DBFOT road concession treated as taxable works contract under GST; toll exemption does not cover construction services.

A DBFOT road concession under which the concessionaire undertakes construction, operation and maintenance, receives an exclusive right to collect toll, and pays premium or concession fee was treated as a taxable supply of works contract services under GST because the reciprocal rights and obligations formed consideration other than money. The road-access toll exemption was held to apply only to services under Heading 9967 and not to road construction under Heading 9954, so it did not cover the construction element. The challenge based on double taxation and parity with other departmental decisions also failed, as those references involved different contracts and issues.

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Issues: (i) Whether the writ petition was maintainable despite the statutory appeal remedy under the GST law, (ii) whether the concession agreement for construction and operation of the road, coupled with the right to collect toll and payment of premium, constituted a taxable supply/works contract under GST, and (iii) whether the petitioner could avoid the demand on the grounds of exemption, double taxation, or parity with alleged contrary departmental decisions.

Issue (i): Whether the writ petition was maintainable despite the statutory appeal remedy under the GST law.

Analysis: Though an appeal lay to the Tribunal, the Tribunal was not functional. The availability of a dormant remedy could not compel the petitioner to pursue an ineffective appellate forum, and the matter was therefore examined on merits.

Conclusion: The writ petition was maintainable and was entertained on merits.

Issue (ii): Whether the concession agreement for construction and operation of the road, coupled with the right to collect toll and payment of premium, constituted a taxable supply/works contract under GST.

Analysis: The agreement contemplated construction, operation and maintenance of the highway on a DBFOT basis, grant of leave and licence over the site, exclusive right to collect user fee, and payment of concession fee and premium. On these terms, the arrangement involved reciprocal obligations amounting to consideration otherwise than in money. The right to collect toll, together with premium and licence/right of way, was treated as part of the consideration for works contract services. The construction activity therefore fell within the scope of supply under the GST framework and was taxable.

Conclusion: The transaction was held to be a taxable supply of works contract services under GST.

Issue (iii): Whether the petitioner could avoid the demand on the grounds of exemption, double taxation, or parity with alleged contrary departmental decisions.

Analysis: The exemption for access to a road or bridge on payment of toll was confined to services under Heading 9967, whereas construction of roads fell under Heading 9954 and was not covered by the exemption. The clarification of 17.06.2021 was accepted as consistent with the notification and the GST Council's understanding. The plea of double taxation failed because the EPC contractor's tax liability arose under a separate contract, while the petitioner's liability arose under its own concession arrangement with NHAI. The plea of parity also failed because the cited orders from other States concerned different factual and legal issues.

Conclusion: The exemption plea, double-taxation objection, and parity claim were rejected.

Final Conclusion: The Court upheld the tax demand and the appellate order, holding that the concession arrangement was taxable under GST and that no ground for interference was made out.

Ratio Decidendi: A DBFOT road concession in which construction services are exchanged for contractual rights such as toll collection, site licence, and premium constitutes taxable supply/works contract under GST, and the toll exemption for access to a road does not extend to construction services.

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