Sikkim High Court in the case of SICPA India Pvt Ltd & Anr
Vs
Union of India & Ors Vide WP(C) 54 of 2023
Dated 10.06.2025
FACTS
SICPA India Private Limited was engaged in manufacturing security inks and solutions with GST registration in Sikkim. In January 2019, the petitioners decided to discontinue operations in Sikkim and sold all machinery and manufacturing facilities between April 2019 to March 2020. At the time of asset sale, petitioners appropriately reversed ITC as per GST law provisions. Upon business closure, petitioners had accumulated unutilized Input Tax Credit balance of ₹4,37,61,402/- and claimed refund under Section 49(6) of CGST Act. The Assistant Commissioner vide order dated 08-02-2022 rejected the refund application. The Appellate Authority vide order dated 22-03-2023 upheld the rejection, reasoning that combined reading of Sections 54(3) and 29 of CGST Act shows no provision for refund of unutilized ITC on business discontinuation, as Section 54(3) restricts refund to only specified circumstances which do not include closure/discontinuation.
ISSUES
Whether the refund of Input Tax Credit under Section 49(6) of the CGST Act is only limited to companies covered under Section 54(3) of the CGST Act or does every registered company have a right to refund of ITC in case of discontinuance of business?
HELD
The High Court held that petitioners are entitled to refund of unutilized ITC on business closure. The court observed that while Section 54(3) deals with only two specific circumstances for refund (zero rated supplies and rate differential cases), there is no express prohibition in Section 49(6) read with Section 54 and 54(3) of CGST Act for claiming refund of ITC on closure of unit. The statute does not provide for retention of tax without authority of law. The court relied on Slovak India Trading Company Private Limited case where similar refund was allowed on company closure under CENVAT Credit Rules as there was no express prohibition. The impugned appellate order dated 22-03-2023 was set aside and writ petition was allowed, directing refund of unutilized ITC to petitioners.
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