Refund of unutilized input tax credit is a strictly statutory right confined to specific situations prescribed by law. It cannot be granted upon business closure unless explicitly enumerated by the legislature, as courts cannot infer or create additional grounds for refunds beyond the scope of enabling provisions.

JUDGMENT :

Bhaskar Raj Pradhan, J.

1. The writ appeal preferred by the Union of India desires the interpretation of section 49(6) and section 54(3) of the Central Goods and Services Tax Act, 2017 (for short, the CGST Act) by the Division Bench. The interpretation of the provisions arises as the respondent - SICPA India Private Ltd. (for short, SICPA) insists that the unutilised Input Tax Credit (for short, ITC) is required to be refunded by the appellant under section 49(6) of the CGST Act. SICPA succeeded before the writ Court and therefore, the Union of India has preferred this appeal.

Submissions

2. The learned Deputy Solicitor General of India submits that the CGST Act and the relevant provisions for refund of ITC has already been examined and decided by the Hon‘ble Supreme Court in Union of India vs. VKC Footsteps (India) (P) Ltd., (2022) 2 SCC 603 and the present writ appeal may be disposed of as the interpretation rendered therein is binding. She also relied upon the judgment of the Division Bench of Tripura High Court in M/s Sterlite Power Transmission Limited vs. Additional Commissioner, CGST and CX and others , (2024) SCC Online Tri 879, in which it was held that in case of accumulated ITC remaining in the credit ledger of the tax payer, refund is not made out under section 54(3) of the CGST Act as none of the enumerated conditions are made out.

3. The learned Counsel for SICPA submits that in a writ appeal, the scope of interference is very limited and narrow relying upon the judgment of the Hon‘ble Supreme Court in Airports Authority of India vs. Pradip Kumar Banerjee , (2025) 4 SCC 111. He contends that the refund claim was filed under section 49(6) of the CGST Act but as both the Assistant Commissioner as well as the Appellate Authority rejected the refund on the interpretation of section 54(3) only, they had to prefer the writ petition. The learned Counsel distinguishes VKC Footsteps (supra) stating that Hon‘ble Supreme Court was dealing with the issue of refund of input services for cases covered under inverted duty scheme of refund under section 54(3)(ii) of the CGST Act and not a case of claim for refund on closure of unit. Distinguishing Sterlite Power Transmission (supra), it is submitted that the case related to the refund of tax paid through cash ledger as ITC ledger was blocked and on reopening, a claim of refund was made for excess payment of cash with respect to availability of ITC. The learned Counsel submits that, therefore, the appellant has not made out a case for interference with the judgment of the learned Single Judge which is sound and reasoned.

Consideration

4. The appellant is aggrieved by the opinion of the learned Single Judge allowing the writ petition preferred by SICPA reversing two concurrent findings of the Assistant Commissioner, Central Goods and Services Tax (CGST) and Central Excise vide order dated 08.02.2022 and that of the Additional Commissioner of CGST and Central Excise as the Appellate Authority vide order dated 22.03.2023.

5. The Assistant Commissioner rejected the refund application filed by SICPA under section 49(6) of the CGST Act claiming unutilised ITC lying in electronic credit ledger amounting to Rs.4,37,61,402/- upon discontinuance of business.

6. The Appellate Authority upheld the order of the Assistant Commissioner rejecting the refund.

7. SICPA was a company incorporated under the provisions of the Companies Act, 1956 engaged in the business of manufacturing security inks and solutions. In the writ petition, SICPA contended that since January 2019 no operations had been carried out at their Sikkim registration due to absence of orders from the customer, viz., Reserve Bank of India and therefore, it decided to discontinue its operation in the State of Sikkim. It was also claimed that during the period April 2019 - March 2020, SICPA sold all the machineries and manufacturing facilities and at the time of sale of assets SICPA had reversed the ITC, as per applicable provision