In Brief
The National Highways Authority of India contracted with JSC Centrodorstroy for highway construction under a contract requiring an insurance policy and performance bank guarantee. When service tax rates increased from 5% to 10.30%, the contractor claimed reimbursement under Clause 70.8 of the contract's Conditions of Particular Application. The Arbitral Tribunal awarded compensation for the excess service tax. The Supreme Court upheld the award, holding that contract interpretation is the arbitrator's primary function and courts should not interfere unless the interpretation is unreasonable. The Court found the arbitrator's view that the service tax was directly relatable to contractual performance was legitimate and within Clause 70.8.
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