Juristway Blog

Tag: GST Appeal

  • Meghalaya High Court Dismisses Jorabat-Shillong Expressway Company’s Writ Against ₹112 Cr GST Demand; Directs Petitioner to Exhaust Statutory Appeal

    Meghalaya High Court Dismisses Jorabat-Shillong Expressway Company’s Writ Against ₹112 Cr GST Demand; Directs Petitioner to Exhaust Statutory Appeal

    Division Bench holds that classification of BOT annuity receipts—whether taxable construction services or exempt road-access services—raises mixed questions of law and fact unsuitable for writ adjudication, and finds no patent jurisdictional defect or violation of natural justice that would warrant bypassing the appellate remedy under Section 107 of the CGST Act.

    Gauhati High Court, Shillong Bench (Meghalaya) | SHILLONG, June 2, 2026

    The Meghalaya Bench of the Gauhati High Court has dismissed a writ petition filed by M/s Jorabat Shillong Expressway Limited (JSEL) challenging a GST demand of ₹112,39,64,394 (comprising CGST and SGST) raised on annuity receipts of ₹864,12,69,958 received from the National Highways Authority of India (NHAI) for the period July 2017 to December 2022.

    The Division Bench of Hon’ble Mr. Justice H.S. Thangkhiew and Hon’ble Mr. Justice B. Bhattacharjee declined to exercise writ jurisdiction under Article 226 of the Constitution, holding that the petitioner had an efficacious alternate remedy by way of a statutory appeal before the appellate authority under Section 107 of the CGST Act, 2017.

    The Court, however, granted liberty to the petitioner to file the appeal within four weeks and directed the appellate authority to consider the same on its own merits, uninfluenced by any observations made in the judgment.

    Background: The BOT Annuity Project

    JSEL was incorporated as a Special Purpose Vehicle (SPV) by a consortium of IL&FS Transportation Networks Limited and Ramky Infrastructure pursuant to a Letter of Acceptance issued by NHAI on 20 May 2010.

    The company entered into a Concession Agreement dated 16 July 2010 for a BOT (Annuity) project covering approximately 61.98 kilometres of the Jorabat–Shillong Section of National Highway No. 40 spanning the States of Assam and Meghalaya.

    Under the BOT (Annuity) model—a Public Private Partnership structure widely used in highway development—the concessionaire finances and constructs the highway, operates and maintains it for a specified concession period, and eventually transfers it back to the government.

    Importantly, the right to collect toll remains with NHAI and not with the concessionaire. Instead, the concessionaire recovers its investment through half-yearly annuity payments made by NHAI after commencement of commercial operations. Under JSEL’s concession agreement, the concession period extends until 2031.

    The Demand and Its Basis

    The dispute originated when GST Intelligence authorities issued a Show Cause Notice dated 30 September 2023 alleging that JSEL had failed to discharge GST on annuity payments received for road construction activities.

    The Department classified the services under SAC 9954 (works contract services taxable at 12% to 18%) rather than SAC 9967 (services by way of access to a road or bridge exempt under Entry 23A of the relevant exemption notification).

    An initial demand of approximately ₹130.57 crore, along with interest and penalty, was proposed.

    JSEL initially challenged the Show Cause Notice before the High Court on the ground that the proceedings were premature. That writ petition was dismissed. Thereafter, a Special Leave Petition filed before the Supreme Court was disposed of on 5 February 2024 with directions requiring the authorities to properly consider the petitioner’s submissions.

    Following a personal hearing held on 19 March 2024, the Additional Commissioner, CGST, Shillong passed an Order-in-Original dated 18 April 2024 confirming a reduced demand of ₹112.39 crore together with applicable interest and penalty.

    The present writ petition challenged both the Show Cause Notice and the Order-in-Original.

    Petitioner’s Grounds of Challenge

    Senior Advocate Mr. S. Ghosh advanced multiple grounds of challenge on behalf of JSEL.

    The central contention was that the entire consideration, including annuity receipts received under the BOT arrangement, was exempt under Entry 23A of the exemption notification dated 28 June 2017, as amended on 13 October 2017, which exempts:

    “Service by way of access to a road or a bridge on payment of annuity.”

    According to the petitioner, the Department had artificially bifurcated an integrated BOT service into separate construction and access components when, in substance, the concessionaire was providing a composite and indivisible service.

    The petitioner also mounted a constitutional challenge to CBIC Circular No. 150/06/2021-GST dated 17 June 2021, which clarified that Entry 23A does not exempt GST on annuity paid for construction of roads.

    It was argued that the Circular effectively overrides a statutory exemption notification, contrary to Section 11(3) of the CGST Act.

    Reliance was placed upon the decision of the Karnataka High Court in M/s DPJ Bidar-Chincholi (Annuity) Road Project Pvt. Ltd. v. Union of India, reported in (2024) 122 GSTR 48, wherein the same Circular was struck down and annuity receipts were held exempt.

