In a significant case, the Supreme Court has held that disputes related to tax concessions are not arbitrable.
M/s Shree Enterprises Coal Sales Pvt, the appellant is a private limited company with a Head Office in Kolkata and branches in other States, including Uttar Pradesh. The appellant is involved in the trading of coal which it obtains from e-auctions conducted, inter alia, by the subsidiaries of Coal India Limited.
It was stated that after purchasing coal from the second respondent, Northern Coal Fields Limited, through e-auction, the appellant took certain consignments through the Railways of which the destination was the State of Madhya Pradesh. Initially, the second respondent charged a concessional rate of tax at two per cent and later the second respondent did not issue Form E-1 which in turn failed to grant the benefit of Form C while charging tax at the rate of four per cent.
The High Court dismissed the writ petition on the ground that the terms of the e-auction provided that any dispute is arbitrable and the appellant was virtually seeking the enforcement of a contract through a writ petition for raising a claim for refund.
A division bench of Justice Dhananjaya Y Chandrachud and Justice Hima Kohli has observed that the High Court was in error in holding that the terms of e-auction provided that any dispute was arbitrable.
It was observed that the appellant was not asserting a contractual claim in pursuance of the e-auction and set aside the impugned judgment order dated 15 March 2018 and remand the proceedings back to the High Court for consideration on merits. The appeal was allowed.
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