THE HIGH COURT OF SIKKIM : GANGTOK
(Civil Extra Ordinary Jurisdiction)
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SINGLE BENCH: THE HON'BLE MR. JUSTICE BHASKAR RAJ PRADHAN, JUDGE
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W.P.(C) No. 20 of 2022
Zydus Wellness Products Limited,
Represented through:
Umesh Parikh,
Chief Financial Officer,
Zydus Wellness Products Limited,
Zydus Corporate Park,
Scheme No. 63, Survey No. 536,
Khoraj (Gandhinagar),
Near Vaishnodevi Circle,
Ahmedabad, Gujarat - 382481. ..... Petitioner
versus
1. Union of India,
Through the Secretary,
Department of Revenue,
Ministry of Finance,
North Block,
New Delhi - 110001.
2. Director,
Department for Promotion of Industry and Internal Trade,
Ministry of Commerce and Industry,
Udyog Bhawan,
New Delhi - 110001.
3. The Assistant Commissioner,
Central Goods & Service Tax,
Gangtok Division, Gangtok,
Indira By-Pass Road,
Near District Court, Sichey,
East Sikkim, Gangtok - 737101.
4. The Commissioner of CGST,
Siliguri, Gangtok Division,
Gangtok II Range - 737101.
5. Central Board of Indirect Taxes & Customs,
Through its Commissioner,
Room No. 22A, II Floor, North Block,
New Delhi - 110001. ..... Respondents
2
W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. &
W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
Application under Article 226 of the Constitution of India
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Appearance:
Dr. Ashok Saraf, Senior Advocate with Mr. Pritam Baruah, Mr. Mayank
Jain, Ms Akshita Shetty and Mr. Hissey Gyaltsen, Advocates for the
petitioner.
Ms Sangita Pradhan, Deputy Solicitor General of India assisted by
Ms Natasha Pradhan, Advocate for the respondents.
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and
W.P.(C) No. 27 of 2022
Alkem Laboratories Limited,
Represented through:
Ajay Kumar Prasad,
General Manager - Accounts,
Alkem Laboratories Limited,
Alkem House, Senapathi Bapat Marg,
Lower Parel, Mumbai,
Maharashtra - 400013 ..... Petitioner
versus
1. Union of India,
Through the Secretary,
Department of Revenue,
Ministry of Finance, North Block,
New Delhi - 110001.
2. Director,
Department for Promotion of Industry and Internal Trade,
Ministry of Commerce and Industry,
Udyog Bhawan,
New Delhi - 110001.
3. The Assistant Commissioner,
Central Goods & Service Tax,
Gangtok Division, Gangtok,
Indira By-Pass Road,
Near District Court, Sichey,
East Sikkim, Gangtok - 737101.
4. The Deputy Commissioner,
Central Goods & Service Tax,
Gangtok Division, Gangtok,
Indira By-Pass Road,
Near District Court, Sichey,
East Sikkim, Gangtok - 737101.
3
W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. &
W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
5. The Commissioner of CGST,
Siliguri, Gangtok Division,
Gangtok II Range - 737101.
6. Central Board of Indirect Taxes & Customs,
Through its Commissioner,
Room No. 22A, II Floor,
North Block,
New Delhi - 110001. ..... Respondents
Application under Article 226 of the Constitution of India
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Appearance:
Mr. Vivek Sarin, Advocate with Mr. Hissey Gyaltsen and Mr. Akath Gupta,
Advocates for the petitioner.
Ms Sangita Pradhan, Deputy Solicitor General of India assisted by Ms
Natasha Pradhan, Advocate for the respondents
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Date of hearing : 17th August, 2023
Date of judgment : 12th September, 2023
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JUDGMENT
(Bhaskar Raj Pradhan, J.)
1. The two writ petitions are taken up for
consideration. W.P. (C) No. 20 of 2022 has been preferred by
Zydus Wellness Products Limited while W.P. (C) No. 27 of
2022 has been preferred by Alkem Laboratories Limited.
