Facts of the Case

Dhingra Brothers (India) filed the writ petition under Articles 226 and 227 of the Constitution of India seeking setting aside of the order dated 14.05.2025.

By the said order, Respondent No. 3, namely the Executive Engineer, Provincial Division, PWD B&R, Ludhiana, had rejected the petitioner’s claim for differential GST arising out of the statutory enhancement of GST from 12% to 18%.

The dispute concerned the petitioner’s claim for reimbursement of the additional 6% GST burden resulting from the enhancement of the GST rate.

The proceedings constituted the second round of litigation.

On an earlier occasion, the petitioner had approached the High Court by filing CWP-7112-2025. That writ petition was disposed of by order dated 29.05.2025, granting liberty to the petitioner to avail remedies permissible in law.

During the pendency of the earlier writ petition, Respondent No. 3 had already passed the order dated 14.05.2025, rejecting the petitioner’s claim for reimbursement of the additional 6% GST.

The petitioner thereafter instituted the present writ petition challenging the rejection order.

Issues Involved

The principal issues arising from the judgment were:

  1. Whether the High Court should exercise its writ jurisdiction under Articles 226 and 227 of the Constitution of India to interfere with the order dated 14.05.2025 rejecting the petitioner’s differential GST claim.
  2. Whether the petitioner’s claim for reimbursement of additional 6% GST, arising from statutory enhancement of the GST rate from 12% to 18%, could be examined in writ proceedings.
  3. Whether the existence of an arbitration clause in the agreement constituted an effective alternative remedy.
  4. Whether the contractual dispute concerning reimbursement of differential GST should be pursued through arbitration rather than through writ jurisdiction.
  5. Whether the rejection of the petitioner’s claim by the Executive Engineer justified interference by the High Court despite the agreed arbitration mechanism.

Petitioner’s Arguments

The petitioner challenged the order dated 14.05.2025 whereby Respondent No. 3 had rejected its claim for differential GST.

The petitioner’s underlying claim concerned reimbursement of the additional 6% GST arising from the statutory enhancement of the GST rate from 12% to 18%.

The petitioner approached the High Court seeking setting aside of the rejection order.

However, when specifically asked by the Court, learned counsel for the petitioner expressed inability to controvert the fact that:

  • the agreement contained an arbitration clause; and
  • the respondent had rejected the petitioner’s claim by passing the impugned order.

Thus, the existence of the contractual arbitration mechanism was not successfully disputed before the Court.

Respondents’ Arguments

The State of Punjab was represented by the learned Assistant Advocate General, Punjab.

The judgment does not record any separate detailed substantive arguments advanced by the respondents.

The decisive circumstance considered by the Court was the admitted or uncontroverted existence of an arbitration clause in the agreement, coupled with the fact that the petitioner’s claim had already been rejected through the impugned order.

Accordingly, no further argument should be attributed to the respondents beyond what is expressly reflected in the judgment.

Court’s Findings

The Punjab and Haryana High Court noted that the agreement contained an arbitration clause.

The Court further recorded that, when asked, learned counsel for the petitioner was unable to controvert the existence of that arbitration clause.

The Court also noted that the respondent had rejected the petitioner’s claim through the impugned order.

In view of the availability of the alternative remedy of arbitration, the High Court held that it did not find it appropriate to interfere in exercise of writ jurisdiction.

The Court therefore declined to examine or decide the differential GST reimbursement dispute on merits.

Court Order / Final Directions

The High Court disposed of the writ petition with the following effect:

  1. The Court declined to interfere with the impugned order in view of the alternative remedy of arbitration.
  2. The petition was disposed of with liberty to the petitioner to avail alternative remedies as permissible by law.
  3. Pending application or applications, if any, were also disposed of.

Important Clarification

The High Court did not decide on merits whether Dhingra Brothers (India) was legally or contractually entitled to reimbursement of the additional 6% GST arising from enhancement of the GST rate from 12% to 18%.

The Court also did not determine:

  • whether the statutory GST rate enhancement entitled the petitioner to contractual price adjustment;
  • whether the additional GST burden was reimbursable by the PWD authorities;
  • whether the rejection order dated 14.05.2025 was correct on the merits of the reimbursement claim; or
  • the quantum, if any, ultimately payable to the petitioner.

The writ petition was disposed of because an alternative remedy of arbitration was available under the agreement.

Therefore, the judgment should not be understood as rejecting the petitioner’s substantive differential GST claim on merits. The petitioner was expressly granted liberty to pursue alternative remedies permissible in law.

Sections / Constitutional and Legal Provisions Involved

·         Article 226 of the Constitution of India — Invoked by the petitioner for exercise of the High Court’s writ jurisdiction to challenge the rejection order.

·         Article 227 of the Constitution of India — Invoked along with Article 226 in the writ petition.

·         Arbitration Clause in the Agreement — The decisive contractual mechanism leading the High Court to decline interference because an alternative remedy of arbitration was available.

·         GST Rate Enhancement from 12% to 18% — The factual basis of the petitioner’s claim for differential/additional GST reimbursement.

·         Additional 6% GST Reimbursement Claim — The specific monetary/tax differential claimed by the petitioner and rejected by Respondent No. 3.

·         Note on GST Statutory Sections: The judgment does not specify any particular section of the CGST Act, 2017 or Punjab GST Act governing the rate enhancement or reimbursement claim. Therefore, no GST statutory section should be added or attributed to the Court beyond the actual contents of the judgment.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1783504826_1479compressed.pdf

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