The Supreme Court has held that the disputes related to tax concessions are not arbitrable and has overruled the Allahabad High Court order holding that the terms of e-auction provided that any dispute was arbitrable.
The appellant, Shree Enterprise Coal Sales Pvt. Ltd, is a private limited company with a Head Office in Kolkata and branches in other States, including Uttar Pradesh. The branch in Uttar Pradesh is situated in the District of Bulandshahar and is registered since 18 July 2001. 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. The appellant has 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.
The appellant was aggrieved by the order of the department refusing to grant Form E-1 and the the benefit of Form C while charging tax at the rate of four per cent.
Earlier, the Allahabad High Court dismissed the writ petition filed by the appellant on the ground that: (i) The terms of e-auction provided that any dispute is arbitrable; and (ii) The appellant was virtually seeking the enforcement of a contract through a writ petition for raising a claim for refund.
Overruling the High Court order, a coram of Justice Dr. Dhananjaya Y. Chandrachud and Justice Hima Kohli observed that “On both these aspects, we are of the view that the High Court was in error. The appellant is not asserting a contractual claim in pursuance of the e-auction. Undoubtedly, a contractual dispute would be amenable to be resolved by arbitration. However, in the present case, as the reliefs which have been extracted above indicate, the dispute was not of that nature. Hence, we are inclined to set aside the impugned judgment and order dated 15 March 2018 and remand the proceedings back to the High Court for consideration on merits. The appeal is allowed. The impugned judgment and order dated 15 March 2018 is set aside. Writ Tax No 850 of 2016 is restored to the file of the High Court for consideration afresh.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
