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2023 (9) TMI 631 - HC - GSTEntitlement of budgetary support under the Budgetary Support Scheme - whether the grant of fresh UID and registration number 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 or not? - HELD THAT - 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. 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 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 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 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. Both the writ petitions preferred by Zydus Wellness Products Limited and Alkem Laboratories Limited are accordingly dismissed.
Issues Involved:
1. Entitlement to budgetary support under the Budgetary Support Scheme. 2. Effect of change in ownership on eligibility for budgetary support. 3. Interpretation of the Budgetary Support Scheme and related legal provisions. Summary: Issue 1: Entitlement to Budgetary Support under the Budgetary Support Scheme The primary issue in both writ petitions is whether the petitioners, Zydus Wellness Products Limited and Alkem Laboratories Limited, are entitled to budgetary support under the Budgetary Support Scheme. Zydus Wellness Products Limited seeks budgetary support for the "residual period" for which Zydus Wellness Sikkim was entitled to exemption under Notification No. 20/2007-C dated 25.4.2007. Similarly, Alkem Laboratories Limited seeks direction to allocate a fresh Unique Identity (UID) for Unit-V and 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 the same notification. Issue 2: Effect of Change in Ownership on Eligibility for Budgetary SupportThe respondents argue that the change in ownership and the grant of fresh UID and registration number disqualify the petitioners from availing budgetary support as they are considered new legal entities. The petitioners contend that the Budgetary Support Scheme provides support to "eligible units" and not to the owners thereof. The court examined the definitions of "eligible unit" and "residual period" under the Budgetary Support Scheme and concluded that the scheme was intended 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. Issue 3: Interpretation of the Budgetary Support Scheme and Related Legal ProvisionsThe court noted that the Budgetary Support Scheme was a concession and not an exemption, and it must be strictly construed keeping in mind the intention of the Government of India. The scheme was limited to the tax which accrues to the Central Government under the CGST Act, 2017 and IGST Act, 2017. The court also referred to the definitions of "manufacture" and "person" under the CGST Act, 2017, and concluded 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. Consequently, both petitioners, being separate and distinct legal entities from the previous "persons," could not have filed the application for budgetary support under paragraph 7 of the Budgetary Support Scheme. Conclusion:
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