M/S Yana Associates vs. State Of Chhattisgarh

Facts

The petitioner, M/s Yana Associates, filed a writ petition seeking the release of an amount representing GST paid, along with 18% interest. The petitioner was awarded a contract for water supply scheme work prior to July 1, 2017. Upon the implementation of GST on July 1, 2017, the petitioner initially paid 18% GST, which was later reduced to 12%. The petitioner claims to have made repeated representations to the respondent authorities for the refund of the excess tax paid, citing two circulars from the Government of Chhattisgarh dated October 10, 2018, and December 21, 2017, which purportedly support their claim for refund of tax levied on account of subsequent imposition of tax by the government. The respondents, however, contended that the contract contained an arbitration clause, suggesting that arbitration was the appropriate remedy.

Held

The Court held that the stage had not yet arisen for the petitioner to invoke the arbitration clause. This was primarily because the respondents had not disputed or denied the petitioner's claim by passing any order or rejecting it. The Court considered the two circulars referred to by the petitioner (dated October 10, 2018, and December 21, 2017) as significant. Given that the petitioner's claim had not been formally rejected, the Court directed respondents No. 2 to 5 to decide on the petitioner's claim for GST refund. This decision was to be made at the earliest, preferably within 60 days from the presentation of a certified copy of the order. The Court stated that thereafter, the petitioner would be at liberty to pursue appropriate remedies based on the decision of the respondents. The Court did not expressly leave any issue undecided, but the ultimate grant of refund was contingent on the respondents' decision.

Key Issues

1. Whether the petitioner is entitled to a refund of GST paid on a contract awarded prior to July 1, 2017, in light of subsequent GST implementation and relevant government circulars? (Question of law) 2. Whether the existence of an arbitration clause in the contract bars the petitioner from seeking relief through a writ petition at this stage? (Question of mixed law and fact) Petitioner's arguments: The petitioner argued that they are entitled to a refund of the GST paid, citing circulars dated October 10, 2018, and December 21, 2017, issued by the Government of Chhattisgarh. They contended that these circulars provide for the refund of tax levied on account of subsequent imposition of tax by the government. The petitioner also stated that they have repeatedly approached the authorities without a response. Respondents' arguments: The State counsel argued that the contract between the petitioner and the respondents contains an arbitration clause. Therefore, the petitioner should avail the remedy of arbitration instead of filing a writ petition, making the current writ petition unsustainable.