No Clause, No Deduction: Delhi HC Sets Aside Arbitral Award Allowing MGCC Shortfall Deduction as Patently Illegal
“There cannot be quarrel with the proposition that no clause can be read into the contract entered between the parties.”
Minimum Guaranteed CENVAT Credit
Explainer: Delhi High Court on Limitation, Waiver, and MGCC Shortfall Deductions under Arbitral Awards in Section 34 Proceedings
The Delhi High Court upheld an arbitral award holding that deduction towards Minimum Guaranteed CENVAT Credit (MGCC) shortfall was impermissible in the absence of an express contractual clause. The Court also ruled that limitation commenced from the date of actual deduction from final invoices and not from a prior notice contemplating such deduction.
Can shortfall in MGCC be deducted from net contract value? Delhi High Court explains
The Court held that deduction for shortfall in Minimum Guaranteed CENVAT Credit (MGCC) could not be made from the net contract value, as such an interpretation would effectively result in a double deduction unsupported by the contract terms.