M/S Blink Fix Private Limited vs M/S Global India Services & Anr.
- Court
- Delhi High Court
$~J
* IN THE HIGH COURT OF DELHI AT NEW DELHI
%
Judgment pronounced on: 31.08.2026
# CNR No.DLHC010585952025
+ O.M.P.(I) (COMM.) 332/2025
M/S BLINK FIX PRIVATE LIMITED .....Petitioner
Through: Mr. Anand Shankar Jha and Mr.
Sachin Mintri, Advocates.
versus
M/S GLOBAL INDIA SERVICES & ANR. .....Respondents
Through: Mr. Ankit Sareen, Ms. Shubhangi
Sharma and Ms. Diksha Sobti,
Advocates for R-1.
Mr. Abhisar Bhanu, Advocate for
R-2.
# CNR No.DLHC010074812026
+
ARB.P. 370/2026
BLINK FIX PRIVATE LIMITED .....Petitioner
Through: Mr. Anand Shankar Jha and Mr.
Sachin Mintri, Advocates.
versus
GLOBAL INDIA SERVICES .....Respondent
Through: Mr. Ankit Sareen, Ms. Shubhangi
Sharma and Ms. Diksha Sobti,
Advocates.
CORAM:
HON'BLE MR. JUSTICE SACHIN DATTA
JUDGMENT
ARB.P. 370/2026
1. The present petition under Section 11(6) of the Arbitration and
Conciliation Act, 1996 (“A&C Act”) seeks the appointment of a sole
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arbitrator to adjudicate the disputes between the parties arising out of a
Letter of Engagement dated 01.04.2021.
2. The petitioner, M/s Blink Fix Private Limited, is a company engaged
in the business of marketing services, principally in the insurance sector.
The respondent, M/s Global India Services, is a sole proprietorship concern,
carrying on business at Jaipur, Rajasthan.
3. By the Letter of Engagement dated 01.04.2021, the respondent was
engaged by the petitioner, on a non-exclusive basis, to render marketing,
branding and promotional services on commercial terms with regard to
compensation as set out in Annexure-A thereto. The Letter of Engagement
contains, an ‘Indemnification and Limitations of Liability’ clause as well as
an arbitration clause.
4. It is the petitioner's case that between 27.04.2022 and 29.02.2024 the
respondent raised invoices upon it aggregating to a taxable value of Rs.
18,53,31,120/-, together with goods and services tax (“ GST ”) at 18%
amounting to Rs. 3,33,59,601.59/-; and that between 02.04.2022 and
13.06.2024, the petitioner made payments to the respondent aggregating to
Rs. 22,27,82,622.09/-. As per the petitioner, since the GST component was
already paid to the respondent, the petitioner availed input tax credit (“ITC”)
in its own GST returns.
5. By letter No. 499 dated 19.10.2024, a notice was issued under Rule
86A of the Central Goods and Services Tax Rules, 2017 by the Deputy
Commissioner (SIB), State Tax, Division-A, Gautam Buddha Nagar, Zone
Noida. It recorded that an inspection had been carried out at the petitioner's
place of business on 01.10.2024, and that the petitioner had claimed faulty
input tax credit by purchasing from non-existent firms. The firm-wise
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particulars mentioned in the notice include, inter alia , the invoices raised by
the respondent upon the petitioner during the financial years 2022-23 and
2023-2024. The notice records:
"It is clear from the above chart that you are wrongly claiming ITC by
declaring inward supplies from non-existent firms. Section-16(2)(c) of
the GST Act clearly states, 'Subject to the provision of section - 41, the
tax charged in respect of such supply has been actually paid to the
Government either in cash or through utilization of input tax credit
admissible in respect of the said supply.' It is clear from the above
section of the GST Act 2017 that the buyer trader should not be entitled
to ITC and the benefit of ITC is admissible only upon the condition that
the tax collected on the said transaction by the selling trader has actually
been deposited in the government treasury as per rules, but the traders
from whom inward supply has been declared by you have not actually
deposited any tax in the government treasury. Hence, under the
provisions of GST Act 2017, you are not admissible the benefit of the said
ITC.”
6. The registration of the respondent stands cancelled suo moto with
retrospective effect from 30.09.2021. The respondent has challenged that
cancellation before the High Court of Judicature at Rajasthan by D.B. Civil
Writ Petition No. 8240/2025, which is stated to be pending.
