The Telangana High Court addressed the case of Aurobindo Pharma Limited, which filed writ petitions after its GST refund claims for zero-rated supplies were denied for tax periods between 2020 and 2023. Aurobindo argued that it had accumulated unutilized compensation cess while manufacturing goods exported as zero-rated supplies, entitling it to a refund of tax credits. The company cited previous judgments, including those involving Atul Limited and Patson Papers Private Limited, which affirmed the right to claim such refunds. An identical case involving Aurobindo had previously been remanded by the Telangana High Court for reconsideration, making the current disputes similar.
The issue at hand was whether the rejection of refund claims for accumulated compensation cess on zero-rated supplies was legally justified despite earlier judicial precedents favoring the assessee. The Court noted that previous judgments had already established the legal position on refund entitlement for zero-rated supplies, directly applying to Aurobindo's case. The State's readiness to reconsider the issue, following the Gujarat High Court's rulings and the Supreme Court's dismissal of a related petition, indicated that the rejections required reevaluation.
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Emphasizing consistency in judicial and administrative decisions, the Court set aside the impugned orders and remanded the matters to the original authority. The authorities were directed to pass fresh orders after hearing the petitioner within four months. The writ petitions were allowed without costs, reinforcing the need for a consistent approach in similar refund claims.
Order Date - 29 April 2026
Parties: Aurobindo Pharma Limited Vs State of Telangana, Revenue Commercial Tax Department
Facts -
- Aurobindo Pharma Limited filed multiple writ petitions after its GST refund claims relating to zero-rated supplies were rejected by the tax authorities for different tax periods between 2020 and 2023.
- They argued that it had accumulated unutilized compensation cess while manufacturing goods exported as zero-rated supplies, and therefore it was entitled to claim refund of such tax credits.
- They relied on earlier judgments, particularly Atul Limited and Patson Papers Private Limited, where courts had recognized the right to claim refund of compensation cess used in manufacturing exported goods.
- Also pointed out that in an earlier identical batch involving the same company, the Telangana High Court had already remanded the matter back to authorities for fresh consideration, making the present disputes substantially similar.
Issue -
- Whether the rejection of refund claims for accumulated and unutilized compensation cess on zero-rated supplies was legally sustainable despite earlier judicial precedents favouring the assessee.
Order -
- The Court observed that the controversy was no longer res integra because earlier judgments, including Atul Limited and Patson Papers Private Limited, had already clarified the legal position regarding refund entitlement on zero-rated supplies. The Bench noted that these precedents directly covered the petitioner’s case since the exported goods were exempt from levy of tax but involved input compensation cess during manufacturing.
- The Court took note of the State’s submission that even the department was willing to reconsider the issue in light of the Gujarat High Court rulings and the dismissal of the Revenue’s Special Leave Petition before the Supreme Court in Patson Papers. This showed that the earlier rejection orders could not be sustained without fresh examination.
- The Bench emphasized that the present batch involved facts identical to those already decided earlier in favour of the same petitioner. Since consistency in judicial and administrative approach is essential, the authorities could not adopt a contrary stand in subsequent refund claims arising from similar transactions.
- The Court therefore set aside the impugned orders and remanded the matters back to the original authority with a direction to pass fresh orders after granting an opportunity of hearing to the petitioner within four months. The writ petitions were accordingly allowed without costs.
