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

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. Issues: Whether GST is payable on interest and costs awarded under arbitration and whether execution court orders directing payment of GST on part payment of interest should be quashed.Analysis: The Court considered the ruling of the Authority for Advance Ruling which held that GST is not leviable on interest awarded under arbitration and on costs awarded under arbitration in respect of the awards subject of the execution proceedings. The executing court had directed payment of GST on part payment of interest; that direction was examined in light of the Advance Ruling placed on record and the limited scope of the petitions confined to the question of payment of GST on part interest payments.Conclusion: The impugned execution orders directing payment of GST on the specified arbitration interest and costs are quashed and set aside because GST is not payable on those amounts as held by the Authority for Advance Ruling.