Gujarat High Court

M/S. Ajanta Pharma Limited vs Union Of India on 16 October, 2025

Author: Bhargav D. Karia

Bench: Bhargav D. Karia

                                                                                                                    NEUTRAL CITATION




                           C/SCA/6833/2025                                         JUDGMENT DATED: 16/10/2025

                                                                                                                     undefined




                                    IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                                      R/SPECIAL CIVIL APPLICATION NO. 6833 of 2025


                      FOR APPROVAL AND SIGNATURE:


                      HONOURABLE MR. JUSTICE BHARGAV D. KARIA

                      and
                      HONOURABLE MR. JUSTICE PRANAV TRIVEDI
                      ==========================================================

                                   Approved for Reporting                         Yes           No

                      ==========================================================
                                                  M/S. AJANTA PHARMA LIMITED
                                                             Versus
                                                     UNION OF INDIA & ORS.
                      ==========================================================
                      Appearance:
                      ANANDODAYA S MISHRA(8038) for the Petitioner(s) No. 1
                      MR ANKIT SHAH(6371) for the Respondent(s) No. 1,2,3
                      ==========================================================

                          CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
                                and
                                HONOURABLE MR. JUSTICE PRANAV TRIVEDI

                                                              Date : 16/10/2025

                                            ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)

1 Heard learned advocate Mr.Anandodaya Mishra

for the petitioner and learned advocate Mr.Ankit Shah

for the respondents.

2 Rule returnable forthwith. Learned advocate

Mr.Ankit Shah for the respondent waives service of

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

notice of rule for and on behalf of the respondents.

3 As the issue involved in this petition is in a

narrow compass, with the consent of the learned

advocates for the respective parties, the matter is

taken up for final hearing.

4 The petition is preferred making prayer to quash

and set aside the impugned order dated 18.02.2025

passed by the learned Additional Commissioner

(Appeals), CGST, Vadodara under the provisions of

Sec.107 of the Central Goods & Service Tax Act, 2017

(hereinafter referred to as 'the Act' for short) and

further allow the refund application preferred by the

petitioner under the provisions of Sec.54(3) of the Act

and under Rule 89(4) of the CGST Rules, 2017

(hereinafter referred to as 'the Rules' for short).

5 The brief facts leading to filing of the present

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

writ petition are as under:

5.1 The petitioner is a Special Economic Zone Unit

(SEZ) engaged in the business of manufacturing and

distributing medicines worldwide inter alia

authorized to operate at Special Economic Zone at

Dahej District. The petitioner is also registered under

the provisions of the Act.

5.2 It is the case of the petitioner that it being the

SEZ Unit, is the recipient of input services which are

proportionately distributed by the Input Service

Distributor (ISD) in accordance with the provisions of

the Act. On the distribution of input services, the

petitioner attracts Integrated Goods and Service Tax

i.e. I.G.S.T. However, the petitioner is making zero

rated supplies, and therefore, the petitioner is not

able to utilize the credit that has been lying in the

Electronic Credit Ledger. Therefore, when the

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

petitioner is not in a position to utilize the Input Tax

Credit, various refund applications dated 24.08.2023,

10.11.2023 and 31.01.2024 for quarters April 2023 to

June 2023, July 2023 to September 2023 and October

2023 to December 2023 respectively, came to be

preferred by the petitioner in Form GST RFD- 01

under the provisions of Sec.54 of the Act under the

category of 'Export of Goods / Services without

payment of Tax'. The refund applications came to be

preferred along with the requisite documents.

5.3 The applications preferred by the petitioner was

allowed and the refund claim by the petitioner was

sanctioned by the Assistant Commissioner, Division-

VII, CGST, Vadodara-II, vide sanction orders dated

05.10.2023, 11.12.2023 and 05.03.2024 for quarters

April 2023 to June 2023, July 2023 to September 2023

and October 2023 to December 2023 respectively

passed in Form GST RFD-06. The Adjudicating

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

Authority also issued corrigendums dated 29.02.2024

and 19.04.2024 and modified the Refund Sanction

Order dated 05.10.2023 and 05.032024 respectively

in view of settled law by this Court in the case of

Britannia Industries Limited vs. Union of India.,

reported in 2020 (42) GSTL.3 (Guj.)., and also in

view of the fact that the SLP preferred against the

decision of this Court had been withdrawn.

