2024 (10) TMI 122 - HC - GST

Levy of GST in relation to the annuity being received by the petitioner - date on which the liability to pay G.S.T. would arise - HELD THAT - The annuity payable to the petitioner is fixed in the concession agreement, dated 18.01.2018. There is a difference of opinion on the question of when such liability would arise. The assessing authority and the appellate authority have taken the view that the said time of supply of services should be treated as on the date on which the concession period had commenced as the annuity is based for maintenance of the road and management of the said road with the said responsibility commencing from the date of the concession period. The issue as to whether the view of the petitioner is to be accepted or whether the view of the assessing authority and the appellate authority is to be accepted is now settled in view of the circular dated 26.06.2024, issued by the Government of India, Ministry of Finance, Central Board of indirect taxes and Customs bearing No. 221/15/2024-GST. In this circular, the C.B.I.C. has taken the view that the tax is payable at the time of issuance of invoice or receipt of payments of annuity, whichever is earlier. The orders are set aside with a direction to the respondent authorities to collect tax in accordance with the circular issued by the C.B.I.C. - appeal disposed off.

Issues:
Interpretation of liability to pay G.S.T. on annuity received by a construction company under a concession agreement for the maintenance of a national highway.

Detailed Analysis:

1. Background of the Case:
The petitioner, engaged in road construction, entered into a concession agreement with the National Highway Authority of India for the construction and maintenance of a section of National Highway No.16. The dispute arose regarding the payment of G.S.T. on the annuity received by the petitioner.

2. Terms of Concession Agreement:
The concession agreement required the petitioner to design, build, operate, and transfer the highway section to the authority after completion. The petitioner was to be paid consideration during the construction period and subsequently on an annuity basis for the concession period.

3. Dispute on G.S.T. Payment:
The petitioner contended that G.S.T. on annuity should be paid when the invoice is raised or payment is made, while the assessing authority insisted on immediate payment of G.S.T. on all annuity installments.

4. Assessment Orders and Appeals:
Separate assessment orders were passed for different periods, leading to the petitioner's appeal to the Appellate Authority, which upheld the assessments, resulting in the petitioner approaching the High Court through writ petitions.

5. Legal Question:
The primary issue before the court was determining the point at which the liability to pay G.S.T. on the annuity arises, considering the provisions of the G.S.T. Act, 2017.

6. Applicable Law and Circular:
Section 13 of the G.S.T. Act, 2017, governs the time of supply of services. The circular issued by the Central Board of Indirect Taxes and Customs clarified that G.S.T. liability arises at the time of invoice issuance or receipt of payments, whichever is earlier.

7. Court's Decision:
In light of the circular, the court set aside the assessment orders and directed the authorities to collect tax in accordance with the circular's provisions. Any amounts collected under the previous orders were to be refunded to the petitioner as per the law, and no costs were awarded.

8. Conclusion:
The court's judgment resolved the dispute by aligning the liability to pay G.S.T. on the annuity with the circular's guidelines, providing clarity on the timing of tax obligations for the petitioner in the construction and maintenance of the national highway.

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