Natural Justice Prevails: Sikkim High Court Sets Aside GST Budgetary Support Order Against Cipla Limited for Denial of Hearing

Background and Context

The Scheme of Budgetary Support under the GST regime, introduced by the Ministry of Commerce and Industry, Union of India on 05.10.2017, was designed to promote industrial development in specified regions including Jammu & Kashmir, Uttarakhand, Himachal Pradesh, and the North Eastern States including Sikkim. Industrial units established in these areas were entitled to claim financial assistance under this scheme as a transitional measure following the rollout of GST.

Against this backdrop, a significant ruling has emerged from the Sikkim High Court in Cipla Limited Vs Union of India (Sikkim High Court), WP(C) No.38 of 2023, decided on 24/08/2026. The judgment addresses a critical question at the intersection of procedural fairness and scheme administration — whether an authority can finalise proceedings adverse to an applicant solely on the basis of a declared figure, without affording the applicant any opportunity to explain an apparent discrepancy between that declaration and a supporting certificate furnished at the authority's own direction.

Facts of the Case

Cipla Limited, a pharmaceutical company operating industrial units in the State of Sikkim, filed an application dated 19.09.2019 claiming budgetary support under the GST Budgetary Support Scheme for its Sikkim unit.

In its declaration, Cipla Limited stated the Input Tax Credit (ITC) availed for the eligible unit at ₹15,28,80,613/- (Rupees fifteen crores, twenty-eight lakhs, eighty thousand, six hundred and thirteen only).

Subsequently, Respondent No. 6 directed the petitioner to furnish a Chartered Accountant (CA) certificate to substantiate the claim. The CA certificate, produced in compliance with this very direction, reflected a different figure — the ITC actually availed for the eligible unit was ₹10,01,57,759/- (Rupees ten crores, one lakh, fifty-seven thousand, seven hundred and fifty-nine only).

Despite this divergence between the two documents, the authorities proceeded to pass an order dated 19.01.2023 finalising the proceedings. Crucially:

  • The order relied upon the higher declaration figure of ₹15,28,80,613/-
  • The CA certificate figure of ₹10,01,57,759/- was not considered
  • No opportunity was extended to Cipla to explain the discrepancy
  • An amount of ₹5,27,22,856/- (Rupees five crores, twenty-seven lakhs, twenty-two thousand, eight hundred and fifty-six only) was deducted from the petitioner's entitlement

Cipla contended that the higher figure in the original declaration was a human error, and that the true and correct ITC figure was the lower amount as certified by the CA. It was further argued that the deduction of ₹5,27,22,856/- was therefore erroneous and contrary to the actual facts.

Procedural History Before the High Court

The Sikkim High Court took up the writ petition and, on 19.09.2025, passed an interim order directing Respondent No. 6 to grant a personal hearing to the petitioner within 45 days. The Court's order reads as follows: