2024 (2) TMI 422 - HC - GST

Recovery of CGST and SGST alongwith interest - evasion of GST - period July 2017 to March 2021 - HELD THAT - Having regard to the discussion made in respect of Agenda Item 13 iv of the 22nd GST Council Meeting, held on 06.10.2017, wherein it has been observed that annuity is a consideration for the service provided by concessionaires to NHAI and the Notification dated 13.10.2017 issued under sub-section 1 of Section 11 of the CGST Act, 2017 read with provisions contained in sub-section 3 of Section 11 of the CGST Act, 2017, this Court is of the considered view that the petitioner has been able to made out a prima facie case for interim relief. It is also noticed that Hon ble Karnataka High Court has already set aside the Circular dated 17.06.2021 by the afore-mentioned Judgment. It is, therefore, provided that till the returnable date, the impugned Demand-cum-Show Cause Notice dated 29.09.2023 shall be kept in abeyance. Issue notice, returnable on 06.03.2024.

Summary

Issues involved:
The issues involved in the judgment include challenging a Demand-cum-Show Cause Notice under Article 226 of the Constitution of India regarding the demand for CGST and SGST, interpretation of GST provisions on construction of roads with annuity payments, and the applicability of Circular dated 17.06.2021 issued by the Central Board of Indirect Taxes and Customs.

Demand-cum-Show Cause Notice:
The petitioner challenged a Notice demanding Rs. 41,92,50,000 towards CGST and SGST for alleged GST evasion related to a construction project. The petitioner contended that the project involved construction of a bridge and roads on a BOT annuity basis, with agreements covering construction, operation, and maintenance phases for a specified concession period.

Challenge to GST Council Agenda and Circular:
The petitioner also contested Agenda no. 6 of the 43rd GST Council Meeting and a Circular dated 17.06.2021 regarding the applicability of GST on road construction with annuity payments. The petitioner argued that the Circular and Agenda were contrary to the provisions of the CGST Act, specifically related to the exemption of annuity payments for road construction.

Legal Interpretation and Relief:
The Court considered the arguments presented, including references to previous judgments and GST Council Meetings. It noted that the Karnataka High Court had set aside a similar Circular in a previous case. The Court found a prima facie case for interim relief in favor of the petitioner, keeping the Demand-cum-Show Cause Notice in abeyance until the next hearing date.

Conclusion:
The Court acknowledged the complexity of the issues raised and the need for further examination. It issued a notice returnable on a specific date, emphasizing that all respondents were represented by counsel and no formal notices were required. The Court granted interim relief to the petitioner based on the interpretation of relevant GST provisions and legal precedents.