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Delhi International Airport Pvt. Ltd. v. Union of India

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 10785 of 2014)Decided 4 Dec 2014
Civil Appeal No. 10785 of 2014
Justice Anil R. Dave · Justice Uday Umesh Lalit

Background

An airport duty-free operator disputed service tax on its licence arrangement and obtained interim protection from recovery. A consent arbitration award already recorded its obligation to reimburse the airport company for the actual tax liability. At the airport company's insistence, the operator nevertheless furnished a bank guarantee, and the High Court ordered the company to bear its cost.

Decision Breakdown

The Supreme Court dismissed the airport company's appeal and upheld the direction to pay ₹1.06 crore towards the guarantee expenses. Its interest was already secured by the consent award, and the additional guarantee had been furnished because it sought that protection while the operator had an interim order in its favour. In those circumstances, requiring the airport company to bear the expense was justified. The appeal concerned the cost of obtaining the guarantee and did not decide the underlying service tax controversy afresh.

Lesson Learnt

A party that insists on additional security despite an existing agreed protection may have to pay the resulting expense. The allocation depends on the agreement, interim orders and circumstances that caused the guarantee to be furnished.

Official source (sci.gov.in)View Judgment (PDF)

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