Lupin Limited vs. Union Of INDIA And Ors.

Facts

The petitioner, Lupin Limited, is challenging the recovery of alleged excess budgetary support received under a scheme notified by the Department of Industrial Policy and Promotion (DIPP) for the period July 2017 to March 2018. Initially, the respondents sought recovery of ₹41,64,578. Following previous court orders, the alleged excess amount was revised to ₹37,93,159. The petitioner filed the present writ petition challenging the Order-in-Original dated 07.01.2025 passed by the Assistant Commissioner, CGST, Gangtok, which confirmed the recovery of ₹37,93,159 along with interest. Subsequently, ₹75,40,592 was adjusted from the petitioner's refund for April to June 2024. The core issue revolves around the petitioner's explanation for an inadvertent disclosure in GSTR-9 which allegedly led to the conclusion of excess budgetary support.

Held

The Court held that the Respondents had not properly undertaken the exercise of considering the Petitioner's explanations and supporting documents. The Petitioner's case was that an inadvertent disclosure in Table 8C of GSTR-9 was the basis for the respondents' conclusion of excess budgetary support. The Court found that the Petitioner was required to explain the discrepancy by providing reconciliation statements, invoices, and relevant account details to demonstrate that the ITC reflected in GSTR-2A was not actually eligible or available for utilization. The Respondents were obligated to consider these explanations and record the documents relied upon and reasons for accepting or rejecting them in a reasoned order. Since this exercise was not properly undertaken, the Court set aside the impugned orders and granted the Petitioner one further opportunity 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 utilization. The Respondents are directed to reconsider the matter afresh after affording an effective opportunity of hearing and to deal with each explanation and supporting document by recording reasons in the final order. The issue of whether the ITC was legally available and capable of utilization was thus remitted for fresh consideration.

Key Issues

1. Whether the Petitioner’s explanation and supporting documents regarding the Input Tax Credit (ITC) reflected in GSTR-2A were properly considered by the Respondents, and if adequate reasons were recorded while rejecting them, as per the principles of natural justice and the requirements of a reasoned order under the CGST Act? (Mixed question of law and fact, concerning the interpretation and application of principles of natural justice and the requirement for reasoned orders). Petitioner's Contention: The petitioner argued that an inadvertent disclosure in Table 8C of GSTR-9 was relied upon by the respondents to conclude excess budgetary support. They contended that the respondents failed to properly consider their explanations and supporting documents demonstrating that the ITC reflected in GSTR-2A was not legally available or utilized. They relied on the principle that authorities must provide reasons for rejecting submissions. Respondents' Contention: The respondents alleged that the petitioner had received excess budgetary support. Their actions, as reflected in the impugned orders, indicate a belief that the petitioner was not entitled to the full amount of budgetary support claimed, based on their interpretation of the petitioner's disclosures and the scheme's provisions. No specific statutory provisions or precedents were explicitly named in the judgment for the respondents' arguments.