HC denies ITC of compensation cess on coal used for township electricity supply

  • Blog|News|GST & Customs|
  • 3 Min Read
  • By Taxmann
  • |
  • Last Updated on 14 August, 2025

Latest from Taxmann

Chhattisgarh HC ITC ruling compensation cess on coal ITC denial electricity supply township electricity GST coal ITC refund rejection

Case Details: Bharat Aluminium Company Ltd. vs. State of Chhattisgarh - [2025] 177 taxmann.com 108 (Chhattisgarh)

Judiciary and Counsel Details

  • SANJAY K. AGRAWAL, J.
  • Bharat Raichandani, Arjyadeep Roy and K. Rohan, Advs. for the Petitioner.
  •  Rahul Tamaskar, Govt. Adv. for the Respondent.

Fact of the Case

The petitioner, an exporter of aluminium products, filed an application claiming refund of input tax credit (ITC) of compensation cess paid on import of coal on the premise that such ITC was admissible. A provisional refund of 90 percent of the total claim was granted, and a show cause notice was issued proposing rejection of part of the refund claim. In reply, the petitioner contended entitlement to ITC; however, the claim was rejected on the ground that 540 MW electricity generated in its power plant was supplied to township consumption, thereby necessitating reversal of ITC of compensation cess paid on coal attributed to the said plant. The petitioner’s appeal was dismissed, leading to the present writ petition before the High Court of Chhattisgarh.

HC Held

The High Court of Chhattisgarh held that as it was the admitted case of the petitioner that electricity generated in the 540 MW plant was used in the course of furtherance of business, and as evident from Form G, the petitioner would not be entitled to ITC on electrical energy consumed for maintenance of its township. Reliance was placed on the decisions in CCE v. Gujarat Narmada Fertilizers Co. Ltd. [2009] 22 STT 46 (SC) and Maruti Suzuki Ltd. v. CCE, Delhi-III [2009] 22 STT 54 (SC). Accordingly, the claim for ITC of compensation cess paid on coal attributed to electricity supplied for township consumption was rejected.

List Of Cases Reviewed

List Of Cases Referred to

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Taxmann editorial team

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied

Leave a Reply

Your email address will not be published. Required fields are marked *

«
»

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied