TaxTMI 
TaxTMI 
2024 (11) TMI 371
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.... GST Council and consequently set aside the same. 2. Heard Mr. S. Niranjan Reddy, learned Senior Counsel appearing on behalf of Ms.Rubaina S. Khatoon, counsel for the petitioner and Mr. Dominic Fernandes learned Senior Counsel for the Central Excise, Customs & Service Tax Department, for the respondents. FACTUAL MATRIX: 3. The Government of India entrusted certain stretches of National Highway-7 (NH) to the National Highway Authority of India (NHAI) vide Notification No. S.O. 456(E) dated 26.04.2002. After that, the NHAI under Section 16 of the NHAI Act, 1988 took up the widening of existing two lanes i.e. from 367/0 to km 447/20 for improvement, operation and maintenance from 447/0 km to 464/0 km with the participation of the private sector in the Build-Operate- Transfer (BOT) model on an annuity basis for 20 years and invited the bidders to implement the project. 4. The NHAI accepted the proposals of the consortium consisting of GMR Infrastructure Limited and GMR Energy Limited/writ petitioner (from now on, 'the petitioner'). Accordingly, an acceptance letter dated 30.12.2005 was issued. In terms thereof, the NHAI and the petitioner entered into a contract agreement o....
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....which is not instead of tolls is not exempt from the GST. Based on it, the respondent department issued the impugned Circular No.150/6/2021 GST dated 17.06.2021 settling that the Entry No.23A of the Notification No.12 of 2017 does not exempt GST on annuity paid for the construction of the roads. 11. He asserts that the agreement is the BOT model, as such, during the period of concession, the petitioner would be in control and possession of the project and provide access to the users. Therefore equating the concession agreement to that of works the contract is implausible. 12. Further, the concession agreement and the construction of the road were completed in January 2009. By this fact, it is obvious that the taxable event was much before the enactment and enforcement of the GST Act, 2017. Thus levy of GST where the supplies were before the GST law particularly, in the absence of any construction services after 01.07.2017 would be without authority of law and jurisdiction. 13. Additionally contested that the concession agreement and annuity do not qualify the definition of supply of service in Section 7 of the CGST Act. Further citing Articles 2, 3, 6, and 18 of the agreem....
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....d submit that the concession agreement between the petitioner/concessionaire and the NHAI is manifesting the period of the contract and the amount payable after completion of each of the milestones and the invoices to be raised are for 20 years inclusive of periodical payment obligations. Nonetheless, the petitioner in self- assessment claimed exemption from payment of the GST in Sl. No.23A of the Notification No.12 of 2017 dated 28.06.2017 claiming Service Accounting Code (SAC) 9967, though the services rendered by the petitioner/concessionaire are under SAC 9954. The clarification in Circular No.150/06/2021-GST dated 17.06.2023 is that the exemption does not cover the construction of road services under heading 9954, even if the deferred payment is made by way of instalments (annuities). Therefore the exemption under Sl. No.23A of the Exemption Notification would not apply to the petitioner's case. On that account, the impugned show cause notice demanding the GST is justified. Further, the contention that the department cannot impose GST on the annuity amount received for September 2017 to September 2022 cannot be accepted as the petitioner had raised invoices during the GST regi....
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.... 226, (v) Anant Mills Co. Ltd. v. State of Gujarat and Ors, (1975) 2 SCC 175 and (vi) Valliamma Champaka Pillai v. Siuvathanu Pillai, 1979 (8) TMI 210. ANALYSIS: 19. The foundational facts i.e., the petitioner's contract with NHAI for execution, operation and maintenance of the notified portion of National Highway in BOT annuity Model for a period of 20 years and completion of construction by March 2009 and continuance of maintenance contract up to 2029 are not in dispute. 20. Additionally, there cannot be disagreement as to the facts of the respondent department vide notification dated 28.06.2017 in Sl.No.23 under heading 9967 exempted tax for the services by way of access to a road or a bridge on payment of toll charges. The relevant portion is extracted hereunder: Notification No. 12/2017- Central Tax (Rate) New Delhi, the 28th June, 2017 G.S.R......(E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest to do, on the recommendations of the Council, hereby exempts the intra-State supply of ....
