N//s. Shankarampet Projects Private Ltd v. The Appellate Joint Commissioner of State Tax

Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ, order, or direction, more particularly one in the nature of Writ of Mandamus or any other appropriate writ declaring (1) Order- in-Appeal dated 2010612025 bearing Order No. 2D360625021149F and bearing ARN AD3609240072933 along with FORM GST APL-04 daled 20t06t2025 passed by the Respondent No. 1 for the period FY 2019-20 to being arbitrary, illegal, in violation of principles of natural justice, suffering from non-application of mind, and in violation of Section 107(12) of the CGST Act. (ii) FORIV GST APL-04 I daled 2010612025 passed by the Respondent No. 1 as null and void, illegal, and without jurisdiction, as rt rs issued without authority of law, and non-est in law on account of the lack of signature. (iii) Order-in-Original along with the Summary of the order in FORtt/ C,ST DRC-07 bearing Reference No. 2D360624'1236858 dated 2910612024 issued by the Respondent No. 2 is also null and void, illegal, and without jurisdiction as it is issued without authority of law, and non-est in law on account of the lack of signature. (iv) The Show Cause Notice along with the Summary of Show Crruse Notrce in FORII/ GST DRC-01 daled 2310212024 bearing reference No. 2D360224038556D issued by Respondent No. 2 is also null and void, illegal. and without jurisdiction, as it is issued without authority of law and non-est in law cn account of the lack of signature. lA NO: 1 OF 2025 Petition under Section '1 51 CPC praying that in the circurnstances stated rn the affidavit filed in sup,port of the petition, the High Court may be pleased to stay the Order-in-Appeal dated 20.06.2025 bearing Order No.2D360625021149F and bearing ARN AD36C9240072933 along with FORM GSI APL-04 dated 20.06.2025 passed by the Respondent No.1 under Section 74 of the CGST Act, 2017 for the period April 2019 to March 2020 and any coercive steps against the Petitioner by the Respondents. Counsel for the Petitic,ner: SRI KARAN TALWAR Counsel for the Respondents No.1 to 3: SRI SWAROOP OORILLA, SPECIAL GOVERNMENT PLEADER FOR STATE TAX Counsel for the Respondent No.4: SRI PULIMAMIDI SHASHIDHAR REDDY, S.C. FOR CENTRAL GOVERNMENT The Court made the following: ORDER * I .l q '* a * a * THE HON'BLE THE CIIIEF JUSTICE SRT APARESH KUMAR SINGH THE HON'BLE SRI JUSTICE G.M.MOHIUDDIN AND WRIT PETITION No.28654 of 2025 ORDER: Learned counsel Sri Karan Talwar appears for the petitioner. Sri Su,aroop Oorilla, learned Special Government Pleader for Statc Ta-x, appears for respondents No. I to 3. Learned counsel Sri Pulimamidi Shashidhar Reddv appears lor respondent No.4.

2. Impugned herein is the order-in-appeal dated

20.06.2025 passed by the Appellate Joint Commissioner (ST), H.yderabad Rural Division, Hyderabad (Annexure P1). The order-in-original (Annexure P3) concerning the financial year 2019-2020 passed under Section 73 of the Te langana Goods ald Services Tax Act, 2O 17 (hereinafter referred to as, "the Act"), imposed tax, interest and penalty under Section 73(9) of the Act and confirmed the demand.

