TaxTMI 
TaxTMI 
2021 (11) TMI 821
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....d a notice inviting tenders for supply and installation of elevators. Kone had participated in the tendering process pursuant to the aforesaid notice and was successful in securing the contract. The parties entered into a 'Contract Agreement CE-3-LOT-1' dated 23.01.2013 (hereafter 'the Contract Agreement') whereby Kone agreed to design, manufacture, supply, install, test and commission 143 numbers of heavy duty machine room-less elevators for Delhi MRTS Project Phase III for an aggregate price of Rs.54,50,64,298/-. 4. In terms of the Special Conditions of Contract (SCC) as applicable to the Contract Agreement, it was agreed that the contract price would be inclusive of all taxes, levies duties, cess, freight, insurance and other incidental charges including statutory deductions towards income tax works, contract tax etc. except the following: "(a) concessional customs duty as applicable for project imports under Chapter 98.01 of Customs Tariff Act; (b) Excise Duty; and (c) VAT/GST". 5. It was agreed that the aforesaid levies would be reimbursed by DMRC on actual basis and on submission of documentary proof. It was also agreed that any new taxes or o....
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....mbursed in respect of the said amount. DMRC disputed the aforesaid claim as it had paid Excise duty to the extent of Rs.1,27,30,042/- and according to it, the said amount would be available as Input Tax Credit to Kone. Arbitral Proceedings 12. In view of the above dispute, Kone issued a notice invoking the arbitration agreement and sought reference of the dispute to arbitration. Before the Arbitral Tribunal, Kone filed its Statement of Claims claiming an amount of Rs.1,27,30,042/- along with interest at 21% per annum from 24.10.2017 till the date of payment. In addition, Kone also claimed costs and expenses. 13. DMRC filed its Statement of Defence disputing Kone's claims. DMRC also filed its counter-claim. DMRC claimed that since the milestones leading up to delivery of the elevators at site had been achieved prior to 30.06.2017 and the elevators had been incorporated at its site, Kone was required to issue VAT invoices in respect of the said elevators and GST was not chargeable on the said supplies. Accordingly, DMRC claimed that it was entitled to refund of Rs.2,88,76,473/-, which was paid to Kone against reimbursement of GST. Based on the aforesaid premises, DMRC made a....
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....e Claimant to the relevant authorities? Issue 1(b): Whether claimant has not erred in complying with the provisions of the GST law by not claiming Input Tax Credit of the excise duty paid on inputs which is held in its stock as on 30.06.2017. Issue 1(c): Whether the claimant has not contravened the provisions of Section 171 of CGST Act, 2017 and has not erred in not passing the benefit of the increased input tax credit under GST regime to the respondent?, and Issue 2: Whether the counter claim of the Respondent is maintainable and/or within the jurisdiction/scope of authority of the Hon'ble Arbitral Tribunal as per the provisions of the Arbitration and Conciliation Act, 1996? If Yes, whether the Respondent is entitled to award of the counter claim? Issue 3(a): Whether GST or DVAT is applicable for the transaction between the parties under the Contract Agreement? Issue 3 (b): Whether claimant has not caused financial loss to respondent by raising an invoice under GST law instead of VAT Law. Issue 4: Whether there have been any violations of the provisions of the Central Goods and Service Tax Act, 2017 or Delhi Value Added Tax Act....
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....Section 171 of CGST Act, 2017 and had not caused any financial loss to DMRC by raising an invoice under the GST law instead of the VAT law. 21. Insofar as the counter-claims are concerned, the Arbitral Tribunal found that the same were maintainable and it had the jurisdiction to decide the same. However, in view of its finding that Kone had rightly raised the invoice under the GST regime, DMRC's counter-claim for refund of the amount of Rs.2,88,76,473/- was rejected. The issues whether there was any violation of the Central Goods and Services Tax Act, 2017 (hereafter the 'CGST Act') or the DVAT Act and, whether Kone had enriched itself at the cost of DMRC, were decided in favour of Kone. 22. Kone's claim for pre-award interest was denied. However, the Arbitral Tribunal granted future interest at the rate of 9% per annum if the awarded amount was not paid within a period of ninety days from the date of the award. 23. The Arbitral Tribunal awarded 50% of the amount claimed, that is, Rs.63,65,021/-, in favour of Kone in view of its finding that both the parties were responsible for not availing the Input Tax Credit in respect of the Excise duty paid on the lifts in question. ....
