2021 (11) TMI 935 - HC - GST

Court orders reimbursement for delayed UID issuance in pharmaceutical case, citing unjustified rejection.

Glenmark Pharmaceuticals Limited Versus Union of India, Director, Department for Promotion of Industry and Internal Trade, The Assistant Commissioner, Central Goods & Service Tax, The Commissioner of CGST

The court held that the rejection of the petitioner's budgetary support claims was unjustified due to the delay in UID issuance caused by the respondents' ... Rejection of the petitioners claims for budgetary support under a “Scheme of Budgetary Support under Goods and Service Tax” regime - rejection on the ground that the claims were made for the period prior to the registration which is impermissible - HELD THAT:- Notification dated 05.10.2017 is a Scheme of Budgetary Support under Goods and Service Tax regime to the units located in the States of Jammu and Kashmir, Uttarakhand, Himachal Pradesh and North East including Sikkim. In pursuance of the decision of the Government of India to provide budgetary support to the existing eligible manufacturing units operating in the states under different industrial promotion schemes of the Government of India, for a residual period for which each of the units is eligible, a scheme was introduced as a measure of good will. It was stated that the Department of Industrial Policy and Promotion (DIPP), the administrative department, had issued Notification dated 05.10.2017 which had come into operation with effect from 01.07.2017 and shall remain in operation for the residual period. Budgetary support under the scheme shall be worked out on quarterly basis and claims for the same shall also be filed on a quarterly basis. It was also specified that the eligible units was required to obtain one time registration and file an application for payment of budgetary support which shall be processed by the Deputy/Assistant Commissioner of the Central Taxes for sanction of the admissible amount. The sanction amount shall be credited into bank accounts of the beneficiaries through PFMS platform of the Central Government. Paragraph 6 thereof, which is pressed by the petitioner, states that the claim for the quarter ending September, 2017 has already become due. In order to mitigate the difficulties of the eligible units, it has been decided that units would be registered on the basis of application filed by them manually and application of claim for budgetary support for the said quarter would also be filed and processed manually. From the circular dated 27.11.2017 it is clear that although the claim for the quarter ending September, 2017 had already become due “In order to mitigate the difficulties of the eligible units” it was decided that those eligible units would be registered on the basis of application filed by them manually and application for claim for budgetary support for the said quarter (i.e., quarter ending September, 2017) would also be filed and processed manually. Reading the Standard Operating Procedure even for the first quarter ending September, 2017 it is clear that registration under the GST is a necessary prerequisite for the scheme and the UID would be issued only after registration - an argument is sought to be made that if such an application is presumed to have been made even then the petitioner failed to follow up the application. Quite evidently, the manual application 12.12.2017, although permitted under the circular dated 27.11.2017, was not processed for registration by the respondents. Quite evidently although the application for registration and issuance of UID made by the petitioner had been received by the respondent No. 3 on 12.12.2017, the authority neither registered the petitioner nor rejected the application compelling the petitioner to reapply for the same electronically pursuant to which registration and UID was granted on 31.10.2018. The fact that registration and UID was granted makes it evident that the petitioner was eligible for the budgetary support under the scheme. Quite clearly the Respondent No. 3 failed to process the application for registration as required. Since, the Respondent No. 3 failed to grant the registration to the petitioner, although it was an eligible unit, the petitioner could not have made their claims for budgetary support before being allotted the UID - As the respondents have rejected the claims of the petitioner on the technical ground, it is directed that the authorities shall process the four claims made by the petitioner for budgetary support and sanction reimbursements as found eligible within three months from the date of this judgment. Petition allowed. Issues Involved:1. Rejection of budgetary support claims for the period prior to UID registration.2. Compliance with the 'Scheme of Budgetary Support under Goods and Service Tax' notification dated 05.10.2017.3. Timeliness and procedural adherence in filing claims.4. Responsibility and fault in the delay of UID issuance.Issue-Wise Detailed Analysis:1. Rejection of Budgetary Support Claims for the Period Prior to UID Registration:The core dispute revolves around the rejection of the petitioner’s claims for budgetary support under the 'Scheme of Budgetary Support under Goods and Service Tax' regime. The rejection was based on the fact that the claims were made for periods before the issuance of the Unique ID (UID), which is a mandatory pre-registration requirement as per the notification dated 05.10.2017.2. Compliance with the 'Scheme of Budgetary Support under Goods and Service Tax' Notification Dated 05.10.2017:The petitioner, engaged in the manufacture and supply of pharmaceutical products, challenged four orders dated 05.12.2019 issued by the Assistant Commissioner, Central Goods and Service Tax, Gangtok Division. The orders rejected the claims for budgetary support for the period from July 2017 to June 2018. The petitioner was assigned a UID number upon validation of eligibility under the scheme. However, the claims were rejected because they were made for periods before the UID was issued, violating the mandatory pre-registration requirement.3. Timeliness and Procedural Adherence in Filing Claims:The respondents argued that the claims for budgetary support for the period July 2017 to June 2018 were filed belatedly, violating the notification dated 05.10.2017. The petitioner filed an application for budgetary support on 02.11.2018, but the UID was issued only on 31.10.2018. The respondents clarified that despite obtaining the UID on 31.10.2018, the claims were made for periods prior to this date, thus making them ineligible.4. Responsibility and Fault in the Delay of UID Issuance:The petitioner contended that the failure to register and issue the UID was due to the respondents' inaction. The petitioner had made a manual application for registration on 12.12.2017, which was not processed by the respondents. Consequently, the petitioner had to reapply electronically, resulting in the issuance of the UID on 31.10.2018. The court found that the respondents' failure to process the initial manual application caused the delay, and it was not the petitioner’s fault.Conclusion:The court concluded that the rejection of the petitioner’s claims was unjustified as the delay in issuing the UID was due to the respondents' inaction. The petitioner was eligible for budgetary support, and the claims were rejected solely on technical grounds without examining the admissible amount of budgetary support. The court ordered the respondents to process the four claims made by the petitioner and sanction reimbursements within three months from the date of the judgment. The writ petition was allowed to this extent, with each party bearing their respective costs.