3. Along v,,ith its appeai, thc petitior"rer, a Coricessronalrc with the National Highr.r,ays Authority of India iNHAI), had submitted service concession agrcement, balance sheet for the year 2019 2O2O, GSTR-9 and GSTR 9C lor the same year, GSTR-.IB and GSTR-1 and the agreemcnt entered with the I(NR Constructions to executc the rvork. The petitioner hzrd taken a plea that undcr tht: aforesaid arrangement. it was rcquired to construct thc :rsset (road) and at the eld ol the concessior-r period, tht: r',rad u,i1l be transferred to NHAI. In Ueu of the sen,ices pr,r.,,ided, the petitioner wc,uld be entitled to receive 4O<)1, ol the bid project cost as 'Construction Support' cluring the construction phase and remaining 60'lu is due zrnd payable in the form of bi-annual annuity installments; after the Commercial Operation Date (COD) i.c., after c,:nstructior-r of the road, over a period of 15 years. Thr' petitioner follows the Indiar Accounting Standards (lnd AS) for accounting and reporting purposes. Its financial statements were prepared in accordance lvith thr: Ind AS as per the Companies (Indian Accounting Standards) Rules, 2015, notilied under Section 133 of the Companies Act, 20 13, and other relevant provisions of the said Act. According to the petitioner, the GST obligations become due and payable for the year 2O|9-2O2O. However, the turnover reported in the monthly GST filings (GSTR-1 and GSTR-3B) n,as based on the amounts that u,ere due and receivable by the petitioner during the construction period in terms of the concession agreement. While submitting GSTR-9 and GSTR-9C lorms for financial year 2O|9-2O2O, the petitioner inadvertentlv classified the variation (difference in turnover according to Financial Statements versus GST returns) as exernpt turnover, rather than correctly reporting it as an adj ustment needed to reconcile the turnover figures bets,een the F inancial Statements ald the GST returns. This led to the issuance of show cause notice in Form DRC-01 from the Deputy Commissioner - Enforcement Wing, dated 23.O2.2024. The adjudicating authority proposed to disallow the turnover reported AS exempt in the GST returns liled by the petitioner for the financial year 2019-2020 and proposed to lery tax on the -+ exempted turnover reported by the petitioner. The petitioner i:r its response explained as to wh)' the differential a mount of turnor,'er (inadvertentlv reported as cxempted turnover) was not subject to taxation durir-rg the financial year 2O|9-2O2O. The petitioner zrlso got an opportunity to attend personal hearings. Tllc petitioner, inter alia, cc ntended that the adjudicating ar-rthorit-"' l-ras stated that tre petitioner is in receipt of annuiry amoullts against the annuity invoices raised post introduction of GST. Accorrling to the petitioner, for the fin ancial -1,ear 20 l9-2O2O, srpecifically relevant to the show ceruse notice, it was engaged in the construction phase of ttre contract and did not receive any annuity payments from NHA[. Thc: construction support received by the petitioncr rluring this phase shoulc not be classified as an annuit_r, under the Hybrid Annu:ty Model (HAM). The annuitl, rel'ers to the \ predeterminerl sum that is paid after the COD i.e., during the operation and maintenance period. According to the petitioner, the adjudicating authority erroneously arrived at the opinion that the exemption claimed by thr: company 7 ) on the annuity income is irregular as the services provided by it do not fall under the Service Accounting Code (SAC) 9967 as the company is not providing anv service by way of access to a road or bridge on payment of annuity and provided onl-v construction at-td maintenance servlces which clearly lalls under SAC 9954. Hence, the exemption claimed under clause 23A of the Notification No.12/2017- CT(R) by classifying Build-Operate-Transfer (BOT) (Annuity) Model under Chapter Heading No.9967 and treating annuity at par with Toll collection appears to be irregular in terms of the provisions of the Act and the Notifications issued thereunder. In its memo of appeal, the petitioner contended that the understalding of the adjudicating authority u/as incorrect, unfounded and without merit, since the petitioner had entered into a concession agrcement under the HAM ald not BOT annuity model. Moreover, the petitioner has not, at any point, either in its replies or otherwise, ciaimed GST exemption on annuity payments by categorizing the annuities under SAC 9967. The petitioner had neither 6 made such a submission nor had it classified annuity payments under SAC 9967. Th.e pre-comlnercial operation date was achieved in October, 202 1. Subseqr.rent to the COD, from the financial year 2021-2022 onq,ards, the petitioner has been receiving annuity payments from NHAI and has appropriately paid tax on these payments, classifying them under SAC 9954, which are veriliable through the r:opies of GSTR-1 and GSTR-3B post COD for the financiaL years 202l-2022 and 2022 2023. it, therefore, assailed the reasonings drawn in the order-in- original by the adjudicating authority that the documents submitted by the tax payer shor.t,s that the anntrity paid by the NHAI covers the entire cost of construction services provided by including the operation, rcutinc ar-rd periodic maintenance of the constructed roads during the operation a;'rd maintenance phase under the sarnc concession agreement dated 31.03.2006. It was also pleaded that the adjudicating authority had accepted that the services provided by tl.re petitioner constitute a continuous supply of services, but had incorrectly appiied Section 31(2) 1 instead of Section 31(5) of the Act for imposing the demand t ithout providing al,y valid reasons lor this deviation. Therefore, the order in-original rvas assailed as suflering from non-application ol mir.rd passed premeditated manner The petitioner also relied upon the Ccntral Board of Indirect Taxes and Customs (CBIC) Circular No.22ll15/2024, dated 26.06.2024, lr,hich provides clarification on the determir-ration of the time of supply for GST purposes in relation to construction and maintenalce services of National Highri,ay Projects under the HAM b_v NHAI. However, the adjudicating authority did not adhere to the guidelines set forth in the circular and erroneously upheld the demand. The circular, according to the petitioner, clarifies that under HAM categorized asa 'continuous supply of services' as defined in Section 2(33) of the Act, the time of supply is determined by either the date of issuance of invoice or the receipt of payment, whichever is earlier, provided that the invoice is issued within the prescribed period or upon the completion of an event as specified in the contract. If the invoice is not 3 issued as required, the time of supply tl-ren detaults to the date on u,hir:h the service was provided or the yral,ment \\'as received, whichever is earlier. Therefore, according to the petitioner, the services in question fall under [he scopc of continuous supply ol service and that the invoicing and time of supply should be regulated by the stil;uiations in Sections i3 1 15) and 13(21 of the Act. Horvever, tl.re adjudicating authority held that the time of sup,ply should be deterrnined by the general rule set out in S,:ction 3l (2) ol the Act in disregard of the aforesaid circular. It is submitted that despite substantive grounds talccn ir-r the memo of appeal, the appellatc authority has, u,ithout :rn1 consideraiion. held that the appellant is not in a oosition ro provide any e',,'iclence of payment of GST on thc ,urnover of Rs.41 1,77,54,68l l- and on the difference turnover between GSTF:-1 and GSTR-3B payable under Si:ction 9(l) of the Act as l)er the provisions of the CBIC circtrlar dated

