9911796707
TMI Blog2022 (7) TMI 1314X X X X Extracts X X X X X X X X Extracts X X X X ..... NNI RAJAGOPAL, ADV.) RESPONDENTS (BY SRI. HARSHA P. BANAD, CGC FOR R1 & R9; SRI. K. HEMA KUMAR, AGA FOR R2; SRI. JEEVAN J. NEERALAGI, ADV FOR R3 TO R5 & R8 SMT. SHILPA SHAH, ADV. FOR R6; SRI. MANU K. ADV. FOR R7) O R D E R Petitioners in both the writ petitions are concessionaires who have been entrusted with construction of road by respondent no.7-Karnataka Road Development Corporation Limited. As a consideration for construction and maintenance of the roads for the contract period, the petitioners are paid certain amounts termed as 'annuity' by respondent no.7. In certain contracts where construction and maintenance of the roads has been out sourced to private persons consideration is paid by permitting the concessionaire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to tax at the rate of 12% and due to this, there was free flow of input tax credit from EPC (Engineering, Procurement and Construction) contractor to the concessionaires and thereafter to NHAI. He stated that as a result, tax at the rate of 12% leviable on the service of road construction provided by concessionaire to NHAI would be paid partly from the input tax credit available with them. He stated that the Council may take a view for grant of exemption to annuity paid by NHAI/State Highways Construction Authority to concessionaires during construction of roads. He added that access to a road or bridge on payment of toll was already exempt from tax. The Hon'ble Minister from Haryana suggested to also cover under this provision annuity pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its minutes of the 43rd GST Council meeting held on 28.05.2021 clarified the same as follows: "15.33 ................................................................................ it was also being clarified that the annuity paid as deferred payment for construction of roads/highways was not exempted from GST as the tolls or annuity in lieu of tolls are............................ 6. GST on annuities paid under the Hybrid Annuity Model Project for construction of roads: Committee discussed the request of Ministry of Road Transport and Highways regarding exemption on annuities paid under the Hybrid Annuity Model Project and has recommended that clarification may be issued that entry 23A of notification No.12/2017-CT(R) exempts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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." Aggrieved by the same, the petitioners have preferred the instant writ petitions. 6. The case of the petitioners is that the annuity (deferred payments) paid for construction of roads is exempt from GST as per notification nos.32 and 33/2017 dated 13.10.2017 and the clarification issued by the GST Council in this regard in its meeting held on 28.05.2021 and the subsequent Circular dated 17.06.2021 issuing clarificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll charges is exempt from GST from 01.07.2017 and onwards. 10. Annuity is paid to the concessionaires in lieu of toll charges. GST Council, in its 22nd meeting held on 06.10.2017 took note of the same and as entire toll charges were being exempted from GST has decided to recommend exemption of annuity also, which include the consideration received by concessionaires which is clear from the recordings in the minute book which is mentioned at paragraph 4 supra. The said recording makes it clear that it recommended treating annuity on par with the toll charges. 11. Pursuant to the said meeting, the notifications no.32/2017 and 33/2017 dated 13.10.2017 have been issued by respondent no.1 wherein service by way of access to a road or a bridge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds construction and maintenance of roads. It cannot be construed to have not exempted the annuity (deferred payments) towards construction of roads. The impugned circular has the effect of overriding the notifications bearing Nos.32 and 33/2017 dated 13.10.2017 and has to be held as bad in law. Nothing prevents respondent no.1 from imposing GST on the consideration paid to concessionaires like the petitioners on the payment received by them by way of annuity but that has to be done in the manner known to law. In the instant case, respondent no.1 has issued the notifications under Section 11 of the Central Goods and Services Tax Act, 2017 and Section 6 of the Integrated Goods and Services Tax Act, 2017 exempting the consideration received by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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