Petitioner for the period April to June, 2024.
7. The short point for consideration is whether the Petitioner’s explanation and supporting documents were properly considered by the Respondents and whether adequate reasons were recorded while rejecting the same. The Petitioner’s case is that it had inadvertently disclosed a certain amount in Table 8C of GSTR-9 and that such inadvertent disclosure was the reafter relied upon to conclude that the Petitioner had received excess budgetary support for the period in question.
8. The question that required consideration was whether the ITC reflected in GSTR-2A was in fact legally available and capable of being utilized by the Petitioner. The Petitioner was required to explain the discrepancy by way of reconciliation statements, invoices and relevant account details. If such explanations were supported by the necessary materials demonstrating that the ITC reflected in GSTR-2A was not actually eligible or available for utilisation, the Respondents were required to consider those explanations and record the documents relied on and reasons for accepting or rejecting the same in a reasoned order.
9. This Court finds that such an exercise was not properly undertaken in the present matter. In such circumstances, one further opportunity ought to be given to the Petitioner to demonstrate, with supporting documents, the basis on which the ITC reflected in GSTR-2A had arisen and why such ITC was not available for utilisation.
10. In such circumstances, in order to afford an opportunity to the Petitioner, it is appropriate that the impugned orders be set aside and this Court directs the Respondents to reconsider the matter afresh after affording an effective opportunity of hearing to the Petitioner.
11. It is made clear that the Petitioner shall demonstrate, by producing the necessary documents, why the ITC reflected in GSTR-2A was not available for utilisation and the Respondents are directed to consider each of such explanations and supporting documents and deal with the same by recording reasons in the final order to be passed.
12. With the above directions, the W.P.(C) No. 24 of 2025 stands disposed of.
13. Needful shall be done within a period of two months.
