2026-VIL-522-RAJ
  1. Home
  2. 2026-VIL-522-RAJ

SGST High Court Cases

GST - Works Contract, Construction of road, Toll forming part of the deferred annuity payment for construction services - Taxability of Construction Services under BOT Concession Agreement - Petitioner-concessionaire enters into a Build-Operate-Transfer (BOT) concession agreement with the NHAI to construct, operate and maintain a highway section and was granted the right to collect toll during the concession period, along with an obligation to pay annual premium - Dept raised demand for GST on the construction services, treating the toll collection rights as deferred annuity payments constituting consideration for works contract service – Petitioners challenge the demand contending that no supply exists between itself and the NHAI as the construction is executed through a sub-contractor and that the toll collection is exempted under Entry 23 of the Notification No. 12/2017–Central Tax (Rate) dated 28.06.2017 – HELD - The concession agreement constitutes a taxable supply falling within the definition of “works contract” under Section 2(119) and Entry 6, Schedule II of the CGST Act, 2017 as the petitioner-concessionaire supplies construction and maintenance services to the authority (NHAI) and in return receives the right to collect toll, license to the site, and right of way, which collectively constitute consideration under Section 2(31) in the form of barter – The petitioner has been awarded the right to collect the toll by the NHAI in consideration of the construction services rendered by the petitioner on a DBFOT basis. Since there is a promise of fulfilling the obligation on the part of the petitioner to construct and maintain the road, vis-à-vis the corresponding promise of NHAI to permit the petitioner to collect toll for the road in question during the subsistence of the contract, the transaction squarely falls within the statutory framework of ‘supply’ and ‘consideration’ - While the Entry 23 of Notification No. 12/2017-CT(R) exempts services by way of access to roads through toll charges simpliciter, the exemption does not extend to toll collected as consideration for construction services, which fall under the construction services heading and not the supporting services heading specified in the exemption notification - The CBIC Circular dated 17.06.2021 clarifies that construction of road services are taxable even when consideration is received in deferred annual payments or annuity form, and that such toll collection constitutes annuity for construction services. In the present case, the collection of toll is one of the consideration which is being received by the petitioner and essentially amounts to annuity. Thus, the same does not fall within the ambit of the exemption clause - The impugned orders raising demand for GST along with interest and penalty is upheld and the writ petition is dismissed - Argument regarding double taxation - The petitioner’s argument regarding double taxation is rejected as there exists no contractual privity between the NHAI and the sub-contractor. There are two distinct contracts, one executed between the NHAI and the petitioner (concessionaire), and the other between the petitioner and the sub-contractor i.e. IRB Infrastructure Developers Limited - As far as the work undertaken by the sub-contractor is concerned, the sub-contractor has provided works contract services to the petitioner and has deposited the due output tax liability. The services rendered by the sub-contractor attracted tax liability and are distinct from the contract between the petitioner and the NHAI - The tax liability of the sub-contractor on construction services does not preclude tax liability of the concessionaire-petitioner on the works contract services supplied to the NHAI.
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Weekly Summary

VIL Video

GST Recent Updates: GSTAT, EWB...
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Security-Code
New Code?

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Security-Code
New Code?

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?