7. On 23.04.2025, the petitioner issued a Demand Notice cum
Invocation of Arbitration to the respondent. Invoking the indemnity clause
of the Letter of Engagement, it called upon the respondent to indemnify it in
the sum of Rs. 3,33,59,601.59/- with interest at 18% per annum, being the
tax component paid by the petitioner to the respondent under the Letter of
Engagement. The notice invoked the arbitration clause and proposed three
names, for appointment of one of them as sole arbitrator, to adjudicate the
disputes between the parties, under the aegis of the Delhi International
Arbitration Centre.
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8. The respondent replied on 20.05.2025, denying the claim and
asserting that the tax collected had been duly deposited. It contended that
reliance upon the indemnity clause was misplaced, and that the clause
applied only to breach of the Letter of Engagement, of intellectual property
rights, or of confidentiality obligations, and no such breach has been alleged.
The Respondent did not accede to the appointment of an arbitrator.
9. It is the petitioner's case that on 20.06.2025 it deposited Rs.
4,46,16,401/- with the goods and services tax authorities by way of Form
DRC-03 (ARN: AD090625059817G), comprising tax of Rs. 3,33,59,152/-,
interest of Rs. 62,53,376/- and penalty of Rs. 50,03,873/-.
10. Learned counsel for the petitioner submits that disputes have arisen
between the parties to an arbitration agreement; that the efforts to have a
sole arbitrator appointed have failed, the respondent having neither
consented to any of the names proposed nor concurred in any appointment
of arbitrator; and that the petitioner is accordingly constrained to invoke
Section 11(6) of the Act. The claim is founded upon the indemnity clause in
the Letter of Engagement, the tax component having been charged by the
respondent on its own invoices and paid to it thereunder.
11. Learned counsel for the respondent, opposes the petition on the
grounds that; the dispute is ex facie non-arbitrable and falls within the
exclusive jurisdiction of the GST authorities.
12. The Respondent’s case is that the substratum of the dispute, is the
alleged non-deposit of tax by the respondent and the consequent reversal of
credit, so that the foundation of the claim is an alleged statutory default, and
the entire cause of action emanates from the proceedings initiated by the tax
authorities and the payment made pursuant thereto. The questions which
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would necessarily arise are whether any tax was in fact collected, whether it
was required to be deposited, whether it was duly discharged, whether the
petitioner was legally liable to reverse the credit, and whether the demand of
tax, interest and penalty was validly raised. These are all aspects which
involve adjudication of questions under the Central Goods and Services Tax
Act, 2017 and the applicable State legislation, and fall within the statutory
domain and jurisdiction of the competent authorities. The dispute is
accordingly said to be statutory in character and, to the extent that it seeks
determination of the validity, levy, collection, reversal or discharge of tax
liability, incapable of adjudication by a private tribunal, an arbitral tribunal
being unable to assume the jurisdiction vested by those enactments in the
competent authorities or to sit in appeal over their determination. It is further
asserted that this is a dispute in rem , concerning the liability towards the
State exchequer with implications beyond the inter se contractual
relationship.
13. Upon the arbitration agreement, it is contended that the clause
provides for arbitration only in respect of disputes between the parties under
the contract and cannot be construed as conferring jurisdiction to adjudicate
disputes arising independently from statutory proceedings; and that the
present dispute does not arise from any ordinary contractual disagreement
regarding the performance of the services rendered under the Letter of
Engagement.
14. Without prejudice to the above, it is contended that no liability is
admitted; that the respondent has denied that any amount is due or payable
and has disputed the assertion that it failed to deposit the tax collected. The
respondent submits that the tax component has already been deposited with
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the Government and is reflected in the statutory returns, so that permitting
recovery of the same sum would expose the respondent to a claim for an
amount already remitted; and that the petitioner's payment to the authorities
cannot automatically create a corresponding right of reimbursement, its
entitlement remaining disputed and incapable of being presumed from the
factum of payment.
15. It is also urged by the respondent that the jurisdiction exercised under
Section 11 is not a mechanical exercise for the appointment of an arbitrator,
that the Court must at the appropriate level of scrutiny examine the existence
of a valid arbitration agreement, and that in a case of manifest non
arbitrability it should decline reference at the threshold. They pray that the
petition be dismissed and that the dispute be held to be ex facie non-
arbitrable and outside the scope of the arbitration agreement contained in the
Letter of Engagement dated 01.04.2021.