2. In the case of Zydus Wellness Products Limited, on
28th February 2019, Zydus Wellness-Sikkim - a Partnership
Firm, was converted into Zydus Nutritions Limited, pursuant
to sub-section (2) of section 7 of the Companies Act, 2013
and Rule 18 of the Companies (Incorporation) Rules, 2014. 4 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
Thereafter, on 4th June, 2019, Zydus Nutritions Limited
changed its name to Zydus Wellness Products Limited
pursuant to Rule 29 of the Companies (Incorporation) Rules,
2014. Zydus Wellness Products Limited seeks budgetary
support under the „Scheme of Budgetary Support dated
05.10.2017‟ (the Budgetary Support Scheme), for the „residual
period‟ for which Zydus Wellness Sikkim was entitled to
exemption under Notification No. 20/2007-C dated
25.4.2007.
3. In the case of Alkem Laboratories Limited, in
October 2019, Unit-V was transferred by way of slump sale
from Cachet Pharmaceuticals Private Limited - the transferee
company, to Alkem Laboratories Limited on a running and
going concern basis under section 54 of the Transfer of
Property Act, 1882. The petitioner seeks direction to allocate
fresh Unique Identity (UID) for Unit-V of the petitioner and to
process the verification and claim applications under the
Budgetary Support Scheme for the „residual period‟ for which
Cachet Pharmaceuticals Private Limited was entitled to
exemption under Notification No. 20/2007-C dated
25.4.2007.
5
W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
4. The changes in case of Zydus Wellness Products
Limited as well as Alkem Laboratories Limited entailed grant
of fresh UID and change in the registration number. This is
an admitted fact.
5. The short question which arises for consideration
in both the writ petitions is - Are the petitioners entitled to the
budgetary support under the Budgetary Support Scheme?
6. The petitioners contend that the change of
ownership and therefore, the grant of fresh UID and
registration number do not disentitle the units from availing
the budgetary support as the Budgetary Support Scheme
seeks to provide budgetary support to „eligible units‟ and not
to the owners thereof. The respondents are, however,
insistent that because of the change in ownership the
petitioners are not entitled anymore as ownership has
changed and the petitioners are completely new legal entities.
7. Dr. Ashok Saraf, learned Senior Advocate for
Zydus Wellness Products Limited submitted that the only
criteria to be satisfied for the benefit of the Budgetary Support
Scheme was that the unit must be an „eligible unit‟ at the
time of transition to GST on 1.7.2017 and the benefit would
be for the „residual period‟. He further submitted that the 6 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
change in constitution from a partnership concern to a
company cannot disentitle it from the benefit of the
Budgetary Support Scheme which is clear from the fact that
they were earlier given the benefit. Even with the change in
the constitution, the business, assets and liabilities vested on
Zydus Wellness Products Limited and therefore, only the
name of the Company changed on 4.6.2019. It is further
submitted that when an assesse is held to be eligible for
obtaining the benefit, the amended notification being an
exempted notification should receive beneficial construction.
Dr. Saraf further submitted that although exemption
provisions are to be construed strictly as regards the
applicability thereof to the case of the assesse but once it is
found that the same is applicable, it is required to be
interpreted liberally. He relied upon P.R. Prabhakar vs. CIT,
Coimbatore1, TATA Iron & Steel Co. Ltd. vs. State of Jharkhand2
and Government of India vs. Indian Tobacco Association3. He
also relied upon various judgments of the Supreme Court on
how exemption notifications ought to be interpreted:
Commissioner of Customs (Imports), Mumbai vs. Tullow India
Operations Ltd.4, Assistant Commissioner (CT) LTU & Anr. vs.
1 (2006) 6 SCC 86 2 (2005) 4 SCC 272 3 (2005) 7 SCC 396 4 (2005) 13 SCC 789 7 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
Amara Raja Batteries Ltd.5, Commissioner of Customs (Preventive),
Gujarat vs. Reliance Petroleum Limited and Bajaj Tempo Ltd.6,
and Bajaj Tempo Ltd., Bombay vs. Cit, Bombay City III Bombay7.
8. The learned Deputy Solicitor General of India
submitted that Zydus Wellness Products Limited came into
existence after change in its constitution from partnership
firm to private limited company. Unit to be declared as an
„eligible unit‟ under the Budegtary Support Scheme is
synonymous with the company which runs it. As Zydus
Wellness-Sikkim had stopped operation as partnership firm
and Zydus Wellness Products Limited had taken over, the
erstwhile unit without making any investment cannot be
considered as an „eligible unit‟. It is submitted that the
Ministry of Finance and Ministry of Commerce had both
unanimously opined that change in constitution and
ownership disentitled them from the Budgetary Support
Scheme as it was a new company having separate GSTIN and
PAN number.
