Sikkim High Court Sets Aside ₹37.93 Lakh Recovery Against Lupin Limited, Directs Fresh Review

On 23 September, the Sikkim High Court set aside a Rs. 37.93 lakh recovery against Lupin Limited under the Budgetary Support Scheme, directing the tax authorities to reconsider the matter after examining the company's explanation and supporting documents.

Chief Justice A. Muhamed Mustaque found that the authorities had not properly considered Lupin's explanation on the ITC reflected in its GSTR-2A before concluding that it had received excess benefit under the scheme. The Bench observed:

“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.”

Lupin had received budgetary support for the period from July 2017 to March 2018. The authorities subsequently alleged that the company had received excess support and, after re-verification, sought recovery of Rs. 37.93 lakh with 15% annual interest.

The company contended that an amount had been inadvertently disclosed in Table 8C of GSTR-9 and was wrongly relied upon to conclude that excess budgetary support had been received.

The High Court found that Lupin's explanation and supporting documents had not been properly considered. It therefore set aside the impugned orders and directed the authorities to reconsider the matter after giving the company an effective opportunity of hearing.

The Bench also directed that the fresh exercise be completed within two months.

For Lupin Limited (Petitioner): Senior Advocate Prakash Shah, appearing through VC, with Advocate Menuka Gurung.

For the Respondents: Deputy Solicitor General of India Sangita Pradhan, with Advocates Sittal Balmiki and Amit Kumar Sharma.