Case Details: SICPA India Pvt. Ltd. v. Union of India (2025) 31 Centax 268 (Sikkim)
Judiciary and Counsel Details
- Meenakshi Madan Rai, J.
- Shri Passang Tshering Bhutia & Ms Ankit Kanodia, Advs. for the Petitioner.
- Ms Sangita Pradhan, Deputy Solicitor General of India for the Respondent.
Facts of the Case
The petitioner was engaged in the manufacturing of security inks and solutions and had a GST registration in Sikkim. The Petitioner decided to discontinue its operations in the State of Sikkim in January 2019. As a result, the company sold its assets between April 2019 and March 2020 and reversed the ITC in compliance with GST provisions. Despite reversing the ITC on the sale of assets, the company still had an accumulated balance of unutilized ITC. The Petitioner applied for a refund of this unutilized ITC under Section 49(6) of the CGST Act following the closure of its business.
The Assistant Commissioner of CGST, however, rejected the refund application on and the Appellate Authority upheld this decision. The Appellate Authority reasoned that Section 54(3) of the CGST Act, which governs refunds, is applicable only to the two specific circumstances listed in the section and does not extend to refunds in case of business closure.
The Petitioner contended that Section 49(6) of the CGST Act allows for the refund of the balance in the electronic credit ledger after paying tax, penalty, or fees. It argued that the refusal to grant the refund of unutilized ITC due to business closure was not supported by the statutory provisions. The Petitioner also argued that the right to claim ITC refund should not be limited solely to the two circumstances in Section 54(3), and the refusal to grant the refund on the grounds of business closure was unjustified.
High Court Held
The High Court noted that there was no express prohibition under Section 49(6) in conjunction with Section 54 and 54(3) of the CGST Act to prevent the refund of ITC due to business closure. The Court acknowledged that Section 54(3) specifically outlines two situations in which a refund of unutilized ITC can be claimed. However, it found that the statute does not provide for the retention of tax without legal authority, and therefore, the unutilized ITC should be refunded to the Petitioner.
The Court also noted that the Respondent’s reliance on the alternative remedy under Section 112 was not valid, as the matter did not require the determination of facts but rather a legal interpretation of the statutory provisions. Consequently, the Court set aside the impugned order passed by the Appellate Authority, and allowed the Petition, thereby granting the Petitioner the refund of the unutilized ITC.
List of Cases Cited
- Eicher Motors Ltd. v. Union of India — 1999 (106) E.L.T. 3 (S.C.) — Referred [Para 4]
- Godrej Sara Lee Ltd. v. Excise and Taxation Officer-cum-Assessing Authority — AIR 2023 SC 781 — Referred [Para 7]
- Shabnam Petrofils (P.) Ltd. v. Union of India — 2019 (29) G.S.T.L. 225 (Guj.) — Referred [Para 4]
- State of Uttar Pradesh v. Indian Hume Pipe Co. Ltd. — 1989 (39) E.L.T. 355 (J&K) — Referred [Para 7]
- Union of India v. Slovak India Trading Co. (P.) Ltd. — [2006] 5 STT 332 (Karnataka) — Referred [Para 4]
