TaxTMI 
TaxTMI 
2024 (10) TMI 1809
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.... interest and penalty on the annuity amount received for the period September 2017 - September 2022; And (ii) To declare Circular No. 150/6/2021 GST dated 17.06.2021 as ultra vires and in contravention to SI. No.23-A of Notification No. 12/2017-CT(Rate) dated 28.06.2017 (as amended) and the 22nd recommendations of the 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 t....
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....ursuance thereof, the GST the authority had issued Notifications vide 32 and 33 of 2017 on 13.10.2017 by introducing Entry Nos. 23A and 24A, exempted services rendered by way of access to a road or a bridge on payment of annuity from GST. 10. Thereafter the 43rd GST Council clarified that payment of annuity for construction of roads/highways 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 be....
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....a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation. Hence prayed for intervention and set aside the impugned circular and show cause notice. PLEADINGS OF THE RESPONDENT DEPARTMENT: 16. The learned Senior Standing Counsel for the Department would 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 SI. 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 St. No.2....
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....Department placed reliance on the judgments (i) The State of Punjab v. M/s Shiv Enterprises and Ors (Arising out of SLP (C) No. 19295/2022), (ii) Rajendra Narayan Mohanty v. CT and GST Cuttack -1 East Circle and Ors, WP (C) No. 5332/2022, (iii) Federation of Hotel and Restaurants Association v. UOI, (1989) 3 SCC 634, (iv) Nitdip Textile Processor vs UOI, (2012) 1 SCC 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 SI.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....
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....notification of the Government of India, in the Ministry of Finance (Department of Revenue), No.12/2017- Central 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. 691(E), dated the 28th June, 2017, namely :- (i) in the Table, - (a) ....... (b) ....... (c) ....... (d) after serial number 23 and the entries relating thereto, the following serial number and entries shall be inserted namely: - SI. 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....
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....s 43rd meeting held on 28th May, 2021. 2.1 GST is exempt on service, falling under heading 9967 (service code), by way of access to a road or a bridge on payment of annuity [entry 23A of notification No. 12/2017-Central Tax]. Heading 9967 covers "supporting services in transport" under which code 996742 covers "operation services of National Highways, State Highways, Expressways, Roads & streets; bridges 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 read....
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....re. The council's reiteration preserved the exemption of the Service under the Code 9967 and enunciated that the taxable Service fall within the scope of heading 9954. A close reading of notification Nos. 12, 32 and 33 of 2017 in no way suggests that the entries 23 or 23A or 24A exempts the services under 9954 i.e. construction service of the highways, bridges, and so on. Thus, we are of the considered opinion that there is no intersection or overlap or contradiction of direction in the resolutions of the 22nd and the 43rd GST Council vis-a-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 petiti....
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....practice of the High Courts entertaining writ petitions questioning the legality of the show-cause notices stalling enquiries as proposed and retarding investigative process to find actual facts with the participation and in the presence of the parties. Unless the High Court is satisfied that the show- cause notice was totally non-est in the eye of the law for absolute want of jurisdiction of the authority to even investigate into 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 e....