    Jurisdictional objections were also raised against:

    • The Additional Director, DGGI, who issued the Show Cause Notice; and
    • The Additional Commissioner, CGST, Shillong, who passed the adjudication order.

    The petitioner contended that neither officer qualified as a “Proper Officer” under Section 2(91) of the CGST Act for initiating and adjudicating proceedings under Section 74.

    Further, it was argued that Section 74, which applies to cases involving fraud, suppression, or wilful misstatement, was inapplicable because the dispute involved only interpretation of law and not any attempt to evade tax.

    Additional grounds included:

    • Taxability of services rendered under pre-GST contracts;
    • Incorrect inclusion of certain exempt receipts;
    • Alleged computational errors in the demand; and
    • Inclusion of interest earned on term deposits, which was claimed to be exempt.

    The petitioner submitted:

    “The case hinges on a pure question of law—whether annuity receipts under BOT road projects are exempt—supported by statutory notifications, judicial precedent, and settled principles on interpretation of exemptions.”

    Revenue’s Defence

    The Union respondents, represented by learned DSGI Dr. N. Mozika, defended both the Show Cause Notice and the Order-in-Original.

    According to the Revenue, JSEL was engaged in a composite supply consisting of:

    • Design;
    • Financing;
    • Construction;
    • Operation; and
    • Maintenance.

    The principal supply, according to the Department, was construction of roads, which is taxable as a works contract service.

    Since the right to collect toll never vested in JSEL, the concessionaire could not claim that it was providing road-access services falling under Entry 23A.

    On jurisdiction, the Revenue relied on Notification No. 14/2017-Central Tax dated 1 July 2017, which conferred powers upon DGGI officers as Central Tax officers.

    The Revenue also relied upon Notification No. 2/2022-Central Tax dated 11 March 2022, which inserted Paragraph 3A and vested Additional Commissioners with adjudication powers in respect of Show Cause Notices issued by DGGI.

    On the issue of pre-GST contracts, reliance was placed on Section 142(10) of the CGST Act and Section 13 dealing with time of supply of continuous services.

    The Revenue further contended that the Karnataka High Court’s decision in DPJ Bidar-Chincholi had not attained finality as appeals were pending.

    The State of Meghalaya, represented by learned Government Advocate Mr. N. Syngkon, argued that Entry 23A was intended to apply only where a concessionaire provides access to a road in lieu of toll collection and receives annuity as compensation.

    Since JSEL never possessed toll collection rights, the principal supply remained construction, making the entire composite supply taxable under Section 8 of the CGST Act.

    Court’s Analysis

    The Division Bench first noted that the legal position concerning GST liability on BOT annuity receipts remains unsettled and is presently the subject of divergent judicial views and pending appeals.

    Against that background, the Court examined the maintainability of the writ petition.

    Challenge to Jurisdiction Rejected

    The Court rejected the petitioner’s challenge regarding the competence of the officers involved.

    It held that the Additional Director, DGGI was a valid Proper Officer by virtue of Notification No. 14/2017, which conferred powers on DGGI officers corresponding to their rank.

    Similarly, the Additional Commissioner, CGST, Shillong possessed adjudicatory authority under Notification No. 2/2022.

    The Court observed:

    “Mere disagreement regarding the interpretation of the scope of powers conferred under statutory notifications cannot by itself convert an issue into a jurisdictional defect warranting interference under Article 226.”

    The Court relied upon the decision of the Allahabad High Court in RC Infra Digital Solution v. Union of India as well as the Supreme Court’s decision in Union of India v. Azadi Bachao Andolan (2004) 10 SCC 1.

    Mixed Questions of Law and Fact

    The Court further held that the controversy involved several intertwined issues requiring detailed factual examination, including:

    • Classification under SAC 9954 or SAC 9967;
    • Applicability of Entry 23A;
    • Characterisation of BOT annuity payments;
    • Interpretation of concession agreements; and
    • Determination of principal supply under the composite supply provisions.

    These issues, according to the Court, constituted mixed questions of law and fact and were therefore unsuitable for adjudication in writ jurisdiction at the first instance.

    Alternate Remedy Cannot Be Bypassed

    The petitioner argued that the appellate remedy under Section 107 would be illusory because appellate authorities are bound by CBIC Circulars issued under Section 168 of the CGST Act.

    The Court rejected this contention.

    It held that while circulars may bind departmental officers, they do not constitute law and do not bind courts.

    The Court observed that acceptance of the petitioner’s argument would effectively permit taxpayers to bypass the statutory appellate framework whenever a departmental circular is involved.

    Approving the principle laid down by the Allahabad High Court, the Bench noted:

    “Though orders or instructions issued by the Board may be binding upon departmental authorities, they do not bind courts and it is needless to cite cases on the point.”

