National Centre for Biological Sciences Tata Institute of Fundamental Research Vs URC Constructions Private Limited (Karnataka High Court)
The Karnataka High Court considered an appeal filed by the National Centre for Biological Sciences (NCBS) under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996, challenging the Commercial Court’s refusal to set aside an arbitral award arising out of a construction contract with URC Constructions Private Limited for a project valued at approximately Rs.43.57 crore. NCBS confined the appeal to a single issue concerning the valuation of non-tendered (NT) items and the GST component of Rs.1,47,34,311.
The dispute arose after the introduction of the GST regime on 01.07.2017. URC claimed reimbursement of GST at 18% on the works contract, relying on the statutory changes and an Advance Ruling holding that NCBS was not entitled to the concessional GST rate of 12%. NCBS accepted that GST at 18% was applicable but disputed the computation, contending that the value of NT items amounting to Rs.9,65,91,596 already included GST and that charging GST again would amount to duplication.
The Arbitral Tribunal accepted URC’s claim that the value of NT items of Rs.9,65,91,596 was exclusive of GST. Relying primarily on the 21st and final bill certified by the engineers of NCBS, the Tribunal held that the amount represented the value of NT items excluding GST and rejected NCBS’s contention that the amount already contained a GST component. Based on this conclusion, the Tribunal computed GST at 18% on the entire value of the NT items and partly allowed URC’s claims while also partly allowing NCBS’s counterclaims.
