2025 (8) TMI 1696 - HC - GST

Decree-holders not liable to pay GST on part payments of interest under arbitral awards; prior payment orders quashed

Goa Shipyard Limited Versus Shoft Shipyard Pvt. Limited

HC held decree-holders are not liable to pay GST on part payments of interest under an arbitral award. The court quashed and set aside the order directing ... GST on Interest part - Execution of arbitral awards - Decree-holder sought directions of the Executing Court to the Judgment Debtor, to pay GST @ 18% on the part payment of interest on the amount due under the award - HELD THAT:- The decree holders would not have to pay GST on the aforementioned amount received by them. Consequently, the impugned order dated 02.08.2020 which directs the Judgment Debtor/ petitioner herein to make this payment would necessarily have to be quashed and set aside, as GST on the aforesaid payments is not payable, as held by the Advance Ruling Authority. In this view of the matter, the impugned orders are quashed and set aside. Petition disposed of. Five writ petitions challenge five execution orders (SEXA/1/2021, SEXA/3/2021, SEXA/5/2021, SEXA/7/2021 and SEXA/9/2021) in which the Executing Court directed the Judgment Debtor to pay GST @ 18% on part payment of interest under arbitral awards (application at Exh.20). The Respondent applied to the Gujarat Authority for Advance Ruling on whether GST was payable on the amounts claimed. This Court had earlier stayed further execution limited to the GST payment issue. The Authority for Advance Ruling ruled that the Respondent is not liable to pay GST on 'interest awarded under arbitration' and 'costs awarded under arbitration' received under the awards. In view of that ruling, the impugned orders directing payment of GST (order dated 02.08.2020) were quashed and set aside; the Rule made absolute in terms of prayer (a) of the petitions and no costs were awarded. The Executing Court may proceed with execution of the arbitral awards in accordance with law.