Writ petition challenging Service Tax imposition dismissed; arbitration clause invoked for dispute resolution upheld.

The High Court dismissed the writ petition challenging the imposition of Service Tax by a Mining Corporation, emphasizing the arbitration clause invoked by the petitioner for dispute resolution. The Court held that as the Arbitrator was already adjudicating the matter, there was no basis for judicial intervention. The judgment underscored the importance of honoring arbitration clauses in agreements and refraining from Writ Court interference when disputes are subject to arbitration, ensuring proper adjudication through the agreed mechanism.

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Issues:
Challenge to order for payment of Service Tax by Mining Corporation and show cause notice by Revenue, invocation of arbitration clause, interference by Writ Court in the matter.

Analysis:
The case involved a writ petition challenging an order by the Madhya Pradesh State Mining Corporation directing the petitioner to pay Service Tax for mining activities as per an agreement. The petitioner disputed the imposition of Service Tax, claiming the agreement did not provide for it. The petitioner invoked an arbitration clause for resolution of the dispute, appointing an Arbitrator. The petitioner then approached the High Court seeking a mandamus to restrain tax recovery, arguing that the imposition of Service Tax was arbitrary. The respondent contended that since arbitration was invoked, the Court should not interfere. The Court considered the arguments and noted that the dispute fell under the arbitration clause of the agreement, and the Arbitrator was already seized of the matter. The Court held that as the petitioner had opted for arbitration and the Arbitrator was adjudicating the dispute, there was no basis for the Court to intervene. The Court emphasized that the dispute was subject to arbitration as per the agreement, making the writ petition not maintainable. Consequently, the Court dismissed the writ petition, finding no grounds for interference.

This judgment addressed the issues of challenging the imposition of Service Tax, invocation of arbitration clause, and the interference by the Writ Court in the matter. The Court emphasized the importance of upholding the arbitration process when parties have already resorted to it for dispute resolution. The judgment highlighted the significance of honoring the arbitration clause in agreements and refraining from interference by the Writ Court when the matter is sub judice before an Arbitrator. The Court's decision underscored the principle that disputes subject to arbitration should be resolved through that mechanism, and the Writ Court should not intervene unless exceptional circumstances warrant it. The judgment provided a clear stance on the maintainability of writ petitions when arbitration clauses are invoked, ensuring the proper adjudication of disputes as per the agreed mechanism.

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