Back
2025 Supreme(Sikk) 86
THE HIGH COURT OF SIKKIM: GANGTOK
Bhaskar Raj Pradhan, J.
M/s Torrent Pharmaceuticals Ltd. (Unit-III), (Erstwhile Unichem Laboratories Ltd.) - Petitioner
Versus
Union of India, Through Secretary, Department of Revenue, Ministry of Finance, North Block, New Delhi - Respondent
W.P. (C) No. 55 of 2023
Decided On : 02-04-2025
For the Petitioner:Mr. V. Sridharan, Senior Advocate with Mr. Rahul Tangi, Advocate. (through V.C.). Ms. Gita Bista, Ms. Anu Sharma, Ms. Udita Saraf and Ms. Anusha Basnet, Advocates
For the Respondent:Ms. Sangita Pradhan, Deputy Solicitor General of India along with Ms. Natasha Pradhan, Advocate
A Single Bench is bound by the findings of a Division Bench; therefore, where a Division Bench has set aside the legal basis for an administrative recovery order regarding eligibility for fiscal support schemes, that order cannot be maintained.
Headnote:(A) Constitution of India - Article 226 - Writ jurisdiction - Recovery of fiscal benefits - Change in ownership of industrial unit - Whether transfer of business ownership renders an entity ineligible for budgetary support - Single Bench bound by Division Bench decision setting aside the precedent that declared units with changed ownership ineligible - Impugned recovery order unsustainable - Writ petition allowed. (Paras 10, 12, 13)
Facts of the case:
The petitioner, a pharmaceutical manufacturer, was granted financial support under a government scheme for its industrial units. Following the acquisition of a business entity and the transfer of its ownership, authorities issued a recovery notice for the refund sums previously disbursed, asserting that the change in ownership disqualified the unit from the scheme. The authorities relied on prior court judgments regarding the eligibility of units that had undergone ownership changes. The petitioner challenged this recovery notice through a writ petition.
Findings of Court:
The court observed that the specific judgments relied upon by the authorities to justify the recovery had been set aside by a recent decision of the Division Bench. The court held that it was obligated to follow the binding precedent established by the Division Bench, which contradicts the rationale used by the respondents to confirm the recovery demand.
Issues: Whether the industrial unit is ineligible for budgetary support benefits following a change in ownership, and consequently, whether the order for recovery of disbursed funds is legally sustainable.
Ratio Decidendi: Judicial discipline requires the Single Bench to adhere to the law settled by the Division Bench. Since the Division Bench had previously set aside the findings upon which the recovery order was predicated, the current recovery demand is inconsistent with binding judicial authority and must therefore be set aside.
Result: Petition allowed.
| Table of Content |
|---|
| 1. factual context regarding the budgetary support scheme and subsequent recovery notice due to ownership change. (Para 5 , 6 , 7 , 8 , 9) |
| 2. parties argument regarding applicability of binding division bench precedents. (Para 10 , 11) |
| 3. court holds itself bound by superior division bench judgment. (Para 12 , 13) |
JUDGMENT :
Bhaskar Raj Pradhan, J.
1. M/s Torrent Pharmaceuticals Limited (Unit III) filed the present writ petition challenging order-in- original No.02/BS/GTK/Torrent Pharma-III/GTK- DIV/2023-24 dated 01.11.2023 passed by the learned Assistant Commissioner of CGST, Gangtok Division directing recovery of refund amounting to Rs.12,18,27,592/- along with interest @ 15% per annum in terms of paragraph 9 of the Budgetary Support Scheme read with affidavit-cum-indemnity bond dated 23.01.2018.
2. It was the case of the petitioner that they had entered into an agreement to acquire Unichem Laboratories business of India and Nepal, as a going concern on slump sale basis. On account of such acquisition, GSTIN of the petitioner was amended and the Sikkim unit of Unichem Laboratories located at NH-31A (NH-10) Village Bhagheykhola, P.O. Majhitar, Rangpo, East District, Sikkim was added as additional place of business in petitioner’s GST registration No.11AAACT5456A1ZY.
3. According to the petitioner this transfer of ownership was duly communicated to the Superintendent of CGST, Range II, Div, Gangtok vide letters dated 07.12.2017 and 14.12.2017.
4. Thereafter, on 19.01.2018 the petitioner submitted an application before the respondent no.4 for registration of Unit III under Budgetary Support Scheme along with Affidavit-cum-Indemnity bond for residual period i.e. 14.12.2017 to 28.05.2020.
5. Certain queries were raised by the respondent no.4 and after receipt of the answers from the petitioner, the petitioner was allotted Unique ID No.45/Gangtok/Siliguri/11AAACT5456A1ZY under BSS vide letter bearing No.C.No.V(19)50/BS/Torrent-III/GTK-Divn/2017-18/1077 dated 30.05.2018.
6. Eleven claims were filed thereafter for the period October 2017 to June 2021 for refund amounting to Rs.12,18,27,592/-. After verification the petitioner was sanctioned budgetary support amounting to Rs.12,18,27,592/- for the period October 2017 to June 2021 as claimed.
7. However, recovery notice bearing No.SBS/03/Torrent Unit-3/Gtk-Div/2022-23 vide letter bearing C. No. V(18)16/GST/SBS/ Recovery/Torrent-III/Gtk-Div/2022-23/1582 dated 29.08.2022 was issued upon the petitioner, directing the petitioner to reverse entire budgetary support amounting to Rs.12,18,27,592/- along with interest @ 15% per annum in terms of paragraph 9.1 of the Budgetary Support Scheme and affidavit-cum- indemnity bond dated 23.01.2018 as affirmed by the petitioner.
8. The recovery notice was issued on the ground that since there is a change in ownership in respect of the concerned Unit, therefore, such Unit is not eligible under the Budgetary Support Scheme. Reliance was placed on the clarification issued by the Department for Promotion of Industry and Internal Trade (DPIIT) via Office Memorandum bearing F.No.10/1/2021-GSTSS dated 31.03.2022 which referred to another Office Memorandum dated 20.10.2021.
9. After receipt of the response from the petitioner including details submissions and personal hearing the respondent no.4 passed the impugned order confirming the demand upon the petitioner on various findings, including that this Court’s had vide Order dated 12.09.2023 dealt with identical issue in W.P. (C) No.20 of 2022 Zydus Wellness Products Limited vs. Union of India & Ors.; and W.P. (C) No.27 of 2022 Alkem Laboratories Limited vs. Union of India & Ors.; wherein it was held that the Unit which had undergone change of ownership would not be entitled to benefit under the Budgetary Support Scheme.
10. Heard Mr. V. Sridharan, learned Senior Counsel for the petitioner as well as learned Deputy Solicitor General of India for respondents. The learned Senior Counsel submits that the two