9. Mr. Vivek Sarin, learned counsel for Alkem
Laboratories Limited, submits that Circular or Office
Memorandum cannot take away or restrict the effect of
5 (2009) 8 SCC 209 6 (2008) 7 SCC 220 7 (1992) 3 SCC 78 8 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
Budgetary Support Scheme. He further argued that change of
ownership or slump sale of unit is immaterial as the
Budgetary Support Scheme is unit based and not ownership
based scheme. He relied upon the judgment of the
Uttarakhand High court in Dana India Pvt. Ltd. vs. Union of
India8, to show that in similar cases it was held that
exemption should be based on unit and not on ownership.
The learned counsel submitted that an exemption should be
liberally construed in accordance with the object sought to be
achieved if such provision is to grant incentive for promoting
economics.
10. The learned Deputy Solicitor General of India in
reply submitted that since Alkem Laboratories Limited came
into existence with effect from 5.10.2019, when it took over
Cachet Pharmaceuticals Private Limited, the petitioner does
not qualify as „eligible unit‟. It is submitted that on the
acquisition of the unit from Cachet Pharmaceuticals Private
Limited, the acquired unit became a new manufacturing unit.
It is stated that the Budgetary Support Scheme was a
measure of goodwill only to those units which were eligible
for drawing benefit under the earlier excise duty
exemption/refund schemes but had otherwise no relation to
8 2013 (298) E.L.T. 710 (Uttarakhand) 9 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
the erstwhile schemes. There has been admittedly change of
ownership, PAN number, as well as GSTIN. It is submitted
that as held by the Supreme Court in Union of India vs. VVF
Industries and others9, withdrawal of exemption being in
public interest and therefore a matter of policy, the Court
would not bind the earlier government policy for all times to
come irrespective of the satisfaction of the government that
the change in policy was necessary in public interest.
11. The learned counsel for the petitioners have also
referred to several judgment of various High Courts and
Tribunals in support of their contentions. This Court has
examined all of them. None of these judgments relate to the
Budgetary Support Scheme. None of the ratios laid down
would apply to the facts of the present writ petitions. The
judgments of the Supreme Court cited with regard to
interpretation of exemption notification are well settled
pronouncements. The Budgetary Support Scheme is only a
concession and not an exemption. The Budgetary Support
Scheme would also however be liable to be strictly construed
keeping in mind the intention of the Government of India for
providing the budgetary support to „eligible units‟.
9 (2020) 20 SCC 57 10 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
12. In Dana India Pvt. Ltd. (supra), the petitioner
entered into a slump sale agreement with M/s Axles India
Limited to take over and operate as a growing concern the
Axles business from the latter, w.e.f., 1.7.2011 and they
wished to continue to avail exemption under Central Excise
Notification by which exemption was being availed by Axles
India Limited. The High Court allowed the writ petition in
view of the circular issued by the Central Board of Excise &
Customs (CBEC) as the petitioner had already exercised
option in writing to avail of the benefit of exemption
notification before effecting the first clearance and it was
found that the petitioner was entitled for the exemption. No
such circular has been issued in favour of the petitioners.
13. According to the Budgetary Support Scheme, in
pursuance of the decision of the Government of India to
provide budgetary support to „the existing eligible
manufacturing units‟ operating inter alia in Sikkim under
different Industrial Promotion Schemes of the Government of
India, for a residual period for which each of the „units‟ is
eligible, a new scheme is being introduced. The new scheme
is offered, as a measure of good will, only to the „units‟ which
were eligible for drawing benefits under the earlier exercise 11 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
duty exemption/refund schemes but has otherwise no
relation to the erstwhile schemes.
14. Units which were eligible under the erstwhile
schemes and were in operation through exemption
notifications issued by the Department of Revenue in the
Ministry of Finance as listed in paragraph 2 (which includes
Sikkim) would be considered eligible under the Budgetary
Support Scheme. The Budgetary Support Scheme was to be
limited to the tax which accrues to the Central Government
under the Central Goods and Services Tax Act, 2017 (the
CGST Act, 2017) and the Integrated Goods and Services Tax
Act, 2017 (the IGST Act, 2017), after devolution of the
Central Tax or the Integrated Tax to the States, in terms of
Article 270 of the Constitution.