26.06.2024 belore the adjudicating authority or l;efore thc appellate authority. Therefore, the appeal is not proper and 9 correct as per law. The Iindings of the adjudicating authority do not require any interlerence. 4 . Learned counsel for the petitioner submits that the impugned appellate order at paragraph 10 thereol summarily rejects the memo o[ appeal without even referring to or discussing any of the grounds raised by the petitioner. Therefore, the impugned orcler may be set aside.

5. Learned Government Pleader appearing for State Tax is not in a position to dispute that the grounds taken b,v the petitioner in its memo of appeal have not been dealt with by the appellate authority. He is also not in a position to dispute that the petitioner had taken categorical grounds that the payments under the HAM were rcceivablc upon annuity being released post COD, which have been treated by the adjudicating authoritv as received during thc financia-l year 2019-2020 to impose the penalty and interest thereupon. The adjudicating authority had also failed to consider that the nature ol services provided by l0 the petitioner \vere not under the BOT model. but rathe r under 1.he H,{M.

6. On consideration of thc rival submissions of the parties an,1 the cliscussion made hereinabove, rve are ol ihe vier.v that the appellate authority has failed to deal and discuss an) of the grounds supported b'l evidcnce submitted by the petitioner rvhile upholding imposrng pcnaltv and interest upon the petitioner for thc l'clcvant tax period 2019-.2O2O.

7. Reasonrs are the soul of the order. A mere perusal of paragraph lt) ol the impugned order shows total non consideration of the grounds urged. Reference is made to the decision of the Apex Court in Kranti Associates (Pf Ltd. v. Masood Ahmed Khanl

8. Having regard to the aforesaid discussion made and the reasons recorded, the order-in-appeal datr:d

20.06.2025 is; set aside. The matter is rernil.t-ed to the appellate autrority to pass a fresh order in accordance ' 1u otol s scc aso urith law. The petitioner should appear before the appellate authority on 06. 10.2025. 9 The writ petition is accordingly disposed of. Hoi'r'ever, there shall be no order as to costs Misceilaneous applications pending, if any. shall stand closed. SD/.G. JYOTHI S STANT REGISTR I //TRUE COPYi/ TION OFFICER To

1. The Appella Hyderabad, 5th Joint Commissioner of State Tax, Hyd Floor, C.T Complex, Nampally. Hyderabad-500 001 bad Rural Division,

2. The Deputy Commissioner (ST)-lll, Enforcement Wing-'l , Commercial Taxes Department, Hyderabad, Telangana. 3 The Principal Secretary, Revenue Department (State Tax), State of Telangana, Secretariat, Hyderabad-500 004

4. The Secretary, Ministry of Finance, Department of Revenue, Union of lndia, New Delhi-l 10 001. 5 One CC to SRI KARAN TALWAR, Advocate [OPUCJ 6. Two CCs to SRI SWAROOP OORILLA, Special Government Pleader for State Tax, High Court for the State of Telangana at Hyderabad [OUT]

7. One CC to SRI PULIMAMIDI SHASHIDHAR REDDY, S C for Central Government [OPUC] B Two CD Copies MP I}S N4, t,' I a , n { 4 s I * * * * I * , 4 t8 { 6 f I * HIGH COURT DATED:2310912025 ,.f.r ( c) :) r) 3 1 0[,] 2025 t t)tspAt,ltr fr0 ,-z o ORDER WP.No.2B654 of 2025 DISPOSING OF THE WRIT PETITION WITHOUT COSTS &1 \ \L)