Any Tax-Paying Person Can Claim GST Refund, Rules Allahabad High Court in Ambuja Cement Case

Any Tax-Paying Person Can Claim GST Refund, Rules Allahabad High Court in Ambuja Cement Case

The Allahabad High Court has ruled that any person who pays GST — not just the one who deposits it with the Government — is eligible to seek a refund, provided proof of payment is furnished.

The judgment came in the Ambuja Cement Limited case, where the tax authorities had denied a refund solely on the ground that the applicant was not the “tax depositor.”

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The Court examined Section 54 of the GST Act, noting that the law uses the phrase “any person claiming refund of any tax… may make an application”, leaving no room for the restrictive interpretation adopted by the authorities.

The bench focused that the GST framework does not require the refund applicant to be the supplier who deposited the tax; instead, the applicant must simply show evidence of having paid the tax amount.

The case stemmed from an EPC contract between Ambuja Cement and Howe Engineering Projects India Pvt. Ltd. (HEPIPL) for expansion works at Ambuja’s Dadri plant. Ambuja had paid invoices raised in November 2022, including GST.

However, after major changes in project scope, both parties mutually cancelled the contract in March 2023. Ambuja then applied for a GST refund on the grounds that the underlying supply became void.

The refund was rejected twice — first on 4 August 2023, and later by the appellate authority on 31 August 2024 — only because the application was not filed by the party that deposited tax into the Government account. Challenging this reasoning, Ambuja approached the High Court.

Justice Piyush Agrawal held that the GST paid by Ambuja had “unquestionably reached the Government treasury,” and once the contract was annulled, the company was entitled to seek a refund of the tax it had borne. The Court criticized the authorities for relying on technical grounds that were not supported by the Act, reiterating that refund provisions are remedial in nature and must be interpreted liberally, particularly when documentary proof exists.

The High Court set aside the appellate order and remanded the matter for fresh consideration, directing the appellate authority to pass a reasoned, speaking order within two months after granting Ambuja a personal hearing. It further clarified that the Court’s observations should not influence the final outcome of the proceedings.

The ruling is expected to have wider implications for businesses dealing with cancelled contracts, reversed supplies, and other situations where GST is paid but the underlying transaction does not materialize.