Goa Shipyard Limited, Thr. Its Auth. Rep. Kishore Manohar Samant vs. Shoft Shipyard PVT. LTD., Thr. Its Rep. R Ram Garg

Held

The Court held that the Petitioner is not liable to pay GST on the interest awarded under arbitration and costs awarded under arbitration received by the Respondent. This decision was based on the ruling of the Gujarat Authority for Advance Ruling dated 26.06.2025. The Authority had ruled that the Respondent is not liable to pay GST on "interest awarded under arbitration" and "costs awarded under arbitration." Consequently, the impugned orders of the Executing Court, which directed the Petitioner to pay GST on the part payment of interest, were quashed and set aside. The Court made the Rule absolute in terms of the prayer clause (a) of the petitions, granting relief to the Petitioner. The Executing Court was permitted to proceed with the execution of the arbitral awards in accordance with law, excluding the GST component on interest.

Facts

These five writ petitions were filed by Goa Shipyard Limited (Petitioner/Judgment Debtor) challenging five separate orders passed by the Civil Judge Senior Division at Vasco Da Gama. These orders directed the Petitioner to pay GST at 18% on part payments of interest due under arbitral awards, as sought by the Respondent (Decree-holder). The Respondent had filed execution applications to enforce these arbitral awards. During the pendency of the petitions, the Respondent obtained an Advance Ruling from the Gujarat Authority for Advance Ruling concerning the GST liability on amounts received under the awards. The High Court had previously stayed further execution of the impugned orders pending this ruling.

Key Issues

1. Whether the Petitioner, as the Judgment Debtor, is liable to pay GST on the part payment of interest awarded under arbitration, as directed by the Executing Court? Petitioner's contention: The Petitioner argued that GST is not payable on the interest awarded under arbitration. They relied on the subsequent ruling by the Gujarat Authority for Advance Ruling. Respondent's contention: The Respondent initially sought directions for the Petitioner to pay GST on the interest component of the award. However, upon obtaining an Advance Ruling, they acknowledged that GST was not payable on the awarded interest and costs. The Respondent did not present any arguments against the Advance Ruling.