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.... (d) after serial number 23 and the entries relating thereto, the following serial number and entries shall be inserted namely: - Sl.No. Chapter,Section,Heading, Group or Serivce Code (Tariff) Description of Services Rate (per cent) Condition (1) (2) (3) (4) (5) "23A Heading 9967 Service by way of access to a road or a bridge on payment of annuity. Nil Nil Notification No. 33/2017- Integrated Tax (Rate) New Delhi, the 13th October, 2017 G.S.R. 1276(E). - In exercise of the powers conferred by sub-section (1) of section 6 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No. 9/2017 Integrated Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 684 (E), dated the 28th June, 2017, namely:- (i) in the Table, (a) .... ....
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....es and tunnel operation services". Entry 23 of said notification exempts "service by way of access to a road or a bridge on payment of toll". Together the entries 23 and 23A exempt access to road or bridge, whether the consideration is in the form of tolls or annuity [heading 9967]. 2.2 Services by way of construction of road fall under heading 9954. This heading inter alia covers general construction services of highways, streets, roads railways, airfield runways, bridges and tunnels. Consideration for construction of road service may be paid partially upfront and partially in deferred annual payments (and may be called annuities). Said entry 23A does not apply to services falling under heading 9954 (it specifically covers heading 9967 only). Therefore, a plain reading of entry 23A makes it clear that it does not cover construction of road services (falling under heading 9954), even if deferred payment is made by way of instalments (annuities). 3. Accordingly, as recommended by the GST Council, it is hereby clarified that Entry 23A of notification No. 12/2017- CT(R) does not exempt GST on the annuity (deferred payments) paid for construction of roads. 4.....
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....that there is no intersection or overlap or contradiction of direction in the resolutions of the 22nd and the 43rd GST Council vis-à-vis Notifications Nos. 12, 32 and 33 of 2017 and the impugned circular. In this view, the circular's explanation aligns with the 43rd GST Council resolution. 29. Thus, we respectfully disagree with the conclusion drawn by the learned single Judge of the High Court of Karnataka in M/S DPJ Bidar-Chincholi(Annuity) Road, (supra) that the impugned circular is overriding the notifications and bad in law, as it cannot be countenanced. That apart, we are unable to accept that the impugned show cause notice would stand or fall with the circular, as the demand for the tax against the petitioner was on the ground that the services of the petitioner fall under heading 9954 and is not exempted under entry 23A. 30. Pertinently, even as per the petitioner, the agreement has no straight covenant evidencing that the annuity is in place of the toll. Rather the agreement specifies that the NHAI is alone entitled to collection of toll. Although the petitioner claims that the payment of annuity is in the place of toll for providing access to the road in the ....
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....o facts, writ petitions should not be entertained for the mere asking and as a matter of routine, and the writ petitioner should invariably be directed to respond to the show-cause notice and take all stands highlighted in the writ petition. Whether the show-cause notice was founded on any legal premises is a jurisdictional issue which can even be urged by the recipient of the notice and such issues also can be adjudicated by the authority issuing the very notice initially, before the aggrieved could approach the court. Further, when the court passes an interim order, it should be careful to see that the statutory functionaries specially and specifically constituted for the purpose are not denuded of powers and authority to initially decide the matter and ensure that ultimate relief which may or may not be finally granted in the writ petition is not accorded to the writ petitioner even at the threshold by the interim protection granted." (ii) In, Union of India v. Kunisetty Satyanarana - (2006) 12 SCC 8 in paras 14, 15 and 16 held as under: "14. The reason why ordinarily a writ petition should not be entertained against a mere show-cause notice or charge sheet is that a....