TaxTMI 
TaxTMI 
2026 (8) TMI 1202
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....ions are being heard and decided together by this common order. However, for the sake of convenience and brevity, the facts are being noticed from D.B.Civil Writ Petition No. 10055/2024, which may be treated as the lead matter. 2. By way of the instant writ petition, the petitioner has assailed the validity and applicability of Circular No. 150/6/2021 dated 17.06.2021 (Annexure-P/24) issued by Respondent No.1Central Board of Indirect Taxes and Customs, inter alia, on the ground that the said circular is not binding upon the petitioner and cannot override or dilute the statutory exemption granted under the notification issued in exercise of powers conferred by Section 11 of the CGST Act, particularly Notification No.12/2017. The petitioner has further challenged the show cause notice dated 09.12.2022 (Annexure-P/7), contending that the provisions contained in Chapter XVII of the CGST Act/RGST Act expressly provide for the binding effect of an advance ruling upon the applicant as well as the concerned departmental authorities and that, vide advance ruling dated 12.02.2019, Entry-23A was specifically held to be exempted from levy of tax. 2.1 Further, the petitioner has also chal....
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.... 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"; Explanation. For the purposes of this notification,- (i) Reference to "Chapter", "Section" or "Heading", wherever they occur, unless the context otherwise requires, shall mean respectively as "Chapter, "Section" and "Heading" in the scheme of classification of services. (ii) Chapter, Section, Heading, Group, or Service Code mentioned in Column (2) of the Table are only indicative" 4. Subsequently, the Respondent-Board issued Circular No.150/06/2021-GST dated 17.06.2021, purporting to clarify the applicability of GST in respect of annuity payments received for construction of roads. The circular records that GST is exempt in respect of services falling under Heading 9967, namely, services by way of access to a road or a bridge on payment of annuity, as covered by Entry 23A of Notification No.12/2017-Central Tax (Rate). However, the circular proceeds to draw a distinction between services falling under Heading 9967 and services rela....
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....nels. 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, 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. Difficulty if any, in the implementation of this circular may be brought to the notice of the Board." 5. Learned counsel appearing for the petitioner assailed the validity and applicability of the impugned circular on the ground that the same is neither binding upon the petitioner nor can it override, modify or dilute the statutory exemption granted under the notification issued in exercise of powers conferred under Section 11 of the CGST Act. It was submitted that the statutory notificat....
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....iability upon the petitioner despite the statutory exemption and the binding advance ruling, travels beyond the scope of the powers conferred upon the Board. In support of his submissions, he placed reliance upon the judgment rendered by Karnataka High Court in DPJ BidarChincholi (Annuity) Road Project Private Limited & Anr. Vs. Union of India & Ors., reported in 2022 SCC OnLine Kar 1829. 6. Per contra, learned counsel appearing for the Union GST and State GST authorities supported and justified the action of the respondents and submitted that the Board is duly empowered under Section 168 of the CGST Act to issue orders, instructions and directions for the purpose of securing uniformity in the implementation of the provisions of the Act. It was contended that the impugned circular has merely clarified the correct position of law and has been issued in exercise of the statutory powers vested in the Board. He submits that Section 168 specifically authorises the Board, wherever it considers it necessary or expedient for securing uniformity in the implementation of the Act, to issue such orders, instructions or directions to the central tax officers as it may deem fit, which are req....
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....ers, decided on 22.05.2026. In the said case, the Division Bench considered the scope and effect of Sections 2(31), 2(119) and 7 of the CGST Act, along with Schedule II thereto and Rules 27 and 28 of the CGST Rules, 2017, in the context of a concession agreement entered into between the petitioner therein and NHAI. Upon examination of the contractual arrangement and the reciprocal obligations undertaken by the parties, the Division Bench held as under: 32:- The definition of "works contract" as provided under Section 2(119) of the Act of 2017, and as included in Schedule II, Entry 6, would apply to the present case. Inasmuch as the petitioner supplies the works contract services to the NHAI and, in return, receives the right to demand and collect fees from the users, licence of the site, and right of way, thus all the ingredients of 'barter' are clearly available in the contract at hand. Moreover, the right to receive premium, as specified supra, itself shows that consideration forms part of the contract. Thus, the agreement in hand would fall within the definition of "supply" as defined under Section 7 of the Act of 2017. 34:- It is further relevant to note that,....
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....& Co.; ( 2018) 9 SCC 1, followed in Commr. (CGST) v. Safari Retreats (P) Ltd.;(2025) 2 SCC 523." 9. Thus, the Court clarified that the concession agreement constituted a taxable supply of works-contract services. Section 7 of the CGST Act broadens the definition of 'supply' to include barter, licensing, and exchange transactions, emphasising the expansive scope of taxable activities. The court found that the petitioner undertook construction, maintenance, and operation duties in exchange for toll collection rights, land licenses, and highway management responsibilities. Toll collection rights qualify as 'consideration' under Section 2(31) of the CGST Act, which encompasses payment in the form of money or other valuable considerations. Entry 23 of Notification No. 12/2017-Central Tax (CG) exempts certain services related to toll roads under Heading 9967; however, the petitioner's activities fall under Heading 9954, which pertains specifically to construction services. 10. In the present case also, the contractual arrangement between the petitioner and NHAI is contained in Annexure-P/2. The relevant provisions of the agreement, which govern the payment of the Pr....
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....ree that 50% (fifty per cent) of the Completion Cost shall be deemed to have been paid during the Construction Period and then balance remaining shall be due and payable during the Operation Period accordance with the provisions of Clause 23.6.2. 23.6.2 The Completion Cost remaining to be paid in pursuance of the provisions of Clause 23.6.1 shall be due and payable in biannual instalments over a period of 10 (ten) years commencing from COD, along with interest thereon (the "Annuity Payments"). The 1" (first) instalment of Annuity Payments shall be due and payable within 15 (fifteen) days of the 180th (one hundred and eightieth) day of COD and the remaining instalments shall be due and payable within 15 (fifteen) days of completion of each of the successive six months. 21.6.3 Each of the Annuity Payments due and payable during (a) the 1st (first), 2nd (second) and 3rd (third) years following the COD shall be equal to 1.5% (one point five per cent) of the Completion Cost;(b) the 4th (fourth), 5th (fifth), 6th (sixth) and 7th (seventh) years following the COD shall be equal to 2.5% (two point five per cent) of the Completion Cost; and (c) the 8th (eighth), 9th (ninth....
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....r that his services were confined only to access to a road or a bridge, by way of payment of an annuity; rather, the terms of the contract essentially include construction, design, and maintenance of the roads, with payments at intervals. 13. The Court in a matter of CG Tollway (Supra) specifically held that the scope of works for construction services is distinct from that of transport contracts, and that Entry 23 of the Notification pertains exclusively to transport services. Therefore, the petitioner's services in the present case do not qualify for exemption and are taxable under the works contract category. The services provided by the petitioner, as described in the contract, constitute a works contract, and Entry 23A of the Notification relates to transport services, establishing that the same principles and analogy applied by the Division Bench in the CG Tollway (Supra) case are directly applicable here. There is no justified reason for this Bench to adopt a differing view. The Single Bench of the Telangana High Court in the matter of GMR Pochanpalli Expreessways Limited (Supra) struck down the impugned Circular, but the Division Bench in the matter of CG Tollway (Su....