15. The Budgetary Support Scheme was under the
Goods and Services Tax (GST) Regime to the units located
inter alia in Sikkim. It came into operation with effect from
01.07.2017 for an „eligible unit‟ and was to remain in
operation for the „residual period‟. Both the words „eligible
unit‟ and the „residual period‟ were defined in the scheme.
16. Paragraph 4.1 of the Budgetary Support Scheme
defined eligible unit as under:-
12
W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
"4.1 „Eligible unit‟ means a unit which was eligible before 1 day of July, 2017 to avail the benefit of ab-initio-
st
exemption or exemption by way of refund from payment of central exercise duty under notifications, as the case may be, issued in this regard, listed in para 2 above and was availing the said exemption immediately before the 1st day of July, 2017. The eligibility of the unit shall be on the basis of application filed for budgetary support under this scheme with reference to:
(a) Central Excise registration number, for the premises of the eligible manufacturing unit, as it existed prior to migration to GST; or
(b) GST registration, for the premises as a place of business, where manufacturing activity under exemption notification no.49/2023-CE dated 10.6.2003-CE and 50/2003-CE dated 10.6.2003 were being carried prior to 01.07.2017 and the unit was not registered under Central Excise."
17. Paragraph 4.3 defined residual period as follows:
"4.3 „Residual period‟ means the remaining period out of the total period not exceeding 10 years, from the date of commencement of commercial production, as specified under the relevant notification listed in paragraph 2, during which the eligible unit would have been eligible to avail exemption for the specified goods. The documentary evidence regarding date of commercial production shall be submitted in terms of para 5.7."
18. Paragraph 2.3 provides that Notification
No.20/2007-CE dated 25.4.2007 as amended from time to
time was the scheme which was in operation on 18.7.2017 in
the State of Sikkim.
19. As paragraph 4.3 which defines „residual period‟
relates the „residual period‟ to the period during which the
eligible unit would have been eligible to avail exemption for
the „specified goods‟ it would be relevant to extract paragraph
4.2 which defines „specified goods‟ as under: 13 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
"4.2 „Specified goods‟ means the goods specified under exemption notifications, listed in paragraph 2, which were eligible for exemption under the said notifications, and which were being manufactured and cleared by the eligible unit by availing the benefit of excise duty exemption, from:
(a) The premises under Central Excise with a registration number, as it existed prior to migration to GST; or
(b) The manufacturing premises registered in GST as a place of business from where the said goods under exemption notification no.49/2003-CE dated 10.06.2003 and 50/2003-CE dated 10.06.2003 were being cleared"
20. As paragraph 4.3 which defines „residual period‟
provides that the documentary evidence regarding date of
commercial production shall be submitted in terms of paragraph
5.7, the said paragraph is quoted hereinbelow:
"5.7. The manufacturer applying for benefit under this scheme for the first time shall also file the following documents:
(a) the copy of the option filed by the manufacturer with the jurisdictional Deputy Commissioner/Assistant Commissioner of Central Excise officer at the relevant point of time, for availing the exemption notification issued by the Department of Revenue;
(b) document issued by the concerned Director of Industries evidencing the commencement of commercial production
(c) the copy of last monthly/quarterly return for production and removal of goods under exemption notification of the Department of Revenue.
(d) an Affidavit-cum-indemnity bond, as per Annexure A, to be submitted on one time basis, binding itself to pay the amount repayable under para 9 below.
Any other document evidencing the details required in clause (a) to (c) may be accepted with the approval of the Commissioner."
21. Paragraph 5.7 above mandates that it was the
manufacturer who was required to apply for benefit under the
Budgetary Support Scheme.
14
W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
22. Paragraph 7 provides for the manner of budgetary
support and reads as under:
"7.1 The manufacturer shall file an application for payment of budgetary support for the Tax paid in cash, other than the amount of Tax paid by utilization of Input Tax Credit under the Input Tax Credit Rules, 2017, to the Assistant Commissioner or Deputy Commissioner of Central Taxes, as the case may be, by the 15th day of the succeeding month after end of quarter after payment of tax relating to the quarter to which the claim relates.
7.2. The Assistant Commissioner or Deputy Commissioner of Central Taxes, as the case may be, after such examination of the application as may be necessary, shall sanction reimbursement of the budgetary support. The sanctioned amount shall be conveyed to the applicant electronically. The PAO, CBEC will sanction and disburse the recommended reimbursement of budgetary support."
23. Paragraph 5.8 defines „manufacture‟ as any
change(s) in the physical object resulting in transformation of
the object into a distinct article with a different name or
bringing a new object into existence with a different chemical
composition or integral structure.