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....Rs.1,27,30,042/- being the GST payable by Kone to the relevant authorities, and whether GST or VAT was applicable in respect of the transaction between the parties, were interrelated and these issues were considered together. 29. According to DMRC, the lifts supplied by Kone were liable to DVAT under the DVAT Act as the said supplies constituted 'sale' within the meaning of Section 2(zc) of the DVAT Act, 2004. According to DMRC, transfer of the lifts involved in execution of the works had taken place prior to 30.06.2017; that is when the lifts were incorporated in the buildings. 30. The Arbitral Tribunal did not accept the aforesaid contention. The Arbitral Tribunal found that the dates on which the lifts were incorporated in the works were not ascertainable from any of the documents provided by the parties and there was insufficient material to accept that the lifts had been incorporated in the building prior to 30.06.2017. Accordingly, the Arbitral Tribunal held as under: "41. In absence of any evidence, the AT is not inclined to accept the contention of the respondent that 85 lifts were incorporated during the DVAT regime, and therefore, the question of tax invoic....
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.... stand that GST invoices were to be raised on transfer of property of the lifts, the tax invoices were required to be raised on the dates of the Taking Over Certificates. The GST rate as applicable on the said dates was 12% and therefore, DMRC was liable to pay GST at the lower rate of 12% instead of 18%. In view of the Arbitral Tribunal's finding that DMRC had raised no objections regarding the issuance of tax invoices and had substantially paid the same; this Court finds no ground to fault the decision of the Arbitral Tribunal not to accept the aforesaid contention. 34. Thus, the principal question to be addressed by the Arbitral Tribunal was whether Kone was entitled to Input Tax Credit for the Excise duty paid on the lifts in question and, whether the failure on the part of Kone to avail of the Input Tax Credit entitled DMRC to withhold an amount equivalent to the said amount. 35. In view of the said dispute, the Arbitral Tribunal had framed the following issue - "1(b) Whether claimant has not erred in complying with the provisions of the GST law by not claiming Input Tax Credit of the excise duty paid on inputs which is held in its stock as on 30.06.2017." 36....
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....t entitled to any benefit under Notification No. 26/2012 dated 20.06.2012 as it was availing exemption from Service Tax under Notification No. 25/2012 dated 20.06.2012 and the said notification was applicable to the contract between the parties. DMRC had disputed the same. 38. Kone had stated that it had made a representation before the Principal Chief Commissioner, Central GST and Excise, inter alia, seeking clarification in respect of Section 140(3) of the CGST Act. Kone had received a response issued by the Joint Commissioner, GST [Government of India, Ministry of Finance Department of Revenue CBEC, GST (Police Wing)] clarifying that since Kone had not availed of the benefits of Notification No. 26/2012 dated 20.06.2012, it was not eligible for the sanction credit. 39. Kone claimed that in view of the clarification, it was clear that the GST Department would not accept any claim for Input Tax Credit on account of Excise duty paid prior to 30.06.2017. DMRC disputed the same and submitted that the said clarification was not binding. 40. Kone had also relied on the following judgments in support of its contention: Kone Elevator India Private Limited v. State of Tamil Nadu ....
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....taxes. AT finds that in this case, the excise duty was reimbursable to the claimant, and there is no order exempting the excise duties in this work and therefore, this clause is not found to be applicable. 97. AT has gone through the rival submission of both the parties and find that the clause 11.1.1 of the Contract Agreement regarding CD/ED reimbursement has no relevance to the case. The requirement given in clause 11.1.1 was to be complied while seeking the reimbursement from the respondent. The present case is regarding excise duty paid in pre-GST regime and the argument put forth in para 95 to 98 above has no relevance to the Claim and counterclaim." 44. The aforesaid view expressed by the Arbitral Tribunal is a plausible one and this Court is unable to accept that the same warrants any interference. 45. Insofar as the clarification obtained by Kone regarding applicability of Section 140(3) of the CGST Act is concerned, the Arbitral Tribunal found that the same did not have any 'force of law'. 46. In regard to the question whether Input Tax Credit in respect of the Excise duty paid prior to 30.06.2017, the Arbitral Tribunal did not return any definite finding....
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.... or CGST Act, 2017 when making such deductions." 47. It is apparent from the above that the principal dispute before the Arbitral Tribunal remains unadjudicated. As noted above, the issue struck by the Arbitral Tribunal was whether Kone had erred in not claiming the Input Tax Credit. Thus, the Arbitral Tribunal was required to address the question whether Kone was entitled to claim Input Tax Credit in respect of the Excise duty paid for the lifts in question prior to 30.06.2017 and if so, whether DMRC was obliged to reimburse the GST, notwithstanding, that Kone had not availed of such benefits. 48. It is seen that the Arbitral Tribunal found both the parties wanting for not engaging in joint discussions for exploring the possibility of availing Input Tax Credit under the CGST Act. Accordingly, the Arbitral Tribunal reasoned that both the parties should equally bear the amount of Input Tax Credit that may have been possibly available. 49. This Court is of the view that since the impugned award does not address the dispute, the impugned award in this regard is liable to be set aside. 50. It is also relevant to refer to Section 28(2) of the A&C Act. The Arbitral Tribunal m....