GST EXEMPTION ON ANNUITY PAYMENTS IN ROAD PROJECTS: RAJASTHAN AAAR CLARIFIES ITC ELIGIBILITY

GST EXEMPTION ON ANNUITY PAYMENTS IN ROAD PROJECTS: RAJASTHAN AAAR CLARIFIES ITC ELIGIBILITY

RAJASTHAN APPELLATE AUTHORITY FOR ADVANCE RULING GOODS AND SERVICES TAX

Bench of

1. Sh. Rakesh Kumar Sharma, Member(Central Tax)

2. Dr. Preetam B. Yashvant, Member(State Tax)

Case Title : M/S Nagaur Mukundgarh Highways Pvt. Ltd

(GST AAAR RAJASTHAN)

Appeal No. RAJ/AAAR/APP/06/2018-19 dated 16.11.2018

Against Advance Ruling No. RAJ/AAR/2018-19/17 dated 15.09.2018

ORDER NO.RAJ/AAAR/06/2018-19

Date of Judgment/Order- 12th Febrary 2019

BRIEF FACTS OF THE CASE

Para No. 2. The present  appeal has been filed under section 100 of the central gst act , 2017 and rajasthan act, 2017 by nagar mukundgarh highways pvt. ltd. against the Against Advance Ruling No. RAJ/AAR/2018-19/17 dated 15.09.2018.

Para No. 3. The Appellant i.e. M/S Nagaur Mukundgarh Highways Pvt Ltd. having Goods and Service Tax (GST) Registration Number 08AAFCN4743HIZC is a company incorporated as Special Purpose Vehicle (SPV) under the provisions of Companies Act, 2013 for the purpose of undertaking two laning/intermediate laning of sections of State Highway (Project) on DBOT (design, built, operate and transfer) basis . The Appellant has been engaged as a ‘Concessionaire’ wherein the Public Works Department (PWD), Government of Rajasthan has granted concession to construct, operate and maintain the project during :

1. the Construction Period which shall commence from the appointed date and will end on Commercial Operation Date (COD) and
2. a period of 10 years from the COD (O&M period ).

Para No. 4. The Appellant shall receive 50% of the project cost(i.e. cost of construction) which shall be paid to the applicant in five equal instalments during the construction period on the basis of achievement of milestones i.e. achieving specified percentage of physical progress.

Para No. 5. The Appellant shall receive the balance 50% of the project cost in bi-annual instalments over the O & M period along with the interest (hereinafter referred to as ‘Annuity Payments’). The first instalment shall be due and payable from the 180^th day of COD.

Para No. 6. The Appellant shall also receive bi-annual payments towards O & M expenses calculated at a specified percentage of the project cost during the O & M period.

RULING

1. Annuity payments are exempted by virtue of Entry No. 23A of the notification No. 12/2017Central Tax (Rate) dated 28.06.2017. However, only 50% ITC of the GST paid on the Input and Input service used in the construction phase is available to the Appellant subject to the provisions of Section 17(5) of the Central GST Act, 2017.
2. Full ITC of the GST paid on the inputs and input services used in the O&M phase is available to the Appellant subject to the provisions of Section 17(5) of the Central GST Act, 2017.