24. As the Budgetary Support Scheme has been issued
under the Goods and Services Tax Regime to the units
located in, inter alia, the State of Sikkim, it would be relevant
to consider some of the provisions of the CGST Act, 2017).
25. Section 2(72) defines the word „manufacture‟ as
under:
15
W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
""manufacture" means processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term "manufacturer" shall be construed accordingly;"
26. The term „manufacturer‟ as used in Budgetary
Support Scheme would thus mean the „person‟ who or which
brings about any change(s) in the physical object resulting in
transformation of the object into a distinct article with a
different name of bringing a new object into existence with a
different chemical composition or integral structure.
27. Section 2(84) defines the word „person‟ as under:
"person" includes -
(a) an individual;
(b) a Hindu Undivided Family;
(c)a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated or not in India or outside India;
(g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013);
(h) any body corporate incorporated by or under the laws of a country outside India;
(i) a co-operative society registered under any law relating to co-operative societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act, 1860 (21 of 1860);
(m) trust; and
(n) every artificial juridical person, not falling within any of the above;"
28. Consequently, it is evident that Zydus Wellness -
Sikkim as well as Zydus Nutritions Limited (later Zydus Wellness 16 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
Products Limited) and Cachet Pharmaceuticals Private Limited as
well as Alkem Laboratories Limited were all „persons‟ as defined in
section 2(84) of the CGST Act, 2017.
29. Section 22 of the CGST Act, 2017 provides for
registration of „persons‟ as defined under section 2(84). Every
supplier shall be liable to be registered in the State or Union
Territory other than special categories States from where he
makes a taxable supply of goods or services or both, if his
aggregate turn over in a financial year exceeds twenty lakhs
rupees.
30. Zydus Wellness - Sikkim as well as Zydus Nutritions
Limited (later Zydus Wellness Products Limited) and Cachet
Pharmaceuticals Private Limited as well as Alkem Laboratories
Limited, would thus be required to mandatorily register itself
under section 22 of the CGST Act, 2017. Admittedly, all the
„persons‟ at different points of time did so.
31. The respondents have filed their counter-affidavits.
In the case of Zydus Wellness Products Limited, it is
contended that on its conversion from a partnership entity to
a company limited by shares on 28.02.2019 they were not
clear as to whether it could be considered as „eligible unit‟ 17 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
and accordingly a reference was made to Central Board of
Indirect Taxes and Customs (CBIC). The matter was
examined by DIPP, Ministry of Commerce in consultation
with CBIC and it was decided that as per guidelines of the
Budgetary Support Scheme, if any unit undergoes for
relocation, expansion and change of ownership, it will not be
eligible under the Budgetary Support Scheme. The CBIC,
therefore, opined that Zydus Nutritions Limited (later Zydus
Wellness Products Limited) was not eligible for Budgetary
Support Scheme.
32. Similarly, in the case of Alkem Laboratories
Limited, it was also held that if any unit undergoes
relocation, expansion and change of ownership, it will not be
eligible under the scheme of budgetary support. Accordingly,
the CBIC had also opined that Alkem Laboratories Limited
Unit-V was not eligible for Budgetary Support Scheme.
33. Notification No.20/2007-CE dated 25.04.2007 for
the North East States including Sikkim was issued in
exercise of the powers conferred by sub-section (1) of section
5A of the Central Excise Act of 1944 in public interest. It
exempted the goods specified in the First Schedule to the
Central Excise Direct Tax, 1985 other than those mentioned 18 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
in the Annexure and cleared from a unit located inter alia in
the State of Sikkim from so much of the duty of exercise
leviable thereon under the said Act as is equivalent to the
duty payable on value addition undertaken in the
manufacture of the said goods by the said unit.
34. The exemption under Notification No. 20/2007-CE
was given to the manufacturer who was required to submit a
statement of the total duty paid and that paid by utilization
of CENVAT credit to the Assistant Commissioner of the
Central Excise or Deputy Commissioner of the Central
Excise.
