Discontinued Business Entitled to GST Refund of Unutilised ITC: Sikkim H

The High Court of Sikkim has delivered a significant judgment, ruling that a business is entitled to a cash refund of its unutilized Input Tax Credit (ITC) even after it has discontinued its operations. The court allowed a refund of Rs 4.37 crore to SICPA India, whose claim was previously rejected by the GST authorities. The department had argued that Section 54(3) of the CGST Act only permits refunds in two specific scenarios: zero-rated supplies and inverted duty structures, neither of which includes business closure. However, the High Court observed that there is no express prohibition in the law that forbids such a refund. It emphasized that the government cannot retain tax collected without the authority of law. This ruling provides crucial relief for businesses that cease operations, ensuring that the accumulated ITC, which is essentially tax already paid on inputs, is not unjustly forfeited.