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2025 Supreme(Sikk) 85
THE HIGH COURT OF SIKKIM : GANGTOK
BISWANATH SOMADDER, C.J., MEENAKSHI MADAN RAI, J.
Glenmark Pharmaceuticals Limited – Appellant
Versus
Union of India and Others – Respondents
WA No.02 of 2024
Decided On : 15-05-2025
For the Appellant :Mr. Rahul Tangri, Ms. Gita Bista, Ms. Pratikcha Gurung, Ms. Anusha Basnett, Ms. Anu Sharma and Mr. Dipendra Chettri, Advocates.
For the Respondents:Ms. Sangita Pradhan, Deputy Solicitor General of India with Ms. Sittal Balmiki and Natasha Pradhan, Advocates for the Respondents No.1 and 2. Mr. Manish Kumar Jain, Advocate.
Budgetary tax reimbursement must be calculated using monthly liability data to align with the underlying tax payment cycle, ensuring equity, even when administrative claim filing is restricted to a quarterly basis. Courts must uphold judicial comity to maintain consistency across similar regulatory schemes.
Headnote:(A) Budgetary Support Scheme - Refund of Tax - Methodology of computation - Whether calculation of reimbursement should be strictly quarterly or based on monthly underlying data - Held, while filing of claims remains quarterly, the calculation must be based on monthly tax discharge to reflect actual liabilities incurred. (Paras 7, 8)
(B) Judicial Comity - Doctrine of - Requirement of courts to avoid conflicting orders - Duty to harmonize decisions with those of competent jurisdictions regarding identical schemes to ensure certainty in law. (Para 10)
Facts of the case:
The appellant sought reimbursement of tax liabilities under a budgetary support scheme. Authorities rejected a portion of the claim based on a quarterly calculation formula, which resulted in the denial of support due to the treatment of unutilized tax credits at the end of the quarter. The appellant argued that since tax returns are filed monthly, the calculation of the quantum of support should also be on a monthly basis. The lower authorities insisted on a strict quarterly computation as per the prescribed scheme.
Findings of Court:
The court determined that the refusal to account for the monthly discharge of tax liability was erroneous. It emphasized that while the administrative requirement to file claims on a quarterly basis must be maintained, the actual computation of the amount to be reimbursed must reflect the monthly cash tax payment cycle to ensure the scheme operates as intended. The court further applied the doctrine of judicial comity, noting that previous decisions on identical schemes had already established the necessity of monthly-based calculations for accurate reimbursement.
Issues: The main issues were the legality of computing budgetary support reimbursement on a quarterly vs. monthly basis and whether the administrative convenience of quarterly filing justifies an accounting method that distorts the actual tax liability, alongside the application of the doctrine of judicial comity regarding similar adjudications.
Ratio Decidendi: Tax reimbursement schemes must be interpreted in a manner that favors the economic reality of monthly tax payments. The requirement for quarterly filing is a procedural directive for administrative efficiency, not a substantive formula for calculation that should be allowed to negate the benefit due to the taxpayer. Adopting a methodology synchronized with the underlying monthly tax cycle is necessary to carry out the objective of the reimbursement.
Result: Writ appeal allowed; impugned orders set aside; matter remanded to the adjudicating authority to reconsider the claim based on monthly calculations.
| Table of Content |
|---|
| 1. challenge to denial of budgetary support due to procedural non-compliance. (Para 1 , 2 , 3) |
| 2. contention over mandatory quarterly versus monthly calculation of budgetary support claims. (Para 4 , 5 , 6) |
| 3. reimbursement calculations must align with monthly tax discharge mechanisms despite quarterly filing requirements. (Para 7 , 8 , 9 , 10) |
| 4. order to re-evaluate claims using consistent monthly calculation methodology. (Para 11 , 12 , 13) |
JUDGMENT :
Meenakshi Madan Rai, J.
1. The appellant is aggrieved by the judgment of the learned single Judge in WP(C) No.02 of 2023 (Glenmark Pharmaceuticals Limited vs. Union of India and Others), dated 06-05-2024, vide which, the order dated 01-03-2022 of the respondent no.3, was upheld and the writ petition dismissed.
2. The respondent no.3, in the order of 01-03-2022, impugned before the learned single Judge inter alia observed that the procedure of sanctioning budgetary support was enunciated in the Circulars dated 27-11-2017, of the Central Board of Excise & Customs, Department of Revenue, Ministry of Finance, Government of India and 10-01-2019 of the Central Board of Indirect Taxes & Customs, Department of Revenue, Ministry of Finance, Government of India. The petitioner's claim for budgetary support for the period July, 2017 to September, 2017, was rejected by respondent no.3 while allowing its claims for October, 2017 to June, 2018, reasoning that in terms of the computation prescribed in Circular, dated 27-11-2017, the appellant's claim for budgetary support, after aggregating the tax liabilities and input tax credit and considering that the balance of input tax credit was in the negative, the appellant was not entitled to any budgetary support for the said period.
3. The learned single Judge, by the order dated 06-05-2024, in WP(C) No.02 of 2023, observed inter alia that, the petitioner admittedly did not follow the budgetary scheme or the instructions of the two Circulars, dated 27-11-2017 and 10-01-2019, to file claim application on a quarterly basis, instead of which, the petitioner filed separate claims for the months of July and August, 2017, under one covering letter. By this process, the petitioner claimed separate amounts for April 2017 and August, 2017. No claim for budgetary support was made for September, 2017. Referring to the Circular dated 27-11-2017, it was observed that, the claim for budgetary support was required to be calculated in the manner provided therein, as it was issued in furtherance of the budgetary support scheme. The learned Court observed that the petitioner intended to make the authorities work out the budgetary support on the basis of monthly claims, filed by them earlier and not on a quarterly basis as required under the budgetary support scheme. Although the Circular dated 27- 11-2017, permitted manual application for budgetary support for the quarter ending September, 2017, it did not digress from the mandate of paragraph 5.4 of the budgetary support scheme. The Circular dated 10-01-2019, permitted the assessee to provide month-wise details in the table annexed to the refund application to enable speedier and accurate verification of the refund claims and to make the process of verification refund claims easier. The assessee would fill monthly returns under the Goods and Services Tax (GST), whereas the refund application was for the quarter. Therefore, when the petitioner was required by the authorities to modify their initial application to a quarterly basis as required under the law, they had no choice but to reflect the balance of input tax credit of Central Goods and Service Tax (CGST) for the month of September, 2017 as well. Rationalising thus, the Court dismissed the writ petition.
4. The petitioner's claim is that despite all conditions of Notification dated 05-10-2017 being fulfilled, the claim for budgetary support for the period mentioned was denied, by misinterpreting the Notification and the Circular of the Central Board
