A One Steels Challenges Rs 222.3951 Crore Coal-Cess Credit Loss

A One Steels India Limited has challenged the alleged extinguishment of approximately Rs 222.3951 crore of compensation-cess input tax credit in the Supreme Court. The coal trader reported the unutilised balance on March 27, 2026, after compensation cess on coal, lignite and peat was abolished with effect from September 22, 2025.

Why is A One Steels challenging the coal-cess credit loss?

A One Steels is challenging the coal-cess credit loss because it says abolition of the levy left no route to transition, adjust or refund its accumulated credit. The company filed Writ Petition No. (C) No. 000638 of 2026 under Article 32 of the Constitution against the Union of India through the Secretary, Ministry of Finance, Department of Revenue. Article 32 permits an approach to the Supreme Court for enforcement of constitutional rights.

A One Steels reported approximately Rs 222.3951 crore of unutilised Goods and Services Tax, or GST, Compensation Cess input tax credit, or ITC, as of March 27, 2026. ITC is credit for tax paid on inputs that may be used against eligible tax liabilities. The company trades coal and is registered under GST in Karnataka and Andhra Pradesh, so its petition concerns whether the recorded cess credit can still be given an economic use after the levy ended.

The writ petition does not challenge a current tax assessment or a stated demand from the tax department. Instead, A One Steels challenges what it describes as the extinguishment of an accumulated credit balance after the relevant coal cess ceased to apply. The company seeks a judicial direction permitting transition and adjustment against GST liability or, alternatively, a refund of approximately Rs 222.3951 crore.

What changed after compensation cess on coal was abolished?

The key policy change was the abolition of compensation cess on coal, lignite and peat from September 22, 2025. A One Steels states that the change followed Section 11(2) of the Goods and Services Tax (Compensation to States) Act, 2017, read with Notification No. 2/2025-Compensation Cess (Rate) and Notification No. 9/2025-Central Tax (Rate), both dated September 17, 2025.

Before September 22, 2025, A One Steels could accumulate Compensation Cess ITC through its coal-trading activity. After that date, the company says there was no disclosed transition, adjustment or refund mechanism for the accumulated balance. The petition therefore frames the issue as a difference between credit generated while the cess applied and the treatment of that credit once the cess category was abolished.

A One Steels says this transition creates tax cascading. Tax cascading means a tax cost remains embedded in a subsequent transaction because an earlier tax credit cannot be used to offset a later liability. The company also alleges discriminatory treatment compared with coal manufacturers, although the supplied disclosure does not quantify the credit held by any coal manufacturer or identify a separate mechanism available to that category.

Which constitutional grounds does A One Steels rely on?

A One Steels argues that its unutilised Compensation Cess ITC is property under Article 300A of the Constitution. Article 300A says that no person can be deprived of property except by authority of law. The company contends that the disappearance of approximately Rs 222.3951 crore of credit without a transition or refund route amounts to an impermissible deprivation.

A One Steels also cites Articles 14 and 19(1)(g) of the Constitution in Writ Petition No. (C) No. 000638 of 2026. Article 14 addresses equality before law, while Article 19(1)(g) protects the right to practise a profession or carry on an occupation, trade or business. The company says the credit treatment causes both tax cascading and unequal treatment of coal traders relative to coal manufacturers.

The constitutional claims remain allegations made by A One Steels in a pending case, rather than findings by the Supreme Court. The disclosure records no ruling on whether Compensation Cess ITC is property under Article 300A, whether Articles 14 or 19(1)(g) apply as argued, or whether the September 2025 notifications unlawfully affect accumulated credit.

What relief has A One Steels sought from the Supreme Court?

A One Steels has requested that the Supreme Court direct the Union of India to permit transition and adjustment of the accumulated Compensation Cess ITC against the company’s GST liability. This is the company’s primary requested remedy for the approximately Rs 222.3951 crore balance reported on March 27, 2026. Adjustment would preserve the credit through use against GST liabilities rather than through a cash payment.

In the alternative, A One Steels seeks a refund of the same approximate Rs 222.3951 crore balance. The two remedies are distinct: transition and adjustment would allow use of the credit against tax liabilities, while a refund would require payment of the claimed amount. The petition also seeks interim relief pending final disposal of the writ petition.

The supplied disclosure says the case is pending and that the next hearing date has not been notified. It does not state that the Supreme Court has granted interim relief, ordered a refund, or allowed the credit to be adjusted. Any continuing availability of the claimed credit therefore depends on the court’s treatment of the petition or another applicable mechanism.

How does the coal-cess case compare with A One Steels' other regulatory matters?

A One Steels' coal-cess case concerns GST credit following a tax-law change, unlike its pending renewable-energy compliance matter. In that matter, the company reported a solar Renewable Energy Certificate, or REC, obligation of 663 RECs for financial year 2017-18. A REC is a certificate used to demonstrate compliance with renewable-purchase requirements, and the company said REC bids were suspended by the Indian Energy Exchange during COVID-19.

The REC matter is pending before the Karnataka Electricity Regulatory Commission, and its next hearing date had not been notified in the disclosure. A One Steels asked the Commission on August 17, 2020 not to impose a penalty and to grant time to buy and submit the balance RECs once bidding resumed. Unlike the Supreme Court case, that proceeding concerns a stated compliance obligation rather than the preservation of a Rs 222.3951 crore tax-credit balance.

A One Steels also disclosed a Karnataka High Court writ petition relating to a December 26, 2018 demand against A-One Steel and Alloys Private Limited. The demand sought Rs 2.32 crore of cross-subsidy charges and Rs 46.98 lakh of differential electricity tax after authorities treated the petitioner as a non-captive consumer. That matter has an interim order in favour of the company, whereas the coal-cess disclosure records only a request for interim relief and no notified hearing date.

Conclusion

A One Steels has put approximately Rs 222.3951 crore of unutilised Compensation Cess ITC before the Supreme Court after cess on coal, lignite and peat ended on September 22, 2025. The case turns on whether accumulated credit can be extinguished without a transition, adjustment or refund mechanism and whether the company’s claims under Articles 14, 19(1)(g) and 300A succeed.

The next item to watch is the listing of Writ Petition No. (C) No. 000638 of 2026, because the disclosure says no next hearing date has been notified. A One Steels has disclosed two final routes, adjustment of the credit against GST liability or a refund, as well as a request for interim relief pending the court’s final disposal.