U.P. Public Works Deptt Vs Vriddhi Infratech India Pvt. Ltd. (Allahabad High Court)
The Allahabad High Court considered an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 filed by the Uttar Pradesh Public Works Department against the dismissal of its Section 34 petition by the Commercial Court, Lucknow, which had affirmed an arbitral award dated 27.01.2024.
The dispute arose from a road widening and strengthening contract executed on 27.04.2016. The contract commenced under the VAT regime but continued after the introduction of the Goods and Services Tax (GST) from 01.07.2017. The contractor sought payment of GST on work executed after the GST regime came into force, relying upon the Ministry of Road Transport and Highways (MoRTH) Standard Operating Procedure (SOP) dated 19.11.2018 relating to GST impact on EPC contracts. The department disputed the claim, contending that GST calculations were governed by the Uttar Pradesh Government Orders dated 09.11.2017 and 10.12.2019.
The dispute first went before the Dispute Review Expert (DRE), who held that the contractor was entitled to GST on price adjustment but accepted the applicability of the State Government Orders for calculating GST. Dissatisfied with the calculation methodology, the contractor invoked arbitration. The Sole Arbitrator framed eleven issues, including the nature of the contract, applicability of the MoRTH SOP, applicability of the State Government Orders, entitlement to GST on price adjustment, reimbursement of GST, penalty, interest and DRE fees.
