Supreme Court Refuses To Interfere With Ruling Holding Paytm-Nightstay GST ITC Dispute Arbitrable

The Supreme Court has refused to interfere with a District Judge's ruling holding that a dispute over One97 Communications Ltd's (Paytm) claim seeking refund of ₹99 lakh from Nightstay Travels Pvt Ltd and others under an Assignment Deed is arbitrable.

It dismissed a Special Leave Petition filed by Nightstay App founder and former Nightstay Travels Pvt Ltd director Nasr Ullah Khan challenging the March 13, 2026 judgment of the District Judge (Commercial), Patiala House Courts, New Delhi.

The District Judge had set aside an arbitrator's order holding the dispute to be non-arbitrable and directed the parties to proceed with arbitration.

A bench of Justices Pamidighantam Sri Narasimha and Alok Aradhe, while refusing to interfere with the District Judge's judgment, observed,

"We are not inclined to interfere with the impugned judgment and order. The Special Leave Petition is dismissed and the accompanying interlocutory application(s), if any, stands disposed of."

The dispute concerned an Assignment Deed executed on December 14, 2018 under which One97 Communications acquired intellectual property from Nightstay Travels for ₹5.5 crore, besides paying ₹99 lakh towards GST.

Paytm alleged that Nightstay failed to deposit the GST with the authorities, depriving it of input tax credit and consequently sought recovery of the amount with interest. Nightstay however, argued that the dispute pertained to taxation, was barred under the CGST Act, and therefore could not be referred to arbitration.

Reversing the arbitrator's finding, the District Judge held that the dispute was essentially contractual and not one involving the sovereign taxing powers of the State. Relying on settled precedents, the Court held that merely because the dispute related to GST did not render it non-arbitrable where the relief sought was against a private party and not the State. The Court observed:

"The issue does not relate to taxing power of the State or any action taken or an order made in exercise thereof. The claim of refund by the appellant from the respondent would be an action in personum and does not involve any instrumentality of the State. As to whether the compensation is liable to be paid to the appellant by the petitioner or whether the appellant is liable to be indemnified under Clause 7 of the Assignment Deed or otherwise, would fall within the domain of arbitration."

Holding that the dispute was arbitrable in nature, the District Judge directed the parties to appear before the arbitral tribunal. 

For Petitioner: Siddharth Bhatnagar, Sr. Advcate, Aditi Mohan, Sparsh Goel, Riya Shankar Sharma, Ndeem Afroz, Mantika Haryani, AOR, Animesh Dubey, Jayant Singh Chauhan

For Respondent: Nakul Mohta, Misha Rohatgi, AOR, Rohit K. Debnath, Saijal Arora