Decided 10 June 2025. The Sikkim High Court has allowed SICPA India's claim for refund of Rs 4,37,61,402 of unutilised input tax credit left in its electronic credit ledger after it closed its manufacturing unit in Sikkim. The Court held that sections 49(6) and 54 contain no express bar on such a refund, and that the statute does not allow tax to be retained without authority of law.
Case at a glance
| Case | SICPA India Private Limited & Anr. v. Union of India & Ors. |
| Forum | Sikkim High Court (Justice Meenakshi Madan Rai) |
| Case No. | WP(C) No. 54 of 2023 |
| Date of judgment | 10 June 2025 |
| Refund claimed | Rs 4,37,61,402 |
| Key provisions | Sections 49(6), 54(3) and 29(5) CGST Act |
| Result | Writ allowed; appellate order set aside; refund allowed |
Facts of the case
The petitioner manufactured security inks in Sikkim. In January 2019 it decided to discontinue operations and sold its machinery between April 2019 and March 2020, reversing ITC as required.
It claimed refund of the ITC balance under section 49(6). The Assistant Commissioner rejected it on 08.02.2022 and the Appellate Authority upheld the rejection on 22.03.2023, holding that section 54(3) allows refund of unutilised ITC only for zero-rated supplies and inverted duty structure.
Issue before the High Court
Is a registered person entitled to refund of unutilised ITC on closure of business, though closure is not one of the two cases in section 54(3)?
What the High Court held
- The writ was maintainable despite the appeal remedy, as no question of fact was involved (Indian Hume Pipe; Godrej Sara Lee).
- Following the Karnataka High Court in Slovak India Trading under the CENVAT Rules, there is no express prohibition on refund of unutilised credit on closure.
- Similarly, there is no express prohibition in section 49(6) read with section 54 and 54(3). Although section 54(3) mentions only two situations, the statute does not provide for retention of tax without the authority of law.
- The petitioners were held entitled to the refund and the appellate order was set aside.
Practical takeaways for taxpayers
- Businesses closing operations with large ITC balances can claim refund, relying on this ruling and Slovak India Trading.
- Reverse ITC correctly on sale of capital goods and stock before claiming the balance.
- Where only a question of law is involved, a writ may be entertained despite the appeal remedy, as the Court did here.
Frequently asked questions
Is refund of ITC available on closure of business under GST?
The Sikkim High Court allowed it, holding there is no express bar and tax cannot be retained without authority of law.
What about the restriction in section 54(3)?
The Court held that section 54(3) lists two situations but does not authorise the government to keep the balance on closure.
Facing a similar GST dispute?
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This summary is based on the order of the Sikkim High Court in WP(C) No. 54 of 2023. It is general information, not legal advice; the outcome of any case depends on its own facts and the full text of the order.