A court will direct an authority to first decide on a pending representation regarding a contractual GST dispute before intervening on the merits of the case.

A court will direct an authority to first decide on a pending representation regarding a contractual GST dispute before intervening on the merits of the case.

Issue

When there is a contractual dispute over who is liable to bear the burden of GST, and the aggrieved party has already made a formal representation to the concerned authority which has not been decided, should the High Court intervene directly to order payment, or should it direct the authority to first dispose of the pending representation?

Facts

• The writ petitioner, a contractor, claimed that they were entitled to an additional payment from the respondent authority to cover the GST liability on their contract.
• The respondent authority, on the other hand, argued that the contract between the parties, dated April 11, 2018, explicitly placed the burden of GST solely on the petitioner. They contended that the petitioner’s claim had no basis.
• The petitioner had already submitted a formal representation to the respondent authority outlining their claim for the GST amount, but this representation had not been acted upon or disposed of.
• Frustrated by this inaction, the petitioner filed a writ petition in the High Court, seeking a direct order for the payment of the GST amount.

Decision

The High Court ruled in a manner that was procedurally in favour of the respondent authority.

• The court held that since the petitioner had already initiated a course of action by filing a representation, the question of whether the petitioner was entitled to the GST claim should, in the first instance, be decided by that respondent authority itself.
• The writ petition was disposed of not with an order for payment, but with a direction to the respondent authority to consider and dispose of the petitioner’s pending representation.
• The authority was instructed to make its decision strictly in accordance with the law and, crucially, in light of the specific terms of the contract governing the parties.

Key Takeways

• Exhaustion of Available Remedies: The court’s decision underscores the legal principle that parties should typically exhaust the available administrative or contractual remedies before seeking judicial intervention. Here, the pending representation was the first remedy to be exhausted.
• Primacy of the Contract: In commercial disputes, the written agreement between the parties is the most important document. The court recognized this by directing the authority to decide the issue based on the terms of the contract.
• Adjudication at the First Instance: The proper forum for deciding a claim in the first instance is the administrative authority or party against whom the claim is made. The role of the High Court in its writ jurisdiction is generally one of review, not of original adjudication of contractual disputes.
• No Ruling on the Merits: The court did not give any opinion on the central question of who should bear the GST cost. It simply directed the administrative authority to perform its duty and make a reasoned decision on the petitioner’s claim, thereby ensuring the due process is followed.