Lupin moves High Court fearing tax on pre-GST stock

Mumbai: Lupin has filed a writ petition in Delhi High Court against the Government of India claiming the stock lying in its godowns could face double taxation at the time of selling.

A recent report in ET states that Lupin is worried that the old pile of medicines, ointments or any other drugs, on which previous taxes such as sales tax and VAT have already been paid and lying in its godowns could face double taxation due to goods and services tax (GST) regulations mainly because many drugs and medicines that were manufactured before GST kicked in, were actually rolled out this year, and could carry an expiry date later than June 2018.

Transitional credit is a concept under GST wherein taxes paid under the old regime can be set off against the GST liability.

So, the pharma companies that bought medicines or other drugs from their vendors or third-party manufacturers without corresponding invoices before July 1 are not entitled to set off the taxes paid on them against their GST liability after 12 months, setting the deadline for June 30, 2018.

On this issue the company has decided to approach the court for clarification

Asking a question, Abhishek A Rastogi, a partner at Khaitan & Co told ET, “The question is can a law dictate how business is conducted and whether it can lay restrictions on the time frame of selling any products."