Claim for Budgetary Support Allowed by Applying Monthly Basis Computation

Case Summary:
Case Title: Glenmark Pharmaceuticals Limited vs. Union of India and Others
Court: High Court of Sikkim, Gangtok – Division Bench
Petition No.: WA No. 02 of 2024
Relevant Section: Notification No. F.No.10(1)/2017-DBA-II/NER dated 05-10-2017; Circulars dated 27-11-2017 and 10-01-2019
Category of Dispute: Refund – Budgetary Support Scheme
Date of Judgement: 15th May, 2025
Relevant Provisions: Para 5.3 and 5.4 of Notification dated 05-10-2017

Facts of the Case (Para 1–5):

• The appellant’s budgetary support claim for July–September 2017 was rejected, while support for October 2017–June 2018 was granted (Para 2).

• Rejection was based on a negative input tax credit (ITC) balance as per Circular dated 27-11-2017 (Para 2).

• The learned single judge upheld this decision on grounds that the appellant filed monthly claims instead of quarterly as required (Para 3).

• The appellant contended that their compliance with Notification dated 05-10-2017 and Circular dated 10-01-2019 was misread, especially as both allowed or necessitated monthly tax calculations despite quarterly filing (Para 4–5).

Question(s) in Consideration (Para 5–6):

• Whether rejection of the budgetary support claim for July–September 2017 was justified solely based on the Circular computation model?

• Whether the claims could be computed monthly, despite being filed quarterly, as practiced in similar jurisdictions?

• Whether the scheme interpretation should align with the rationale of Coromandel International Ltd. ruling?

Observations of the Court (Para 7–10):

• Court noted Coromandel International Ltd. v. UOI (2023) (Para 8), where the Jammu & Kashmir High Court held that although refund claims are filed quarterly, computation must be done monthly (Para 7–8).

• Cited clarification dated 26-04-2022 by J&K Finance Department that allowed monthly computation of claims even if reimbursement is quarterly (Para 7).

• Circular dated 10-01-2019 (Para 9) supported annexing month-wise details to refund applications for accurate verification.

• The Court held that ignoring a coordinate High Court’s interpretation (J&K HC in Coromandel) would violate judicial comity (Para 10).

Judgment of the Court (Para 11–13):

• Set aside the single judge’s order dated 06-05-2024 and the original order of rejection dated 01-03-2022 (Para 11).

• Directed respondent authority to reconsider appellant’s claim for July–September 2017 on the lines of Coromandel International Ltd. ruling (Para 12).

• Writ Appeal allowed and disposed of accordingly (Para 13).

🧾 Between Fine Lines:

1. Glenmark’s refund for July–September 2017 was rejected due to negative ITC and non-compliance with quarterly filing.

2. The court held that the monthly computation of tax liability, as clarified in earlier High Court decisions, is valid.

3. Judicial discipline requires following precedent from courts of concurrent jurisdiction.

4. Circulars cannot override vested rights under a statutory notification.

5. Rejection order was quashed; claim to be re-evaluated using monthly data, though filed quarterly.

📚 Summary of Referred Cases: