TaxTMI 
TaxTMI 
2026 (6) TMI 166
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....inafter referred to as 'CGST Act, 2017')holding the petitioner liable for payment of the GST, amounting to Rs. 16,36,20,418/-, along with interest and penalty. The petitioner has also laid a challenge to the order dated 09.05.2025passed by the Appellate Authority, Commercial Tax Department, Ajmer (hereinafter to be referred as 'Appellate Authority') whereby the Appellate Authority while rejecting the appeal filed by the petitioner upheld the order dated 14.12.2023 holding it to be valid and in accordance with law. The petitioner has also laid a challenge to the subsequent intimation letter, dated 06.06.2025, directing him to deposit the amount. Factual Matrix 2. The brief facts of the case are that the NHAI entered into a concession agreement with the petitioner for the purpose of six laning of Kishangadh Udaipur Ahmedabad Section from kilometer 90.000 (near Gulabpura) to kilometer 214.870 (end of Chittorgarh bypass) of NH-79 in the State of Rajasthan Package-2 under NHDP Phase-V on BOT (Toll) Mode on 09.12.2016. As per the agreement, the concessionaire (i.e. the petitioner) was required to design, build, finance, operate and transfer ("DBFOT") the highway in question in acco....
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....he relevant articles of the concession agreement. It was emphasized that in case no reply to the show cause notice was received within the time frame, appropriate proceedings would be initiated against the petitioner. The petitioner filed a detailed reply to the above-mentioned show cause notice on 07.12.2023, emphasizing that there could not be any tax liability upon the petitioner as the work was sub-contracted and the sub-contractor had already paid the GST upon the work undertaken for the construction of the highway. Various other objections were also raised by the petitioner, including the ground that in identical circumstances, the authorities of GST in Karnataka and Gujarat had found the explanation given by the petitioner therein and the same sub-contractor to be justified and had dropped the audit proceedings. An opportunity of hearing was given to the petitioner, and thereafter the Deputy Commissioner proceeded to pass a detailed order dated 14.12.2023, holding the petitioner liable for payment of GST to the tune of Rs. 16,36,20,418/- along with penalty @ 10% and interest. 6. Being aggrieved by the aforesaid order, the petitioner filed an appeal under Section 107 of th....
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....it objections raised against the sub-contractor in identical circumstances were dropped, and asserted that two different stands cannot be taken by the department on the same issue of incidence of tax. 10. Initially, written submissions were filed by the counsel for the petitioner on 18.04.2026. However, post hearing of the matter on 05.05.2026, on the same date, another set of written submissions were filed by the counsel for the petitioner in consonance with the liberty granted to him. The brief of the written submissions filed by the counsel for the petitioner is as under: "Submissions 4. First, there is no service provided to NHAI. It is an independent contract entered with the NHAI. There is no service/supply. 5. Second, reliance placed on the CBIC Circular vide Circular No. 150/06/2021-GST dated 17.06.2021 is completely incorrect. The said circular provides clarification with respect to the applicability of GST on the activity of construction of road where considerations are received in deferred payment (annuity). In the present case, the Petitioner has not received any payment from NHAI. The Petitioner has collected only toll from toll users whic....
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....itioner's sister concerns including M/s. IRB Westcoast Tollway Limited, in the States of Gujarat and Karnataka, have accepted and acted upon the aforesaid CBIC clarifications and Entry No. 23 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and has dropped the demands. In those cases, the department has taken a consistent view and granted relief, confirming the non-taxability services under consideration. 12. The Petitioner, being similarly situated, is entitled to parity in treatment under Article 14 of the Constitution of India. Therefore, once this is the case, the Respondent No. 3 & 4 cannot take a contradictory stand. The GST is a central statute, there cannot be different and varying stand of the GST department. Reliance is placed upon the decision of the Hon'ble Supreme Court in the case of Union of India and Ors. vs. Kaumudini Narayan Dalal and Anr. - 2001 (10) SCC 231, wherein it was held that, it is not open to the revenue to accept one judgment in the case of the assessee in the case and challenge its correctness in the case of other assessees without just cause. A copy of the said audit reports are enclosed as Annexure 17 and Annexure 18 ....
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....2020) 19 SCC 681. 15. Apart from the objection regarding availability of alternative remedy, learned counsel for the respondents, while referring to the definition of "supply" under Section 7 of the Act of 2017 as well as the definition of "consideration" under Section 2(31) of the Act of 2017, emphasized that 'supply' includes 'barter' and 'consideration' includes 'payment in money or otherwise'. Learned counsel thus emphasized that since the petitioner was granted the right to collect toll, the same amounted to consideration and the transaction was essentially 'barter', inasmuch as the petitioner constructed the road and in barter, received the right to collect toll. He therefore emphasized that the transaction clearly falls within the definition of taxable supply. 16. Mr. Bishnoi further referred to the exemption granted under the notification dated 28.06.2017, is confined to services falling under Heading 9967, i.e., "supporting services in transport". He submitted that, thus as far as the service by way of access to a road or bridge on payment of toll is concerned, the same was exempted under Entry 23. However, the service in question is construction of road, which falls....
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....ply of goods or services or both includes- (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; Section 2(119) (119)"works contract" means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration commissioning of any immovable property wherein transfer of property in goods (whether as g....
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.... be treated as a supply of services, namely:- (a) works contract as defined in clause (119) of section 2; and (b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration. Rule-27 & 28 of the CGST Rules, 2017 27. Value of supply of goods or services where the consideration is not wholly in money.- Where the supply of goods or services is for a consideration not wholly in money, the value of the supply shall,- (a) be the open market value of such supply; (b) if the open market value is not available under clause (a), be the sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money, if such amount is known at the time of supply; (c) if the value of supply is not determinable under clause (a) or clause (b), be the value of supply of goods or services or both of like kind and quality; (d) if the value is not det....
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.... for building, construction, erection, repair, maintenance, etc., of any immovable property, (wherein transfer of property in goods or in some other form is involved) in the execution of such contract. It is thus clear that even if the consideration is not in money but otherwise, and payment is made or to be made in future, the same is included within the definition of 'consideration'. At the same time, for a contract to qualify as a works contract, the handing over of any immovable property in execution of such contract for construction, maintenance, etc., is a necessary indice. 21. As far as supply is concerned, all forms of supply of goods or services or both, including sale, transfer, barter, exchange, licence, lease, rental, etc., made or agreed to be made for a consideration, have been treated as falling within the definition of supply. Furthermore, even in cases of composite supply, the details provided under Schedule-II, which forms part of Section 7, includes works contract as defined in Clause 119(2) of the Act of 2017, as part of the supply of services. 22. As far as the levy and collection of tax is concerned, specific provision has been made under Section 9 of th....
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....eto or necessary for the performance of any or all of the obligations of the Concessionaire under this Agreement." 25. As to what concession has been granted has been specified under Clauses 3.1.1 and 3.1.2, which provide as under: 3.1.1 Subject to and in accordance with the provisions of this Agreement, the Applicable Laws and the Applicable Permits, the Authority hereby grants to the Concessionaire, the Concession set forth herein including the exclusive right, license and authority to design, finance, construct, operate and maintain the Project (the "Concession") and provide Services for a period of 45 (forty-five) years, commencing from the Appointed Date, and ending on the Transfer Date (the "Concession Period"), and the Concessionaire hereby accepts the Concession and agrees to implement the Project subject to and in accordance with the terms and conditions set forth herein. 3.1.2 Subject to and in accordance with the provisions of this Agreement, the Concession hereby granted shall oblige or entitle (as the case may be) the Concessionaire to undertake the following in accordance with the provisions of Applicable Laws and Applicable Permits, during the Concession Per....
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.... the Concession Fee, this Agreement and the Covenants and warranties on the part of the Concessionaire herein contained, the Authority, in accordance with the terms and conditions set forth herein, hereby grants to the Concessionaire, commencing from the Appointed Date, leave and license rights in respect of all the land (along with any buildings, constructions or immovable assets, if any, thereon) comprising the Site which is described, delineated and shown in Schedule-A hereto (the "Licensed Premises"), on an "as is where is" basis, free of any Encumbrances, to develop, operate and maintain the said Licensed Premises, together with all and singular rights, liberties, privileges, easements and appurtenances whatsoever to the said Licensed Premises, hereditaments or premises or any part thereof belonging to or in any way appurtenant thereto or enjoyed therewith, for the duration of the Concession Period and, for the purposes permitted under this Agreement, and for no other purpose whatsoever." 27. Articles 26.1 and 26.2 of the agreement in question make reference to the concession fee to be charged by NHAI and the additional concession fee amounting to Rs. 2,28,60,00,000/- after....
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....Clause 26.2.1 shall be deemed to be part of the Concession Fee for the purposes of this Agreement." 28. Further perusal of the terms of the contract, including Clause 37, reveals that absolute right of termination has been conferred upon the NHAI, and even the project itself is to be undertaken under the complete control and supervision of the NHAI. Needless to emphasize, as far as the contract in question is concerned, the same has been entered into between the NHAI and the writ petitioner in the capacity of concessionaire, and there is no corresponding agreement between the NHAI and the sub-contractor. In other words, there is no privity of contract between the NHAI and the sub-contractor. 29. Thus, there are two distinct contracts, one executed between the NHAI and the petitioner, and the other between the petitioner and the sub-contractor, i.e., IRB Infrastructure Developers Limited. 30. An in-depth analysis of the terms and conditions of the articles of the contract clearly reveals that the argument raised by the counsel for the petitioner, with regard to no service being provided to the NHAI, is liable to be rejected, inasmuch as the scope of supply, as defined under....
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.... by the petitioner on a DBFOT basis. The service encompasses direct and indirect expenses related to construction of roads, bridges, infrastructure, etc. and other assets at the toll plaza. Thus, the arrangement in question falls within the definition of "works contract services" and has rightly been treated as taxable. 34. Since, as 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'. 34. As far as the argument advanced by the counsel for the petitioner with regard to double taxation is concerned, though they may appear attractive at first blush, but upon perusal of the record of the case, the same fizzles out. This is for the reason that there is no privity of contract between the NHAI and the sub-contractor. Rather, there exist two distinct contracts, one between the NHAI and the petitioner, and another between the petitioner and the sub-contractor. 35. As far as....