REASONING AND CONCLUSION:
16. The controversy lies within a narrow compass. The petitioner paid to
the respondent, along with contract consideration, amounts represented by
the respondent in its invoices as the goods and services tax. The petitioner
availed input tax credit in respect of those amounts. The GST authorities
thereafter called upon the petitioner to reverse the input tax credit on the
footing that the GST collected had not been deposited by the respondent and
the respondent’s GST registration stood cancelled with retrospective effect.
17. The petitioner reversed the credit and paid tax, interest and penalty
and now seeks to recover that sum from the respondent through arbitration.
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18. The primary defense of the respondent is that the claim of the
petitioner is in a sense a tax dispute which is not arbitrable at all.
Scope of the present proceedings:
19. The legal position is well settled that the scope of the present
proceedings is confined to ascertaining whether there exists an arbitration
agreement between the parties or not. In this regard, the legal position has
been set out in the judgment of the Supreme Court in SBI General
Insurance Co. Ltd. Vs. Krish Spinning 2024 (12) SCC 1 in the following
terms:
“117. In view of the observations made by this Court in Interplay Between
Arbitration Agreements under the Arbitration Act, 1996 & the Stamp Act,
1899, In re [Interplay Between Arbitration Agreements under the Arbitration
Act, 1996 & the Stamp Act, 1899, In re, it is clear that the scope of enquiry at
the stage of appointment of arbitrator is limited to the scrutiny of prima facie
existence of the arbitration agreement, and nothing else.
For this reason, we
find it difficult to hold that the observations made in Vidya Drolia and
adopted in NTPC Ltd. v. SPML Infra Ltd. that the jurisdiction of the Referral
Court when dealing with the issue of “accord and satisfaction” under Section
11 extends to weeding out ex facie non-arbitrable and frivolous disputes
would continue to apply despite the subsequent decision in Interplay Between
Arbitration Agreements under the Arbitration Act, 1996 & the Stamp Act,
1899, In re.”
20. The same has been reiterated in Office for Alternative Architecture vs
Ircon Infrastructure and Services Ltd. 2025 SCC OnLine SC 1098 wherein
the question which came up for the consideration of the Supreme Court was
whether, while exercising power under section 11 of the 1996 Act, the Court
was required to confine its consideration as to the existence of an arbitration
agreement between the parties and whether it is permissible for the court to
hold that some of the claims raised are non-arbitrable or fall within
‘excepted’ category. The Supreme Court observed as under:
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“9. The statement of objects and reasons of the 2015 amendment with
reference to insertion of sub-section (6A) in Section 11 of the 1996 Act, reads
thus:
“(iii) an application for appointment of an Arbitrator shall be
disposed of by the High Court or the Supreme Court, as the case may
be, as expeditiously as possible and an endeavour should be made to
dispose of the matter within a period of 60 days.
(iv) to provide that while considering any application for appointment
of Arbitrator, the High Court or the Supreme Court shall examine the
existence of a prima facie arbitration agreement and not other
issues.”
10. The significance of the use of the expression “not other issues” in the
statement of objects and reasons of the 2015 amendment was noticed by a
seven-Judge bench of this Court in In Re : Interplay Between Arbitration
Agreements under the Arbitration and Conciliation Act, 1996 and the Indian
Stamp Act, 18995, and it was observed:
“209. The above extract indicates that the Supreme Court or High
Court at the stage of the appointment of an Arbitrator shall ‘examine
the existence of prima facie arbitration agreement and not other
issues’. These other issues not only pertain to the validity of the
arbitration agreement, but also include any other issues which are a
consequence of unnecessary judicial interference in the arbitration
proceedings.”
11. Relying on the above observations made by this Court in In Re: Interplay
(supra), a three-judge bench of this Court in “SBI General Insurance Co.
Ltd. v. Krish Spinning” observed:
“114. ….that the scope of enquiry at the stage of appointment of
Arbitrator is limited to the scrutiny of prima facie existence of the
arbitration agreement, and nothing else. For this reason, we find it
difficult to hold that the observations made in ‘Vidya Drolia v. Durga
Trading Corporation7 (supra) and adopted in ‘NTPC v. SPML Infra
Limited8 (supra) that the jurisdiction of the referral court when dealing
with the issue of “accord and satisfaction” under section 11 extends to
weeding out ex-facie non-arbitrable and frivolous disputes would
continue to apply despite the subsequent decision in In Re: Interplay
(supra)”.