5.4 It is the case of the petitioner that the

Commissioner, Central CGST, Vadodara, directed the

Adjudicating Authority to file appeal before the

Appellate Authority under Sec.107(2) of the Act. The

appeals came to be preferred by the Adjudicating

Authority before the Addl. Commissioner (Appeals),

CGST, Vadodara, against sanction orders on the

ground that refund sanction is invalid as per

Sec.16(3) of the IGST Act, Sec.54(3) of the Act and

Rule 89 of the CGST Rules. The petitioner filed

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

detailed Written Submissions / Cross Objections

before the Appellate Authority. The Appellate

Authority allowed the appeal preferred by the

Adjudicating Authority and set aside the refund order

by way of impugned order dated 18.02.2025.

5.5 It is the case of the petitioner that subsequent to

the setting aside of the refund order, a show-cause

notice came to be issued to the petitioner on

12.03.2025 under Sec.73(1) of the Act, asking the

petitioner as to why the refund sanction should not be

demanded and recovered. The show-cause notice was

issued under the guise that the respondent authority

had filed review application before the Hon'ble

Supreme Court against the disposal of the Special

Leave Petition preferred against order of this Court in

case of Britannia Industries Ltd (Supra).

5.6 Being aggrieved and dissatisfied by the

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

impugned order dated 18.02.2025, passed by the

Appellate Authority, the petitioner has preferred the

present writ petition.

6 Learned advocate Mr.Anandodaya Mishra

appearing for the petitioner, submitted that this Court

has pronounced various judgements interpreting the

refund of Accumulated ITC under Sec.54(3) of the Act

and the Appellate Authority being a statutory

authority under the CGST Act, was duty bound to

comply with the law laid down by this Court.

6.1 Mr.Mishra, learned advocate, relying on para 8

of the impugned order dated 18.02.2025, submitted

that any deviation from the law laid down by this

Hon'ble Court would amount to judicial indiscipline

and would under mine the law. Relying on the

decision in the case of M/s.Britannia Industries Ltd

(supra), learned advocate Mr. Anandodaya Mishra

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

for the petitioner submitted that the ratio as laid

down in the decision is squarely applicable in the

facts of the present case. It was submitted by

Mr.Mishra that the decision in the case of

M/s.Britannia Industries Ltd (supra), reads as

under:

"21. In facts of the present case, instead of Rule 96 as was applicable in case of M/s. Amit Cotton Industries (supra), Rule 89 would be applicable which is pertaining to refund of the input tax credit. Rule 89 of the CGST Rules provides for procedure for application for refund of tax, interest, penalty, fees and prescribes that in respect of supplies to a SEZ unit, the application for refund has to be filed by the supplier of goods or services. The contention of the respondents that as the petitioner is not the supplier of the goods and services, the petitioner would not be entitled to file application for refund is not tenable because in facts of the present case, input service distributor Le. ISD as defined under section 2(61) of the CGST Act is an office of the supplier of goods and services which receives tax Invoices issued under section 31 of the CGST Act towards the receipt of input services and issues a prescribed document for the purpose of distributing the credit of CGST, SGST or IGST paid on such goods or services. Therefore, in facts of the case, it is not possible for a supplier of goods and services to file a refund application to claim the refund of the input tax credit

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

distributed by ISD. Therefore, the stance of the department that the petitioner is not entitled to seek the refund of the ITC paid in connection with goods or services supplied to SEZ unit are not tenable.