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....entations have been received requesting for a clarification regarding applicability of GST on annuities paid for construction of road where certain portion of consideration is received upfront while remaining payment is made through deferred payment (annuity) spread over years. 2. This issue has been examined by the GST Council in its 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 are in the form of toll 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, street....
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....P) Ltd.;(2025) 2 SCC 523. The Hon'ble Supreme Court in Dilip Kumar (supra) has observed as under: "53. After thoroughly examining the various precedents some of which were cited before us and after giving our anxious consideration, we would be more than justified to conclude and also compelled to hold that every taxing statute including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly. Further, in case of ambiguity in charging provisions, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption notification wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State. 54. In Govind Saran Ganga Saran v. CST [Govind Saran Ganga Saran v. CST1985 Supp SCC 205 : 1985 SCC (Tax) 447], this Court pointed out three components of a taxing statute, namely, subject of the tax; person liable to pay tax; and the rate at which the tax is to be levied. If there is any ambiguity in understanding any of the components, no tax can be levied till the ambiguity or defect is removed by the legislature. [See Mathuram Agrawal v. State of M.P. [Mathuram Agrawa....
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.... our conclusion. We may now consider the decisions which support our view. .... .... .... 63. In TISCO Ltd. v. State of Jharkhand [TISCO Ltd. v. State of Jharkhand, (2005) 4 SCC 272], which is another two-Judge Bench decision, this Court laid down that eligibility clause in relation to exemption notification must be given strict meaning and in para 44, it was further held: (SCC pp. 289-290) "44. The principle that in the event a provision of fiscal statute is obscure such construction which favours the assessee may be adopted, would have no application to construction of an exemption notification, as in such a case it is for the assessee to show that he comes within the purview of exemption (see Novopan India Ltd. v. CCE [Novopan India Ltd. v. CCE, 1994 Supp (3) SCC 606] )." 66. To sum up, we answer the reference holding as under: 66.1. Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. 66.2. When there is ambiguity in exemption notification which is subject to stri....
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....ther than injustice, such construction should be preferred; 27.11. It is not a function of the Court in the fiscal arena to compel Parliament to go further and do more; 27.12. When a word used in a taxing statute is to be construed and has not been specifically defined, it should not be interpreted in accordance with its definition in another statute that does not deal with a cognate subject. It should be understood in its commercial sense. Unless defined in the statute itself, the words and expressions in a taxing statute have to be construed in the sense in which the persons dealing with them understand, that is, as per the trade understanding, commercial and technical practice and usage." 42. Apparently, there is no ambiguity. However, even assuming for the sake of argument that some ambiguity exists with regard to the exemption, then the same has to be interpreted in favour of the department, in view of the clarification circular dated 17.06.2021. Thus, the ground taken by the counsel for the petitioner with regard to the toll being collected, as exempted under Entry 23-A of the circular in question, cannot be accepted in view of the clarification ....
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....the NHAI and not by the concessionaire in that particular case), held that the prolonged collection of toll in question amounted to annuity. Though it was not a hybrid annuity model, it was treated as a BoT-annuity model. The Court, while examining both the Circular dated 17.06.2021 and the Notification dated 28.06.2017, held as under: "26. Therefore by the contents of the circular, the Entry of 23A in the Notification that the GST is exempt on service falling under Service Code 9967, by way of access to a road or a bridge on payment of annuity has been reaffirmed. Additionally, explained that the service code covers (a) supporting services in transport (b) operation 17 PSKJ&NTRJ Wp_16266_2023 services of National Highways, State Highways, Express Highways, Roads and streets, (c) bridges and tunnel operation services, by way of access to a road or bridge on payment of toll under Entry 23 of the Notification. In substance, the services enumerated in 23 and 23A for providing access to roads or bridges are exempted, whether the consideration is in the form of tolls or annuities. On top of that, specified the services of construction of highways, streets, road railways, air....
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....g they are indeed identical) were dropped, it makes no difference. The Court has been called upon to adjudicate a pure question of law, and simply because an office of the department has dropped identical objections does not preclude this Court to deliberate and decide the taxability of the petitioner. Even otherwise, there can be no concept of negative equality, as sought to be invoked by the counsel for the petitioner. 52. However, in the interest of justice and for complete adjudication, this Court finds it appropriate to deal with the argument advanced by the counsel for the petitioner in this regard. The petitioner has placed on record the audit reports and decisions thereupon pertaining to the States of Karnataka and Gujarat, wherein audit objections were initiated against M/s. IRB Westcoast Tollway Limited and M/s. IRB Ahmedabad Baroda Super Express Tollway Pvt. Ltd., respectively. 53. A perusal of the objection shows that, as far as the audit objection in the State of Karnataka is concerned, it was with regard to the assessee/auditee declaring ITC of a certain amount as ITC available but ineligible at column No. 8 of Form GSTR-9. However, no documentary evidence was p....