Ambuja Cement Limited Vs Union of India
Date: November 5, 2025
Subject Matter
Tax-Paying Parties, Not Just Depositors, Can Claim Refunds Under Section 54
Summary
The petitioner, UltraTech Cement Ltd., entered into an Engineering, Procurement, and Construction (EPC) contract with M/s Howe Engineering Projects India Pvt. Ltd. (HEPIPL) for a plant debottlenecking project.
Payment and Tax: The petitioner remitted payment, including 18% GST, to HEPIPL against the first milestone invoices (raised Nov 2022). The GST was deposited into the government treasury by HEPIPL.
Contract Annulment: Due to changes in the scope and HEPIPL's inability to meet new terms, the parties mutually agreed to annul the existing contract via a Memorandum of Settlement (March 3, 2023) and a formal Termination Letter (March 8, 2023).
Refund Claim: The petitioner filed an application under Section 54 of the CGST Act for a refund of the GST paid on the annulled contract.
Rejection and Appeal: The claim was rejected by the adjudicating authority and subsequently dismissed on appeal (impugned order dated Aug 31, 2024).
The Revenue's primary objection was that the petitioner (the recipient) was not the person who deposited the tax with the government, and therefore, the refund application was technically flawed and inadmissible under Section 54.
Ruling:
The High Court disposed of the petition by setting aside the Appellate Authority's order (dated 31.8.2024) and remanding the matter for de novo consideration.
Scope of Section 54: The Court noted that Section 54 allows "Any person claiming refund of any tax... paid by him, may make an application." The court implicitly questioned the narrow interpretation of the Revenue that only the person who deposited the tax (the supplier, HEPIPL) can apply for the refund. The petitioner had paid the consideration, including the tax component, which was later remitted to the government.
Need for Reconsideration: Since the Revenue's counsel conceded that "various aspects of the matter which were required to be considered, have been overlooked" and requested a reconsideration, the Court found it prudent to remand the matter.
Direction to Appellate Authority: The Appellate Authority is directed to reconsider the matter and pass a fresh reasoned and speaking order within a period of two months.
The Court explicitly clarified that its observations should not be construed as a binding opinion on the merits during the fresh appeal.
FULL TEXT OF THE ORDER OF ITAT ALLAHABAD
1. Heard Mr. Ashish Agrawal, learned counsel for the petitioner, Mr. Anoop Trivedi, learned Additional Advocate General assisted by Mr. Ravi Shanker Pandey, learned ACSC for the State-respondent nos. 4 and 5, Mr. Saumitra Singh, learned counsel for respondent nos. 1 and 2 and Mr. Ramesh Chandra Shukla for respondent no. 3.
2. By means of present petition, the petitioner is assailing the order dated 31.8.2024 passed by respondent no. 4 and the order dated 4.8.2023 passed by respondent no. 5.
3. Learned counsel for the petitioner submits that the petitioner is a registered company and involved in the business of manufacturing of cement and clinker having GSTIN 09AAACG0569P1Z5. He submits that in furtherance of its business expansion and operational enhancement, the petitioner company sought to undertake the expansion and debottlenecking of its existing plants, along with the establishment of new greenfield cement grinding unit across the country. Therefore, the petitioner proposed to undertake debottlenecking work at its Dadri Plant located in the State of UP for which the petitioner company entered into an engineering, procurement and construction contract i.e. EPC contract with M/s Howe Engineering Projects India Pvt. Ltd. (hereinafter referred to as HEPIPL). He submits that in pursuance of the said contract, invoice dated 28.11.2022 and 29.11.2022 have been raised to which petitioner company remitted payment to HEPIPL for the purported first milestone, which included the applicable GST at the rate of 18 %. But due to unforeseen internal and external factors, the petitioner company notified HEPIPL of substantial changes from the initial contract award, which would detrimentally impact the project status and necessitate modifications to the agreed scope of work to be performed by HEPIPL. Thereafter, HEPIPL indicates its inability to complete the expanded scope of work within the existing timeline and budget. Thereafter, the petitioner and HEPIPL mutually agreed to annul the existing contract for which memorandum of settlement of agreement dated 3.3.2023 was executed followed by a termination letter dated 8.3.2023 by which the EPC contract, purchase order number 2800927060, was cancelled. But before recession / cancellation of the contract, the petitioner had already paid the GST. Therefore, after recession / cancellation of contract, the petitioner moved an application under Section 54 for claiming the refund of the tax pursuant to which a show cause notice was issued to which detailed reply was submitted but being not satisfied with the same, the impugned order dated 4.8.2023 has been passed rejecting the application of the petitioner. Aggrieved to the said order, the petitioner filed an appeal, which has also been dismissed without considering the material on record.
4. Learned counsel for the petitioner submits that claim has
been rejected on too technical grounds which do not contemplate under the Act and Rules, therefore, the impugned orders are not justified. He prays for allowing the present petition.
5. Per contra, Anoop Trivedi, learned Additional Advocate General supports the impugned orders and submits that claim of the petitioner has rightly been rejected. He submits that the petitioner is not entitled for any refund as the application has not been made by the party who has deposited the GST. He submits that the Act only contemplates that the person who has deposited the tax can file any application for refund. He submits that merely on the basis of mutual settlement, the petitioner will not be held entitled for any refund. He further submits that various aspects of the matter which were required to be considered, have been overlooked, therefore, the matter requires reconsideration.
6. Learned counsel for the petitioner has no objection to the last submission made by learned AAG.
7. The other respondent counsels adopts the argument of learned AAG.
8. After hearing learned counsel for the parties, the Court has perused the records.
9. The record shows that the agreement was entered into between the petitioner and HEPIPL but the same could not be executed on the premise that scope of contract was enlarged and petitioner was compelled to complete the project within timeline and budget already mentioned. Therefore, HEPIPL shows its inability to complete the expanded scope of work and requested for re-negotiation of the contract terms but the petitioner company and HEPIPL mutually agreed to annul the existing contract and entered into a memorandum of settlement agreement, followed by termination / cancellation of contract. It is not in dispute that the invoices were raised and payment was remitted by the petitioner on which the GST was charged. It is not the case of the respondent that amount paid by the petitioner along with GST has not been deposited with the Government treasury.
10. Section 54 of the Act empowers that any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed.
11. Section 54 of the Act does not restrict that refund application has to be made only by the person who has deposited the tax, but a person paying the tax to a registered person can also make an application for refund. Section 54 of the Act contemplates that person claiming the refund has to show the proof of payment of tax and not beyond that.
12. In view of the facts and circumstances of the case, the matter requires reconsideration by the first appellate authority and for that purpose, the impugned order dated 31.8.2024 is set aside.
13. The matter is remanded to the first appellate authority, who shall reconsider the matter of the petitioner and pass a reasoned and speaking order, after giving due opportunity of personal hearing to the petitioner, in accordance with law, expeditiously, preferably within a period of two months from the date of production of certified copy of this order.
14. It is made clear that any observation made, herein above, shall not come in way, while deciding the appeal, afresh.
15. The writ petition is disposed off