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Indian Judgements

Arbitration: Navigating the Tax Shift: Resolving Post-VAT GST Disputes in Infrastructure Contracts

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This arbitration appeal under Section 37 of the Arbitration and Conciliation Act, 1996, arose from a commercial dispute regarding the calculation and payment of Goods and Services Tax (GST) for a road-widening project that commenced under the pre-GST (VAT) regime and concluded under the GST regime. The Sole Arbitrator had previously awarded the contractor over INR 11.35 crores inclusive of GST components, price adjustments, interest, and penalties, which the Commercial Court affirmed. The Allahabad High Court partly allowed the appeal, holding that while tax liabilities concerning who pays are arbitrable, the quantum and methodology of tax calculation fall under statutory tax domains. The Court found the arbitrator’s reliance on MoRTH Standard Operating Procedures (meant for EPC contracts) flawed for an item-rate contract and remitted the core tax calculation issues back to the Arbitral Tribunal while severing and upholding minor awards based on consensus.

  • Arbitrability of Tax Disputes:
    • The Court bifurcated tax disputes into two heads: Head-A (private contractual obligations such as inter se tax liability, indemnity, and reimbursement rights, which are arbitrable) and Head-B (statutory tax determinations, classifications, tax rates, and matters encroaching on exclusive taxing authority domains, which are not arbitrable).
    • The dispute regarding which methodology or government order applied to calculate the tax impact post-VAT repeal fell under Head-A and was therefore arbitrable.
  • Flawed Application of MoRTH SOP:
    • The contract between the parties was an item-rate contract, and the incorporation of Ministry of Road Transport and Highways (MoRTH) specifications was strictly limited to technical standards for road and bridge building, not tax mechanisms.
    • The Sole Arbitrator committed a patent illegality by applying the MoRTH Standard Operating Procedure (SOP) dated 19.11.2018 (which explicitly governs Engineering, Procurement, and Construction [EPC] contracts) to an item-rate contract without contractual backing or mutual consent.
  • Ignorance of State Government Orders and Statutory Framework:
    • The Arbitrator failed to provide cogent reasons for discarding the State Government Orders dated 09.11.2017 and 10.12.2019, which provided specific formulas for calculating GST on running contracts in Uttar Pradesh.
    • The tribunal also overlooked the transitional provisions under Chapter XX (specifically Sections 142(2), 142(10), and 142(11)) of the U.P. GST Act, 2017, rendering its findings vulnerable.
  • Inconclusive Award and Overreach as Assessing Officer:
    • By making the awarded tax amounts subject to final assessment by GST authorities while simultaneously awarding statutory interest and penalties under Section 50 of the GST Act without establishing foundational default or negligence by the department, the arbitrator acted akin to an Assessing Officer, creating ambiguity and failing to bring finality.
  • Application of Severability and Relief:
    • Relying on the Supreme Court ruling in Gayatri Balasamy v. ISG Novasoft Technologies Ltd., the High Court exercised its powers of severability.
    • The judgment of the Commercial Court and the major monetary award regarding issues 2 to 4 and 8 to 9 (totaling over INR 11.35 crores) were set aside.
    • Findings on Issue No. 1 (item-rate consensus) and Issue No. 10 (INR 66,500 for the Dispute Review Expert fee share) were severed, protected, and sustained.
    • The matter regarding issues 2 to 4 and 8 to 9 was remanded back to a newly constituted Arbitral Tribunal for fresh adjudication in accordance with the law.

J.O. (Web) 2026 ALL 26

U.P. Public Works Deptt. through Chief Engineer Central Zone Lko. v. M/s Vriddhi Infratech India Pvt. Ltd. (D.O.J. 21.07.2026)

J.O. (Web) 2026 ALL 26 click here to view full text of judgment

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High Court Appoints New Sole Arbitrator for Fresh Adjudication

August 12, 2026 No Comments

The present petition was filed under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the re-appointment of a sole arbitrator. Although an earlier arbitral award had granted a principal amount of Rs. 15,12,253 to the Petitioner, the Section 34 court set it aside solely with respect to pre-reference and pendente lite interest, directing that the interest claim be adjudicated afresh. With the Respondent offering no objection to the reference, Justice Om Prakash Shukla allowed the petition and appointed Ms. Abha Malhotra, Advocate, as the sole arbitrator to decide the limited issue of interest and related deductions under the aegis of the Delhi International Arbitration Centre (DIAC).

  • Nature of Petition: The petition was brought under Section 11 of the Act for the appointment of a new arbitrator following a partial setting aside of a previous arbitral award.
  • Scope of Remand: The Section 34 court had upheld the principal amount awarded to the Petitioner but remanded the matter back exclusively for the fresh adjudication of pre-reference and pendente lite interest claims along with related deductions.
  • Existence of Arbitration Agreement: Noting that the scope of enquiry under Section 11 is confined to examining the prima facie existence of an arbitration agreement, the Court observed that a valid arbitration clause between the parties was undisputed.
  • Respondent’s Consent: Counsel for the Respondent raised no objection regarding the reference of the disputes back to arbitration.
  • Appointment of Arbitrator: Abha Malhotra, Advocate (Mobile No. 9810777876), was appointed as the sole arbitrator to adjudicate the remaining disputes independently.
  • Procedural Directions: The arbitration will be conducted under the aegis and rules of the Delhi International Arbitration Centre (DIAC), with fees regulated as per the DIAC Schedule of Fees, and the arbitrator is required to furnish statutory disclosures under Section 12(2) within three weeks.

