Recipient held liable to pay GST on interest on Arbitral award under RCM

Angerlehner Structural and Civil Engineering Company Vs Municipal Corporation of Greater Bombay (Bombay High Court)

This liability of GST (taxes) was certainly not in contemplation of the parties when they entered into the contract in the year 2001. MCGM who would be liable to pay the GST to the Government on a Reverse Charge basis and the same cannot be deducted from the dues payable to the Applicant.

Facts-

The Applicant, being a foreign entity, does not have a bank account in India. The Applicant, therefore, requested that payment under the Arbitral Award be made by the MCGM in the name of the Applicant’s lawyer and agent who would credit the same into the Applicant’s account in escrow for transfer to the Applicant in Austria.

This Court directed the MCGM to pay the amounts due under the Arbitral Award. It was made clear that once the aforesaid payment was made, the liability of the MCGM under the Award would stand satisfied and the Applicant would have no claim whatsoever against the MCGM.

Please become a Premium member. If you are already a Premium member, login here to access the full content.