M/S Yana Associates vs. State Of Chhattisgarh

Facts

The petitioner, M/s Yana Associates, entered into a contract for water supply scheme works prior to July 1, 2017. Upon the introduction of GST on July 1, 2017, the petitioner was initially made to pay 18% GST, which was later reduced to 12%. The petitioner claims entitlement to a refund of the tax paid, citing circulars from the Government of Chhattisgarh dated October 10, 2018, and December 21, 2017. Despite repeated representations to the respondent authorities (State of Chhattisgarh and its departments), no decision has been made on their claim. The State counsel argued that the contract contained an arbitration clause, making the writ petition unsustainable.

Held

The Court held that the stage for invoking the arbitration clause had not yet arisen. This was because the respondents had not disputed or denied the petitioner's claim by passing any formal order. The Court considered the two circulars relied upon by the petitioner (dated October 10, 2018, and December 21, 2017) as significant. Given that the petitioner's claim was pending and had not been 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 of the petitioner presenting a certified copy of the order. After the respondents pass an order, the petitioner would be at liberty to pursue appropriate remedies. The Court did not expressly leave any issue undecided.

Key Issues

1. Whether the petitioner is entitled to a refund of GST paid on a contract awarded prior to July 1, 2017, based on subsequent government circulars? (Question of law) 2. Whether the existence of an arbitration clause in the contract bars the petitioner from approaching the High Court by way of a writ petition for the refund of GST? (Question of law) Petitioner's arguments: The petitioner contended that they are entitled to a refund of GST paid, referencing two specific circulars from the Government of Chhattisgarh (dated October 10, 2018, and December 21, 2017) that support their claim for refund of tax levied on pre-GST contracts. They also argued that their repeated representations to the authorities have not been addressed, and therefore, the stage has not been reached to invoke the arbitration clause. Revenue/State's 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 rather than filing a writ petition, making the present writ petition unsustainable.