The Himachal Pradesh High Court has set aside an order confirming GST demand of more than Rs. 80 crore along with interest and penalty against pharmaceutical major Abbott Healthcare Pvt. Ltd., holding that the adjudicating authority failed to address a fundamental jurisdictional objection relating to denial of Input Service Distributor (ISD) credit. 

The bench of Justice Vivek Singh Thakur and Justice Ranjan Sharma observed that the impact of the audit report required fresh adjudication by the competent authority. 

The petitioner, a leading multinational pharmaceutical company, had its head office in Mumbai registered as an Input Service Distributor (ISD). The Mumbai office had distributed input tax credit (ITC) to the company’s manufacturing unit situated at Shimla. Apart from ISD distribution, the Mumbai office had also cross-charged services to the Shimla unit.

The dispute arose after the GST authorities at Shimla questioned the correctness of the ITC distributed by the Mumbai ISD and proceeded to deny such credit to the recipient unit. The adjudicating authority held that ITC amounting to ₹17.67 crore had been wrongly distributed by the ISD during FY 2018-19 and 2019-20 and consequently confirmed recovery proceedings against the assessee. 

Before the High Court, the petitioner raised a fundamental jurisdictional challenge by contending that the Shimla adjudicating authority could not sit in judgment over the correctness of ITC distribution carried out by the Mumbai-registered ISD, which fell within the jurisdiction of authorities in Mumbai.

The petitioner further relied upon an audit report issued under Section 65(6) of the CGST Act by the jurisdictional authorities at Mumbai. The audit report, after detailed verification of records, had reportedly accepted the correctness of the ISD credit distribution and granted a clean chit to the petitioner. 

The High Court noted that despite being granted time, the Revenue authorities failed to place any material on record to rebut the audit findings relied upon by the petitioner. 

Accordingly, the Court set aside the impugned order dated December 29, 2023 passed by the Additional Commissioner, Central GST, Shimla, and remanded the matter back for fresh adjudication after considering the submissions and material placed by both the assessee and the Revenue Department. 

The Court clarified that it had not examined the merits of the show cause notice or the objections raised by the petitioner and directed the adjudicating authority to decide the matter independently without being influenced by any observations made in the order. 

The matter has been directed to be decided afresh preferably within two months.

Case Details

Case Title: Abbott Healthcare Pvt Ltd Versus Union of India & Ors. 

Citation: JURISHOUR-1110-HC-2026(HP) 

Case No.: CWP No.2696 of 2024

Date: 24.04.2026

Counsel For Petitioner: Bharat Raichandani

Counsel For Respondent: Nand Lal Thakur, Senior Panel counsel