Emphasis Supplied
12. As the above decision has been rendered by a three-Judge bench of this
Court after considering the seven-Judge bench decision of this Court in In
Re: Interplay (supra), we are of the view that the respondent cannot profit
from certain observations made by a two-Judge bench of this Court in Emaar
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(supra). In our view, therefore, the High Court fell in error in bisecting the
claim of the appellant into two parts, one arbitrable and the other not
arbitrable, when it foundarbitration agreement to be there for settlement of
disputes between the parties. The correct course for the High Court was to
leave it open to the party to raise the issue of non-arbitrability of certain
claims before the arbitral tribunal, which, if raised, could be considered and
decided by it.
”
21. In the instant case, the petitioner seeks to raise a pure monetary claim
against the respondent on the basis of the inter se dealings between the
parties pursuant to the contractual arrangement between them, viz. the Letter
of Engagement dated 01.04.2021. The same contains an arbitration clause
which is in the following terms:-
“In case of any disputes between the parties under this Letter, the Parties
resolve to settle the dispute/s through mutual negotiation and discussions.
In the event that the said dispute/s are not settled within 30 days of the
arising thereof, the same shall finally be settled and determined by
arbitration in accordance with the Arbitration and Conciliation Act, 1996
or any amendment thereof. The language to be used in the arbitral
proceedings shall be English. The arbitrator will be selected by the joint
approval of both the Parties. Each Party shall bear its own cost of
preparing and presenting its case and the arbitration proceedings. The
courts of New Delhi, India shall have exclusive jurisdiction for all disputes
arising out of this Letter.”
22. The existence of the arbitration agreement being not in dispute; all
objections pertaining to jurisdiction/arbitrability are required to be decided
by a duly constituted arbitral tribunal. Prima facie , therefore, this Court
finds no merit in the objections raised by the respondent to constitution of an
arbitral tribunal.
23. However, the learned counsel for the respondent insists that given the
kind of dispute that has been sought to be raised, non-arbitrability is
manifest on the face of the record. The learned counsel for the respondent
has gone to the extent of urging that for all practical purposes, given the
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nature of the disputes/s sought to be raised, there cannot be said to be in
existence any arbitration agreement between the parties. It is for the purpose
of forming a prima facie opinion on this aspect, that this Court has examined
the matter further on merits.
Distinction Between a ‘Tax Dispute’ And ‘Contractual Dispute’:
24. There can be no cavil with the proposition that levy, assessment,
collection and recovery of tax by the State is an exercise of sovereign power.
The questions about whether a tax is exigible, whether an assessment is
proper, whether input tax credit was rightly denied or not, or whether a GST
registration was validly cancelled or not are questions required to be
determined by the statutory authorities in the context of the statutory
framework set out in the relevant taxing statutes.
25. However, a dispute as to which of the two contracting parties must
ultimately bear an indirect tax burden or as to whether one contracting party
must make good to the other a sum which is collected on a representation
that it would be remitted to exchequer, are disputes of an altogether different
character. These are disputes about money that has passed between two
private parties under a contract. Clearly, these are disputes in personam .
Resolution of such disputes which are essentially pure money claims inter se
the contracting parties, neither determines the liability of either parties to the
revenue, nor binds the revenue, nor encroaches upon the sovereign function
of taxation.
26. As noticed in the present case, the petitioner seeks to make a pure
money claim against the respondent. There is no reason to deny the
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petitioner adjudication of the said claim by taking recourse to the arbitration
agreement between the parties.
27. In Spectrum Power Generation Limited vs. GAIL (India) Limited ,
2022 SCC OnLine Del 4262, a coordinate Bench of this Court had occasion
to deal with a petition under Section 11 of the A&C Act concerning a claim
for refund of amounts collected by supplier as GST under gas sales
agreement. It was held by this Court that the issue which essentially arose
was whether GST liability could have been passed on to the petitioner
therein and it was held that such a dispute was a dispute between parties
inter se , having no bearing on the taxing power of a State. This Court
allowed the petition under Section 11 and appointed a sole arbitrator to
adjudicate the disputes between the parties. The relevant observation in the
said judgment are as under :
“16. However, it is relevant to bear in mind that the petitioner here does
not assail, question or dispute a tax that may have been imposed upon it
by the State in exercise of its sovereign or statutory powers. The issue
which is essentially raised is whether the GST/VAT liability which came to
be placed upon GAIL could be passed onto the petitioner or it be held
liable to reimburse GAIL to the aforesaid extent under the agreement. The
challenge is raised solely on the anvil of Article 10.6. The petitioner
asserts that it was only liable to bear such taxes as may have been
shouldered by GAIL while purchasing gas from any supplier or any tax
that may have been levied or stood attracted at the time when natural gas
was sold to the petitioner. Viewed in the aforesaid light, it is manifest that
the issue does not relate to the taxing power of the State or any action
taken or an order made in exercise thereof.”
