Budgetary Support Scheme is in nature of grant and not Refund of Duty: Sikkim HC dismisses Writ Petition by Glenmark Pharma [Read Order]

A Single Bench of the Sikkim High Court had held that budgetary support scheme is in nature of a grant and not a refund of duty, and dismissed a Writ Petition filed by Glenmark Pharma.

The rejection of the petitioner’s claim for budgetary support for the period July-September, 2017 even while its claim for October, 2017 to June, 2018 was allowed under the “Scheme of budgetary support under Goods and Services Tax Regime” to the units located in States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North East including Sikkim dated 05.10.2017 (the Budgetary Support Scheme) has led to the present litigation.

The question which seeks determination in the present writ petition is whether the budgetary support claimed by the petitioner for the month of July 2017 and August 2017 separately in their initial applications ought to have been favourably considered by the Assistant Commissioner, Central Goods & Service Tax holding that the Budgetary Support Scheme envisaged working it out on a quarterly basis on claims to be filed on quarterly basis.

The counsel for the petitioner submitted that there was a violation of principles of natural justice as the same has been passed without granting any opportunity of personal hearing to the petitioner.

The Budgetary Support Scheme provides the manner in which the claims can be made and determined. The initial orders of rejection passed by the respondent no. 3 had been set aside by this Court and thereafter, the claims of the petitioner were re-examined, he added.

Pursuant thereto out of the four claims made by the petitioner for four quarters, three claims were accepted and budgetary support granted. The petitioner has no grievance against non grant of opportunity of hearing for those quarters for which their claims were accepted and budgetary support granted.

In spite of the petitioner having not fulfilled the requirement of the Budgetary Support Scheme to make their claims for the quarter opportunity was granted to them to resubmit their applications for budgetary support. Pursuant thereto the petitioner claims to have submitted fresh applications for budgetary support for the four quarters out of which budgetary support was granted for three quarters, the bench observed.

At this instance the bench noted that there was no violation of natural justice involved in the case.

The petitioner also contended that the petitioner had satisfied all the conditions of the Budgetary Support Scheme but was denied on its erroneous interpretation and of the Circular dated 27.11.2017 and Circular dated 10.01.2019 issued by the Central Board of Excise and Customs.

The petitioner’s contention that therefore, the petitioner claimed budgetary support for the month of July 2017 and August 2017 but did not claim for the month of September 2017 since no IGST was paid in cash for that month. It is their contention that the petitioner’s separate claims for the months of July 2017 and August 2017 was in terms of Circular dated 10.01.2019.

The petitioner contended that reliance placed on Circular dated 27.11.2017 was misplaced and incorrect. It was further contended that Circular dated 27.11.2017 allows adjusting the balance of ITC against IGST paid in cash but does not allow aggregation of figures for the entire quarter. It is submitted that reliance placed on format and formula of the Circular dated

27.11.2017 is incorrect and cannot supersede the Budgetary Support Scheme.

Deputy Solicitor General of India appearing for the respondents referred to paragraphs 3.2, 5.1, 5.4 of the Budgetary Support Scheme as well as paragraph 9(ii) of the Circular dated 27.11.2017 and submitted that a combined reading of these provisions requires that as per the formula, whatever balance of ITC of CGST/IGST is available at the end of quarter, the same is to be deducted from the cash payment for calculation of budgetary support claim for the quarter.

It was also submitted that the Budgetary Support Scheme does not envisage grant of any interest as claimed by the petitioner. It is the submission of the respondents that the budgetary support under the Budgetary Support Scheme is in the nature of grant and not refund of duty under taxation law.

The bench noted that According to the impugned Order the computation of the budgetary support had been made as per the data in statutory documents submitted by the petitioner.

It was noted that “the Budgetary Support Scheme clearly mandated that it should be worked out on quarterly basis for which claims shall be filed on a quarterly basis.”

Further, it was remarked that, “it did not permit the assessee to make monthly claims as opposed to the mandate of paragraph 5.4 of the Budgetary Support Scheme.”

The bench of Justice Bhaskar Raj Pradhan observed that “It was incumbent upon the petitioner to satisfy the requirements of the Budgetary Support Scheme and follow the procedure prescribed. When a procedure is prescribed, the petitioner while seeking the grant of budgetary support, is required to follow that procedure and not work out a different procedure for the authorities to follow.”

It was thus held that, “this Court is of the view that the petitioner is not entitled to any relief as sought for in the present writ petition which is accordingly dismissed.”

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