22. This aspect is further fortified by notification nо 28/2012 dated 20th June, 2012 which was in connection with service tax attributable to the services used in more than one unit to be distributed pro-rata on the basis of the turnover during the relevant period of the concerned unit to the sum total of the turnover of all the units and similarly, in facts of the present case also, credit of service tax is distributed to all the units by the ISD and therefore, the claim of refund made by the SEZ unit of the petitioner is required to be granted.

23. We are of the opinion that in view of the aforesaid decision in case of M/s. Amit Cotton Industries (supra), the petitioner is entitled to claim refund of the IGST lying in the Electronic Credit Ledger as there is no specific supplier who can claim the refund under the provisions of the CGST Act and the CGST Rules as input tax credit is distributed by the input service distributor."

6.2 Learned advocate Mr.Anandodaya Mishra relied

upon the decision of this Court in the case of M/s.

IPCA Laboratories Ltd vs. Union of India & Ors.,

rendered in Special Civil Application No. 638 of

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

2021, wherein it is held that the SEZ unit is eligible

for refund of ITC of IGST lying in the Electronic

Credit Ledger under Sec.54 of the Act.

7 In view of such submissions, learned advocate

Mr.Anandodaya Mishra has submitted to allow the

present petition and grant the refund to the writ

petitioners.

8 Per Contra, learned advocate Mr.Ankit Shah for

the respondents on the basis of the affidavit-in-reply

has submitted that the judgement of this Court dated

11.03.2020 in the case of M/s.Britannia (supra), as

quoted by the petitioner would not be applicable in

the facts of the present case since the petitioner was

situated in Special Economic Zone (SEZ) and had

filed an application for refund in FORM GST RFD-01A

with regard to the credit of Integrated Goods and

Services Tax (IGST) distributed by Input Service

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

Distributor (ISD) for the services pertaining to the

SEZ unit, as in that case, the supplier was making

supplies to the ISD of the company and thus was

incapable of claiming refund due to supply not

directly made to a SEZ unit. It was further submitted

that it was not possible for a supplier of services to

file a refund application to claim the refund of the

Input Tax Credit (ITC) distributed by the ISD under

Rule 89 of the CGST Rules, 2017.

8.1 With regard to the judgement in the case of M/s.

IPCA Laboratories Ltd (supra) is concerned, it was

contended that the same would not be applicable in

the present case as in the case of M/s.IPCA

Laboratories, there was no specific supplier who

could have claimed the refund under Rule 89 of the

CGST Rules.

8.2 It was further submitted that the judgement of

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

this Court in the case of M/s.Amit Cotton

Industries Through partner Veljibhai Virjibhai

Ranipa vs. Principal Commissioner of Customs,

rendered in Special Civil Application No. 20126 of

2018 on 27th June, 2019, would not be applicable as,

in the instant case, the CGST Rules 2017 do not

provide for refund to SEZ Unit in respect of input tax

credit distributed by Input Service Distributor to SEZ

Unit.

8.3 It was also further submitted on collective

reading of provisions of Sec.54(3) of the Central

Goods & Service Tax Act, 2017, Section 16 of the

IGST Rules, 2017, together with Rule 89(1) of the

CGST Rules, 2017 that, it was clear that when a

supply is made to the SEZ unit or SEZ Developer, it is

the supplier and not the receiver viz., the petitioner in

the instant case, who shall file the refund application.

The reason for the same is that in case of supply to

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

petitioner, the liability to pay tax on such supplies is

on the supplier. The receiver, i.e. the petitioner is not

at all liable to pay any kind of tax on such supplies

received by them.

8.4 It was submitted by learned advocate Mr.Ankit

Shah that the petitioner was not at all liable to pay

any tax on the supplies received by the petitioner and

therefore was not liable to claim refund as per the

prevalent provisions.

