Arbitral Award on refund of deducted Maximum Guaranteed Tax Credit
Section 34 petition against the Arbitral Award dated 8.1.2024 of the International Chamber of Commerce, allowing the claim of the respondent for refund of withheld amount of shortfall in the minimum guaranteed tax credit with interests and costs.
The contract provided that the petitioner would get the benefit of minimum guaranteed tax credit including CENVAT, VAT credit and VAT on Works Contract. Subsequently, by the amendment to the contract, the credit obligation was apportioned between the consortium members.
On verification of the tax credit documents, the petitioner found that the MGC had not been achieved and therefore, the shortfall was adjusted from amounts payable to the respondent.
According to the Respondent, the MGC figures had been premised upon the tax regime prevailing at the time of bidding and execution of the Contract, and subsequent statutory changes substantially affected the tax credit position.
The contract disputed the deductions n the ground that the shortfall was neither contractually recoverable nor attributable
Delhi HC Rejects SAIL’s Section 34 Petition and Claim that Minimum Guaranteed Tax of Rs.103.85 crores was absolute contractual guarantee and shortfall recoverable irrespective of the tax regime changes.
Delhi HC Upheld NCC’s Claim for tax regime changes, reduced available tax credits and unjustified deductions by SAIL.
Delhi HC – Guaranteed Tax Credits are considered in the light of prevailing statutory frame work, not as immutable promises.
Judgment dated 1.7.2026 of the High Court of Delhi in OMP (COMM) No.447 of 2024 of Steel Authority of India Ltd Vs. NCC LTD
