Torrent Pharmaceuticals Ltd. Vs Union of India (Sikkim High Court)
The Sikkim High Court has set aside a recovery order against Torrent Pharmaceuticals Ltd., which had been directed to refund over Rs. 12 crore in budgetary support along with interest. The court’s decision hinged on a prior judgment from its own Division Bench, which had already established a precedent on the core issue of a change in ownership.
The case, Torrent Pharmaceuticals Ltd. Vs. Union of India, originated from a dispute over the eligibility of a pharmaceutical unit under the Budgetary Support Scheme (BSS), an incentive program for industrial units in specific states. Torrent Pharmaceuticals had acquired the Sikkim-based Unit III of Unichem Laboratories on a slump sale basis, incorporating it as an additional place of business under its own GST registration. Following the acquisition, Torrent applied for and was granted a Unique ID under the BSS for the remaining period of the scheme, from December 2017 to May 2020. Over a period spanning from October 2017 to June 2021, the company filed and received eleven claims for budgetary support totaling Rs. 12,18,27,592.
However, the situation changed in August 2022 when the Assistant Commissioner of CGST, Gangtok Division, issued a recovery notice to Torrent. The notice demanded the full refund amount along with a 15% annual interest. The government’s primary contention was that a change in ownership rendered the unit ineligible for the BSS, citing clarifications issued by the Department for Promotion of Industry and Internal Trade (DPIIT) in October 2021 and March 2022.