8.5 Mr.Shah, learned advocate would further submit

that neither any provision under the CGST Act 2017 /

IGST Act 2017 and rules thereunder or under any

Notification nor any circular or guidelines have been

issued by the Government / Central Board of Indirect

Taxes and Customs prescribing to process and allow

the refund of Input Tax Credit Refund filed by the

units located in the Special Economic Zones, in

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

respect of tax paid on inward supplies. Therefore, in

absence of any mandate in the governing Act and

Rules made thereunder, or Notification / Circular of

the like, the petitioner should not have been granted

refund and hence the petitioner's contention before

the appellate authority was rejected following the

CGST/IGST laws and Rules applicable at the relevant

time.

8.6 In wake of such submissions, learned advocate

Mr.Ankit Shah has requested to reject the writ

petition.

9 Having heard the learned advocates appearing

for the respective parties and having perused the

material on record, the issue is in a very narrow

compass as to whether the writ petitioner being a

SEZ Unit registered under the Special Economic Zone

Act, would be eligible for grant of refund and entitled

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

to the Input Tax Credit on the services received while

making zero rated supply. The issue is squarely

covered by the decision of this Court in the case of

Britannia (supra) as it had been held that the input

service distributor i.e. ISD as defined under Sec.2(61)

of the CGST Act is an office of supplier of the goods

and services which receives tax invoice issued under

Sec.31 of the CGST Act towards the receipt of input

services and issues a prescribed document for the

purpose of distributing the credit of CGST / IGST paid

on such goods or services which is also squarely

covered by the decision of this Court in the case of

Britannia (supra). Relevant paragraphs 21 to 23 of

the decision reads as under:

"21. In facts of the present case, instead of Rule 96 as was applicable in case of M/s.Amit Cotton Industries (supra), Rule 89 would be applicable which is pertaining to refund of the input tax credit. Rule 89 of the CGST Rules provides for procedure for application for refund of tax, interest, penalty,fees and prescribes that in respect of supplies to a SEZ unit, the application for refund has to be by the supplier of goods

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

services. The contention of the respondents that as the petitioner is not the supplier of the goods and services, the petitioner would not be entitled to file application for refund is not tenable because in facts of the present case, input service distributor i.e. ISD as defined under Section2(61) of the CGST Act is an office of the supplier of goods and services which receives tax invoices issued under Section 31 of the CGST Act towards the receipt of input services and issues a prescribed document for the purpose of distributing the credit of CGST, SGST or IGST paid on such goods or services. Therefore, in facts of the case, it is not possible for a supplier of goods and services to file a refund application to claim the refund of the iinput tax credit distributed by ISD. Therefore, the stance of the department that the petitioner is not entitled to seek the refund of the ITC paid in connection with goods or services supplied to SEZ unit is not tenable.

22. This aspect is further fortified by Notification No.28/2012, dated 20 June 2012, th

which was in connection with service tax attributable to the services used in more than one unit to be distributed pro rata on the basis of the turnover during the relevant period of the concerned unit to the sum total of the turnover of all the units and similarly, in facts of the present case also, credit of service tax is distributed to all the units by the ISD and therefore, the claim of refund made by the SEZ unit of the petitioner is required to be granted.

23. We are of the opinion that in view of the aforesaid decision in case of M/s. Amit Cotton

NEUTRAL CITATION

C/SCA/6833/2025 JUDGMENT DATED: 16/10/2025

undefined

Industries (supra), the petitioner is entitled to claim refund of the IGST lying in the Electronic Credit Ledger as there is no specific supplier who can claim the refund under the provisions of the CGST Act and the CGST Rules as input tax credit is distributed by the input service distributor."

9.1 The ratio covered by this Court is not disturbed

till today. Further, there is no stay against the order

passed by this Court in the case of Britannia (supra)

and other allied matters. The ration laid down by this

Court in the case of Britannia Industries Ltd

(supra), squarely applies to facts of present case,

and therefore, the petition succeeds and is

accordingly allowed.

10 The impugned order dated 18.02.2025 passed by

the learned Additional Commissioner (Appeals),

CGST, Vadodara is hereby quashed and set aside. The

respondents are directed to process the claim of