GST Registration or Ownership Change Won’t Disqualify Units from Budgetary Support Scheme: Supreme Court Affirms HC Order [Read Judgement]

The apex court dismissed the Union of India’s special leave petition, affirming that the BSS benefits are unit-specific and not contingent on the identity of the owner or the GST registration details.

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The dispute arose when Zydus Wellness Products Limited and Alkem Laboratories Limited were denied budgetary support because the ownership of their manufacturing units in Sikkim had changed, and new GST registrations had been issued post-transition to the GST regime.

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The Central government’s counsel argued that these changes created distinct legal entities no longer entitled to the benefits originally granted under the pre-GST excise exemption scheme.

Challenging the government's position, the petitioners filed writ appeals before the Sikkim High Court. They argued that the eligibility for budgetary support should be tied to the manufacturing unit itself, particularly its location and activity, rather than to the ownership or registration status.

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The Division Bench of the High Court agreed, finding that the BSS was designed to support units established in specified areas during the excise exemption period and that the scheme did not contain any clause disqualifying units due to a change in ownership or registration.

The Sikkim High Court explained that the BSS intended to extend support to manufacturing units operating in difficult terrains like Sikkim and that denying benefits solely due to procedural changes in business structure undermined that objective. It directed the government to process the petitioners’ claims within twelve weeks.

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In the Supreme Court, the Union argued that by complying with the High Court’s order without reserving the right to challenge it, the petitioners had waived their appeal. They also raised concerns about the alleged suppression of facts.

The court rejected these preliminary objections but ultimately declined to interfere with the High Court’s findings, stating that no sufficient ground existed to set aside the judgment.

The Supreme Court reaffirmed the principle that the Budgetary Support Scheme’s benefits follow the manufacturing unit, not the entity that owns or registers it. The petition was dismissed and the High Court’s direction to adjudicate the pending claims stands.

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