The Gujarat High Court has issued notice in a significant case involving Eris Lifesciences Ltd., a pharmaceutical company, challenging a demand order for reversal of Input Tax Credit (ITC) under the Goods and Services Tax (GST) framework related to returned and expired medicines/drugs.
The bench of Justice Bhargav D. Karia and Justice Pranav Trivedi issued the notice to the GST department on August 5, 2025, returnable on September 18, 2025.
The pharma company, Eris Lifesciences is contesting a tax demand of Rs. 1.28 crore raised against it for ITC claims on expired drugs returned by distributors and subsequently destroyed.
The core of the dispute lies in the interpretation and application of Section 17(5)(h) of the CGST Act, 2017, which bars ITC on goods “lost, stolen, destroyed, written off or disposed of by way of gift or free samples.” The authorities applied this clause to deny ITC on expired drugs returned to Eris, even though the goods had been originally sold with GST duly paid.
The pharma company has argued that the returned goods (expired pharmaceutical products) were sold in the regular course of business and were subject to output GST at the time of original supply. Upon return due to expiry, the drugs were mandatorily destroyed following the Central Drugs Standard Control Organization (CDSCO) guidelines. The destruction of the drugs was a regulatory requirement, not a voluntary act of disposal by the company. The issuance of credit notes for the expired goods occurred beyond the time limit prescribed under Section 34(2) of the CGST Act, and therefore, the provision of Section 17(5)(h) should not apply retroactively.
Additionally, the company has challenged the validity of clause (d) of Para 3(B) of Notification No. 72/46/2018-GST dated October 26, 2018, as being ultra vires to the GST Act when applied in such circumstances.
The High Court has allowed direct service of notice through email to expedite proceedings. The case will be taken up next on September 18, 2025.
Case Details
Case Title: M/S Eris Lifesciences Ltd. Versus Union Of India & Ors.
Case No.: R/Special Civil Application No. 10773 Of 2025
Date: 05/08/2025
Counsel For Petitioner: Jagrat B Shah
Counsel For Respondent: Pradip D Bhate
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