The Madras High Court directed the reconsideration of the matter involving the time of supply for road constructions in HAM model in light of GST ( Goods and Services Tax ) Circular No.221/2024. The court set aside the impugned order sent to the petitioner.
The Petitioner-assessee, DBL Villuppuram Highways Limited, a roadway construction company, was awarded a concession on the Hybrid Annuity Model (HAM) by the National Highway Authority. The Petitioner sub-contracted engineering, procurement, and construction to fulfill their obligations under the HAM.
In November 2023, an intimation was sent by the state tax officer of Cuddalore concerning the value of supplies report to the assessee. The petitioner responded to the concerning issue but the GST officer was not satisfied.
The tax officer sent a show cause notice demanding the petitioner to clarify the indifference in their supply values report compared to those submitted by their EPC contractor. The assessee replied to the show cause notice but the GST officer still was not satisfied.
On 28th February 2024, the AO issued an impugned order stating that the petitioner owes liability based on the higher supply value submitted by the EPC contractor.
The assessee filed a writ petition under Article 226 of the Consitution before the Madras High Court calling for the records of the impugned order.
The assessee’s counsel argued that a contract awarded by HAM cannot be equated with an EPC contract and HAM Contracts is a continuous supply of Services not only construction. The petitioner’s counsel continued their arguments that the petitioner should not be imposed liable based on the EPC contractor’s supply values.
The assessee’s counsel relied on the GST Circular No. 221/2024 which clarified that HAM contracts are single contracts involving a continuous supply of services, thus it should be treated differently from EPC contracts.
Mr. V. Prashanth, a Government Advocate who appeared for the Respondents contended that under section 31 of the GST, the time of supply is the time of provision of service, the report submitted by the EPC contractor about the higher outward supply indicates that the construction work was completed to that extent. The Respondent’s counsel also agreed that the matter may require reconsideration in light of the GST Circular No. 221/2024.
Justice Senthilkumar Ramamoorthy observed that the matter needs reconsideration in light of Circular No. 221/2024 and set aside the impugned order dated 28th February 2024. The state tax officer was directed to allow the petitioner to be heard and issue a fresh order within 4 months. The writ petition was disposed of based on the aforementioned terms.
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