GST
TRT-2025-
High court of Gujarat
Date:-05-08-25
In:-
Issue Favourable to Tax Payer ?:-
Order dated 05 August 2025
Parties: M/s Eris Lifesciences Ltd. V. Union of India & Ors.
Facts -
- The petitioner, a pharmaceutical company, challenged the Order-in-Original and the appellate order confirming a demand of ₹1,28,52,421 towards reversal of Input Tax Credit (ITC) on pharmaceutical products returned after expiry. The company argued that under the Central Drugs Standard Control Organization’s guidelines, expired goods must be destroyed upon receipt.
- Since these goods were already sold with output tax paid, the petitioner contended that Section 17(5)(h) of the CGST Act should not apply. They also challenged Clause (d) of Para 3(B) of Notification No. 72/46/2018-GST, stating that the provision for ITC reversal on such returns was inapplicable when credit notes were issued after the time limit in Section 34(2) CGST Act.
Issue -
- Whether the ITC reversal under Section 17(5)(h) of the CGST Act applies to expired goods returned post-sale and destroyed, and the validity of the relevant notification clause mandating such reversal?
Order -
- The division bench of the Hon’ble high court held that the provision of clause (h) of sub-section (5) of section 17 of the Central Goods and Service Tax Act, 2017 [‘the CGST Act’ for short] which is made applicable where the goods have been returned on payment of Input Tax Credit or reversal of Input Tax Credit would not be applicable in the facts of the case more particularly, when the credit note was issued on return of the time expired goods after the due date as prescribed under sub-section (2) of section 34 of the CGST Act.
- Accordingly, Court issued notice returnable on 18 September 2025 and permitted direct service through email, indicating that the matter required consideration.
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