2026 DHC 6497

Suri International v. Union of India (D.O.J. 07.08.2026)

2026 DHC 6497 click here to view full text of judgment

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Moratorium Halts Enforcement: High Court Disposes of Execution Petition Amid Personal Insolvency Proceedings

August 12, 2026 No Comments

The present execution petition was brought before the Delhi High Court by the Decree Holder, Louis Dreyfus Company India Pvt. Ltd., against the Judgment Debtors, Mr. Krishan Dhingra and Anr. At the outset of the proceedings, counsel representing both parties jointly informed the Court that the Judgment Debtors were currently undergoing personal insolvency proceedings, under which a statutory moratorium was in active operation. In light of this development, Justice Om Prakash Shukla disposed of the execution petition while granting liberty to the Decree Holder to approach the Court by filing a fresh enforcement petition as and when the situation warrants.

  • Nature of Proceedings: The matter concerned an execution petition (OMP (ENF.) (COMM.) 15/2019) filed by the Decree Holder.
  • Insolvency and Moratorium Status: Counsel for both sides jointly reported that the Judgment Debtors are subject to personal insolvency proceedings and that a moratorium is currently in effect.
  • Disposal of Petition: Acknowledging the operation of the moratorium, the High Court disposed of the execution petition.
  • Liberty Granted: The Court granted liberty to the Decree Holder to revive or file a new enforcement petition when circumstances permit in the future.

2026 DHC 6494

Louis Dreyfus Company India Pvt. Ltd. v. Mr. Krishan Dhingra & Anr. (D.O.J. 10.08.2026)

2026 DHC 6494 click here to view full text of judgment

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Pursuit of Representation Leads to Withdrawal of Arbitration Petition

August 12, 2026 No Comments

The present arbitration petition was brought before the Delhi High Court, where the learned Senior Counsel for the Petitioner submitted that a formal representation dated 07.08.2026 had been made to the Ministry of Housing and Urban Affairs, Government of India. In light of this representation, the Petitioner sought leave to withdraw the arbitration petition. With the learned Additional Solicitor General (ASG) appearing for the Respondent offering no objections, Justice Om Prakash Shukla granted the requested leave and liberty, dismissing the petition as withdrawn.

  • Filing of Representation: The Petitioner submitted a representation dated 07.08.2026 to the Ministry of Housing and Urban Affairs, Government of India.
  • Withdrawal Request: Learned Senior Counsel for the Petitioner sought permission to withdraw the present arbitration petition so that the Petitioner could actively pursue the aforesaid representation.
  • Respondent’s Stance: Chetan Sharma, learned ASG representing the Respondent, stated that he had no objections to the withdrawal.
  • Judicial Order: The High Court granted the requested leave and liberty, dismissing the arbitration petition as withdrawn.

2026 DHC 6492

Indian Polo Association v. Union of India Through Ministry of Housing Finance and Urban Land Development Office (D.O.J. 10.08.2026)

2026 DHC 6492 click here to view full text of judgment

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Ensuring Continuity in Land Compensation Arbitration: High Court Extends Arbitrator’s Mandate

August 12, 2026 No Comments

The present petition was filed under Section 29A of the Arbitration and Conciliation Act, 1996, seeking an extension of the mandate of the learned Arbitrator to adjudicate land compensation disputes arising from the acquisition of the Petitioners’ land for the construction of NH-344M under the National Highways Act, 1956. Although pleadings before the erstwhile arbitrator were completed, the proceedings were transferred to a newly appointed arbitrator (the Secretary, Land and Building) on 28.07.2023, who subsequently observed that his mandate had expired. With the Respondent having no objection to the extension, Justice Om Prakash Shukla granted a joint request from the parties and extended the mandate of the sole arbitrator by a further period of six months from the date of the order, while also regularizing the intervening period.

  • Nature of Petition: The petition was brought under Section 29A of the Arbitration and Conciliation Act, 1996, to secure an extension of the arbitral mandate.
  • Origin of Dispute: The underlying dispute relates to the enhancement of land compensation awarded under Section 3G(5) of the National Highways Act, 1956, following the acquisition of the Petitioners’ land for NH-344M.
  • Transfer of Proceedings: Proceedings were transferred to a newly appointed arbitrator, the Secretary (Land and Building), vide an order dated 28.07.2023, during which it was noted that the mandate had lapsed and required formal judicial extension.
  • Respondent’s Stance: The Respondent, represented through counsel, submitted that they had no objection to the extension of the arbitral mandate.
  • Final Order and Relief: Acting on the joint request of both parties, the High Court extended the mandate of the sole arbitrator by six months and regularized the intervening period up to the date of the order, disposing of the petition accordingly.

2026 DHC 6488

Sh. Sube Singh & Anr. v. National Highway Authority of India (D.O.J. 10.08.2026)

2026 DHC 6488 click here to view full text of judgment

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