35. A composite reading of the Budgetary Support
Scheme along with the exemption notification no.20/2007-CE
makes it clear that Government of India had decided to
provide budgetary support to the existing manufacturing unit
operating in Sikkim under different Industrial Promotional
Schemes of the Government of India, for the "residual period
for which each of the unit is eligible". Quite evidently, it was
a support given to the existing manufacturing units operating
in Sikkim since the said units had not been able to enjoy the
full benefit of exemption notification no.20/2007-CE for the
entire period. The Budgetary Support Scheme therefore was a 19 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
measure of goodwill only to the units which were eligible for
drawing benefits under the earlier excise duty
exemption/refund schemes but has otherwise no relation to
the erstwhile schemes.
36. Budgetary Support Scheme was limited to the tax
which accrued to the Central Government under the CGST
Act, 2017 and IGST Act, 2017, after devolution of the Central
Tax or the Integrated Tax to the States, in terms of Article
270 of the Constitution.
37. Paragraph 7.1 of the Budgetary Support Scheme
mandates the manufacturer to file the application for
budgetary support. The definition of „eligible unit‟ in
Paragraph 4.1 also provides that the application must have
reference to either the Central Excise registration number of
the eligible manufacturing unit as it existed prior to
migration to GST or GST registration for the premises as a
place of business where manufacturing activities under the
exemption notification no.49/2003-CE dated 10.06.2003 and
50/2003-CE dated 10.06.2003 were being cleared. This was
definitely related to the manufacturer or the „person‟
registered. The definition of „residual period‟ also relates to
the remaining period out of the total period not exceeding ten 20 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
years from the date of commercial production. The
documentary evidence regarding date of commercial
production in terms of paragraph 5.7 also relates to the
option filed by the manufacturer at the relevant point of time
for availing the exemption notification. This would thus mean
the date of commercial production of Zydus Wellness-Sikkim
the partnership firm and Cachet Pharmaceuticals Private
Limited and not the present petitioners.
38. Under the CGST Act, 2017, it is the „person‟ as
defined under section 2(84) who is liable to the tax
thereunder. Consequently, the Budgetary Support Scheme
which is limited to the tax which accrues to the Central
Government under the CGST Act, 2017 and IGST Act, 2017
is liable to be paid by the „person‟. Reading the definition of
„person‟ under section 2(84) and the requirement of
registration under section 22 of such „persons‟ makes it clear
that Zydus Nutritions Limited (later Zydus Wellness Products
Limited) and Alkem Laboratories Limited were required to be
registered under section 22 after the change in ownership.
Accordingly and admittedly, Zydus Nutritions Limited was
registered under Rule 10(1) on 26.03.2019 and Alkem
Laboratories Limited on 3.10.2019. Consequently, both the 21 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
petitioners who were separate and distinct legal entities from
the previous „persons‟, i.e., Zydus Wellness-Sikkim and
Cachet Pharmaceuticals Private Limited, who were eligible
under exemption notification 20/2007-CE could not have
filed the application for budgetary support under paragraph
7 of the Budgetary Support Scheme. The petitioners, as
rightly contended by the respondents, were not „eligible units‟
as defined under paragraph 4.1 of the budgetary scheme.
The intention of the Government of India in providing the
Budgetary Support Scheme was to support those „eligible
units‟ for the „residual period‟ not exceeding ten years of
commercial production during which they would have been
eligible to avail exemption for the specified goods under
exemption notification no. 20/2007-CE in recognition of the
hardship arising due to its withdrawal. Clearly, the
exemption under exemption notification no. 20/2007-CE was
to those manufacturers who have made investments in the
State of Sikkim. The untimely withdrawal of exemption
notifications before the manufacturers could enjoy its
benefits for its full term as the new GST regime came in,
persuaded the Government of India to provide budgetary
support to those „eligible units‟ and not to those who have not
made any investment to be able to enjoy the benefit of the 22 W.P. (C) No. 20 of 2022 Zydus Wellness Products Ltd. Vs Union of India & Ors. & W.P. (C) No. 27 of 2022 Alkem Laboratories Ltd. Vs Union of India & Ors.
exemption notification no. 20/2007-CE for the „residual
period‟. Neither Zydus Wellness Products Limited nor Alkem
Laboratories Limited could legally claim that they were
entitled to the exemption under the exemption Notification
No. 20/2007-CE as they did not exists then.
39. Both the writ petitions preferred by Zydus
Wellness Products Limited and Alkem Laboratories Limited are
accordingly dismissed. The respondents shall with regard to
Alkem Laboratories Limited dispose of the claim applications
as well as any other application pending before it in terms of
this judgement.
( Bhaskar Raj Pradhan )
Judge
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