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# Chhattisgarh HC Orders Refund of Tax Recovered From Two Cement Firms
- URL: https://newsanek.com/chhattisgarh-hc-refund-tcs-recovery-cement-companies/
- Published: 2026-11-03T15:54:24.000Z
- Updated: 2026-11-03T15:54:24.000Z
- Description: The Chhattisgarh High Court asked the Income Tax Department to return any amounts taken from Ultratech and Shree Cement for the Mining Department's dues.
- Author: Kumar Ujjwal
- Tags: India, Chhattisgarh, #state-chhattisgarh, #starter

The Chhattisgarh High Court has directed the Income Tax Department to return any amounts it recovered from Ultratech Cement Limited and Shree Cement Limited towards the tax dues of the State Mining Department. The direction came after the tax demand against the Mining Department was quashed, according to a report by Tax Guru.

### Key points

- The High Court disposed of three connected writ petitions in one common order.
- Amounts recovered, if any, are to be returned once each petitioner submits an application.
- The decision followed an earlier Division Bench judgment that allowed the Mining Department's challenge to the tax demand.
- The recovery related to tax collected at source (TCS) on royalty payments under Section 206C.

## How the dispute arose

Both companies make cement and clinker, and limestone is a necessary raw material for them. To keep the supply steady, they obtained mining leases from the Government. The leases required them to pay royalty to the Mining Department.

As described in the order, royalty was payable in advance through an online portal against allotted pit passes, under a notification dated 30 June 2017\. Mining was permitted on the basis of these advance payments.

The Income Tax Department passed an order dated 30 November 2018 on the non-collection of TCS on royalty payments under Section 206C. According to the judgment, the Mining Department did not deposit the TCS amount. The Income Tax Department then sought to recover the outstanding demand from the mining leaseholders and issued notices to the petitioners under Section 226(3) of the Income Tax Act.

## What the companies challenged

The companies approached the High Court under Article 226 of the Constitution. They challenged a letter dated 4 January 2021 from the Additional Secretary, Department of Mineral Resources, Government of Chhattisgarh. The letter had rejected their request for refund or adjustment of advance royalty, which they sought because of the amounts paid to the Income Tax Department for recovery of the Mining Department's dues.

As the petitions raised common questions of law and fact, the Court heard them together.

## Court's reasoning and outcome

The Income Tax Department argued that certain dues were recoverable from the Mining Department, and that the notices to the petitioners were issued for that reason. Its action therefore rested on the existence of a demand against the Mining Department.

The State told the Court that the Mining Department had challenged this claim in Tax Case No. 189 of 2025 and connected matters. This included the dispute between the Deputy Director of Geology and Mining and the Deputy Commissioner of Income Tax (TDS). A Division Bench of the High Court allowed that challenge.

Once the underlying demand was quashed, the Court directed that any amounts recovered from the petitioners be returned. Each petitioner must first submit an application to claim the refund.

## Why it matters

The ruling shows that when a tax demand against one party is set aside, recovery made from other parties on the strength of that demand can also be reversed. For leaseholders who pay royalty in advance, it offers a route to get back money recovered for another body's liability.

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### Source

- [Tax Guru: Chhattisgarh HC Directs Refund of TCS Recovery from Cement Companies](https://taxguru.in/income-tax/chhattisgarh-hc-directs-refund-tcs-recovery-cement-companies.html?ref=newsanek.com)