Sikkim HC closes Zydus Healthcare writ petition post refund of Rs. 4 crore; liberty kept open on interest and assessments

Background and context

Zydus Healthcare Limited Vs Commissioner (Sikkim High Court) concerns a writ petition where Zydus Healthcare Limited (earlier known as M/s German Remedies) invoked the writ jurisdiction of the Sikkim High Court. The core dispute related to:

• Refund of an ad‑hoc security amounting to Rs. 4.00 Crores,
• Claim for interest on that deposit, and
• Challenge to certain pending assessment and reassessment proceedings under the Sikkim VAT Act read with the CST Act.

The amount in question was deposited on 17.12.2016 with the Commercial Tax authorities as “security paid under protest”. Over time, events moved in a direction where the principal amount was returned to the assessee, leaving only the questions of interest and the validity of pending assessment and reassessment proceedings in dispute.

The matter ultimately came before the Sikkim High Court, which recorded the subsequent developments and disposed of the writ petition in light of the refund, while preserving the assessee’s right to seek further judicial recourse if required.

Reliefs originally sought in the writ petition

The writ petition, as noted in the order, was structured around three principal prayers:

1. Refund of deposit of Rs. 4.00 Crores

   • The assessee sought a direction for refund of Rs. 4.00 Crores deposited on 17.12.2016 as an ad‑hoc “security paid under protest” with respondent no.1 (Commercial Tax authorities).

2. Interest on the deposit

   • The petitioner requested interest at 6% per annum, or at any other rate the Court considered appropriate, calculated from 17.12.2016 (the date of deposit) till the date of refund.

3. Quashing of assessment / reassessment proceedings as time-barred

   • The assessee also challenged certain assessment and reassessment proceedings, asserting that they were barred by limitation:
     • under section 38 and section 42A of the Sikkim VAT Act,
     • read with section 6A of the CST Act.

Thus, the dispute combined both a monetary component (refund and interest) and a challenge to the jurisdictional validity and timeliness of ongoing assessment-related actions.

Statement by counsel for Zydus Healthcare Limited

During the hearing, the Sikkim High Court recorded the submissions of Mr. Jatin Arora, learned counsel representing the petitioner, Zydus Healthcare Limited.

Confirmation of refund of Rs. 4.00 Crores

Counsel informed the Court that:

• The ad‑hoc security amount of Rs. 4.00 Crores, originally paid on 17.12.2016, had already been refunded to the assessee.

This development effectively resolved the primary relief of refund that had triggered the filing of the writ petition.

Request to close writ in view of ongoing negotiations

In view of the refund having been made, counsel submitted that:

• The parties were engaged in ongoing negotiations relating to the remaining issues, namely:
  • the claim for interest on the refunded amount, and
  • the proposed withdrawal and status of the assessment and reassessment proceedings that had been challenged as time-barred.

On this basis, Mr. Arora requested that:

• The writ petition may be closed at this stage, without adjudication on merits of the remaining prayers.

Prayer for liberty to approach Court again

Counsel further sought a specific safeguard: