Supreme Court Issues Notice On Patanjali Foods' Rs 2.97 Crore Excise Duty Refund Appeal

The Supreme Court has recently issued notice in an appeal filed by Patanjali Foods Limited (formerly Ruchi Soya Industries Ltd.) seeking a refund of Rs 2.97 crore charged by the tax department in connection with an excise duty dispute.

A Division Bench of Justice Pamidighantam Sri Narasimha and Justice Atul S Chandurkar issued notice on both the main appeal and the application seeking condonation of delay.

The appeal challenges the Karnataka High Court's judgment dated September 30, 2024, and its subsequent order dated July 4, 2025, dismissing Patanjali's review petition.

The dispute began after the Commissioner of Central Excise and Service Tax, Mangaluru, raised a demand of Rs 8.06 crore in November 2012 on the manufacture and clearance of “RBD Palm Stearin” between 2009 and 2011.

Of this amount, Rs 2.97 crore was already paid by Ruchi Soya, while the remaining Rs 5.09 crore was contested before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).

During the pendency of the appeal, insolvency proceedings were initiated against Ruchi Soya. The National Company Law Tribunal (NCLT), Mumbai approved a resolution plan under the Insolvency and Bankruptcy Code (IBC) in July 2019. Patanjali, which later took over the company, argued that since the tax department did not file any claim during the Corporate Insolvency Resolution Process (CIRP), the excise demand stood extinguished and the previously paid amount should also be refunded. 

While the tribunal refused any relief to Patanjali, the Karnataka High Court partly accepted this contention. It held that the unclaimed balance of Rs 5.09 crore stood extinguished under the IBC but refused to direct a refund of the Rs 2.97 crore already appropriated by the department.

The bench observed that since the claim for Rs 5.09 crore was not lodged before the Resolution Professional, it stands extinguished, but clarified that Patanjali is not entitled to seek a refund of the amount already appropriated by the department prior to insolvency.

Patanjali then filed a Review Petition, arguing that the High Court should have ordered the refund and clarified the extinguishment of interest and penalty as well.

On July 4, 2025, the same Bench of Justices S G Pandit and Justice C M Poonacha, dismissed the petition, stating that it was “an attempt to re-argue the main appeal on its merits,” which is outside the scope of review.

The court also termed the argument on interest and penalty “misconceived,” noting that no such demand had been raised

Case Title: Patanjali Foods Ltd. v. Commissioner of Central Excise and Service Tax 

Case Number: Civil Appeal  Diary No(s). 57088/2025

Appearances:

For Appellant: Senior Advocate Balbir Singh, with Advocates Rajesh Rawal, Deepak Agrawal, Kunal, Ruchika Jain and Himanshi Pal 

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