Section 34 review remains limited when an arbitral award reasonably interprets contract terms on reimbursement of later-imposed tax.

In a Section 34 challenge, the Court reiterated that interference with an arbitral award is limited and that it cannot reappraise the contract as if on appeal. The award directing reimbursement of service tax on road maintenance work was sustained because Condition 13.3 was read as covering only duties and taxes payable under the law existing at the time of bidding, not a levy imposed later during the contract. As no contractual term clearly shifted the subsequently imposed tax burden to the contractor, the arbitrator's view that reimbursement was payable was held to be a reasonable and plausible interpretation of the contract. The challenge therefore failed and the award was upheld.

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Issues: Whether, in a petition under Section 34 of the Arbitration and Conciliation Act, 1996, the arbitral award directing reimbursement of service tax on road maintenance work was liable to be set aside as being contrary to the contract and beyond the arbitrator's jurisdiction.

Analysis: The scope of interference under Section 34 is limited and the Court does not sit in appeal over the arbitral award. The contractor's pre-bid query and the reply given by the petitioner were read in the context of the legal position prevailing when the bids were submitted, when no such levy was in force. Condition 13.3 of the bid documents was held to cover only duties and taxes payable under applicable law at the time of bidding, and not a tax introduced later during the currency of the contract. The Court distinguished the cited precedent on escalation, holding that there was no contractual term shifting a subsequently imposed tax to the contractor. The arbitral view that the service tax, being an indirect levy, could be reimbursed was held to be a reasonable and plausible construction of the contract.

Conclusion: The challenge to the award failed and the award was sustained.

Final Conclusion: The decision affirms that an arbitral award will not be interfered with under Section 34 merely because another interpretation of the contract is possible, so long as the arbitrator's view is a reasonable one and not contrary to the contract.

Ratio Decidendi: In a Section 34 challenge, an arbitral award based on a plausible contractual interpretation will not be set aside merely because it involves reimbursement of a tax imposed after the bid, unless the contract clearly shifts that subsequent burden to the contractor.

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