28. Reliance sought to be placed by the respondent on a judgment of the
Madhya Pradesh High Court in case of Premief Shield Pvt. Ltd. Vs. Indian
Institute of Science Education and Research Bhopal , 2026:MPHC-
JBP:13339, is misconceived. In the said case, the contractor was itself liable
to pay tax upon service charges it received from the respondent therein. The
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respondent assumed no contractual liability to pay/deposit the GST and did
not even have a GST registration. In those circumstances, the Court held that
since admittedly, the respondent had assumed no obligation with regard to
the payment/deposit of GST, there was no occasion to raise any dispute
regarding reimbursement of tax/GST by the respondent. It was in that
context that the Court declined to entertain the petition under Section 11 of
the A&C Act.
29. In the present case, the respondent charged the tax in its own invoices,
received the same from the petitioner, and was obliged to deposit the same
before the tax authority. The sum sought to be claimed, is a sum which
admittedly passed on from the petitioner to the respondent in the guise of
GST. The entire claim is founded upon a payment made by one contracting
party to the other party under the contract. As such, the facts are quite
distinct from those in the case of Premief Shield Pvt. Ltd. (supra).
30. In the circumstances, this Court is unable to accept the plea of the
respondent that non-arbitrability of the disputes sought to be raised by the
petitioner is manifest in the facts and the circumstances of the present case.
While so observing, it is clarified that only a prima facie view has been
taken by this Court, and it shall be open to the respondent to take appropriate
objections as regards jurisdiction/arbitrability during the course of arbitral
proceedings inter-alia by moving an application under Section 16 of the
A&C Act which shall necessarily be considered by the arbitrator on its own
merits.
31. Given that the existence of the arbitration agreement is admitted and
the fact that the Delhi is the juridical seat of arbitration, it is incumbent upon
this Court to appoint an independant sole arbitrator to adjudicate the disputes
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between the parties as mandated in terms of the dicta laid down in SBI
General Insurance Co. Ltd. v. Krish Spinning , (2024) 12 SCC 1, Aslam
Ismail Khan Deshmukh v. ASAP Fluids Private Limited & Anr. , (2025) 1
SCC 502 and Maharashtra State Electricity Distribution Co. Ltd. & Ors. v.
R Z Malpani, 2026 SCC OnLine SC 553.
32. Accordingly, Mr. Justice (Retd.) J.R. Midha, former Judge, Delhi
High Court (Mob: +91 9717495003) is appointed as the sole arbitrator to
adjudicate the disputes between the parties.
33. It is made clear that the respondent shall be entitled to raise
appropriate objections as regards jurisdiction and arbitrability which shall be
considered by the sole arbitrator on its own merits.
34. The learned Sole Arbitrator may proceed with the arbitration
proceedings subject to furnishing to the parties requisite disclosures as
required under Section 12 of the A&C Act.
35. The learned Sole Arbitrator shall be entitled to fee in accordance with
Fourth Schedule to the A&C Act; or as may otherwise be agreed to between
the parties and the learned Sole Arbitrator.
36. The parties shall share the arbitrator’s fee and arbitral costs, equally.
37. All rights and contentions of the parties in relation to the
claims/counter-claims are kept open, to be decided by the learned Arbitrator
on their merits, in accordance with law.
38. Needless to say, nothing in this order shall be construed as an
expression of this court on the merits of the case.
39. The present petition stands disposed of in the above terms.
O.M.P.(I) (COMM.) 332/2025
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40. Since an arbitral tribunal has been constituted in ARB.P. 370/2026, it
shall be apposite if the present petition is treated as one under Section 17 of
the A&C Act and is dealt with by the learned sole arbitrator. It is directed
accordingly.
41. The present petition stands disposed of in the above terms.
SACHIN DATTA, J
AUGUST 31, 2026/ at/nb
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