    The Court also noted that the petitioner had fully participated in the adjudication proceedings pursuant to the directions of the Supreme Court, filed detailed replies, attended personal hearings, and presented extensive submissions.

    Whether the conclusions reached by the adjudicating authority were correct or incorrect was a matter appropriately falling within the domain of the appellate authority.

    Outcome

    Finding no exceptional circumstance warranting interference under Article 226, the Court dismissed the writ petition.

    The Court held that none of the recognised exceptions to the rule of alternate remedy were attracted, namely:

    • Lack of jurisdiction;
    • Violation of principles of natural justice; or
    • Infringement of fundamental rights incapable of redress through the statutory mechanism.

    However, the Court granted JSEL liberty to file an appeal under Section 107 of the CGST Act within four weeks from the date of the judgment.

    The appellate authority was directed to decide the appeal independently and strictly on its own merits, without being influenced by any observations made in the writ proceedings.

    Significance

    The judgment reinforces the well-established principle that writ jurisdiction should not ordinarily be invoked where an effective statutory appellate remedy exists.

    The ruling is particularly significant for infrastructure concessionaires operating under BOT (Annuity) models because it indicates that disputes concerning the GST treatment of annuity receipts should generally be pursued through the appellate hierarchy rather than through direct writ proceedings.

    The decision also highlights that the controversy surrounding taxation of BOT annuity receipts remains unresolved. Although the Karnataka High Court in DPJ Bidar-Chincholi held such annuity receipts to be exempt, the Meghalaya Bench noted that the issue remains subject to pending appellate proceedings and cannot yet be regarded as conclusively settled.

    Case: M/s Jorabat Shillong Expressway Limited v. Union of India & Others
    Court: Meghalaya Bench of the Gauhati High Court
    Case No.: WP(C) No. 245 of 2024
    Decision Date: 2 June 2026

  • GSTAT Dismisses Dow Chemical’s ₹13.41 Crore GST Refund Claims, Holds Swiss Affiliate’s Services Are Not “Intermediary”

    GSTAT Dismisses Dow Chemical’s ₹13.41 Crore GST Refund Claims, Holds Swiss Affiliate’s Services Are Not “Intermediary”

    India’s GST Appellate Tribunal upholds the Revenue’s position that procurement services rendered by Switzerland-based Dow Europe GmbH to its Indian affiliate constituted an import of services — rejecting six consolidated refund appeals spanning January to June 2022 and holding that a centralised group hub providing core services to a sister concern cannot be characterised as a mere facilitator.

     

    In a closely watched ruling, the Goods and Services Tax Appellate Tribunal’s Division Bench — comprising President Justice (Retd.) Dr. Sanjaya Kumar Mishra and Technical Member Shri Anil Kumar Gupta — on June 4, 2026 dismissed six consolidated appeals filed by M/s Dow Chemical International Private Limited, confirming the rejection of IGST refund claims totalling approximately ₹13.41 crore.

    The appeals arose after Dow India concluded — following an internal review — that it had erroneously discharged Integrated GST under the Reverse Charge Mechanism on fees paid to Dow Europe GmbH, a Switzerland-incorporated affiliate that serves as the centralised procurement hub for the global Dow Group. Dow India had initially treated the payments as imports of services. It later formed the view that Dow Europe’s activities qualified as “intermediary services” under Section 2(13) of the IGST Act, which would have placed the supply outside India’s GST net entirely.

    Background

    Under a Procurement Agreement dated July 1, 2021, Dow Europe was engaged to identify and approve foreign suppliers, negotiate procurement terms, review and sign contracts and purchase orders, develop procurement strategies, manage supplier relationships, and oversee quality and spend analytics. In return, Dow India paid a service fee equal to 3.5 per cent of total monthly purchases — with no fee payable in months where no procurement occurred.

    Under Section 13(8)(b) of the IGST Act, the place of supply for intermediary services is the location of the service supplier. Since Dow Europe is based in Switzerland, Dow India argued the transaction fell outside India’s GST net altogether. It reversed the input tax credit previously availed and filed refund applications. Both the Adjudicating Authority and the First Appellate Authority rejected the claims, finding that Dow Europe was rendering a core procurement outsourcing service — not mere ancillary facilitation.

    Arguments Before the Tribunal

    Before the GSTAT, counsel for Dow India argued that the statutory definition of “intermediary” is deliberately wide, covering brokers, agents, and “any other person, by whatever name called” who arranges or facilitates supply between two or more parties. The three-party structure — Dow India, Dow Europe, and the foreign supplier — together with the commission-linked fee and advance rulings from Karnataka and West Bengal (including Airbus Group India and Global Reach Education Services) were cited to support the intermediary classification.

    “The manner of remuneration is a key indicator of the nature of services. A commission-based structure clearly reflects a facilitative role.”

    — Shri Mihir Prashant Deshmukh, Counsel for Dow Chemical India

    The Revenue’s counsel countered by pointing to Appendix 1 of the Procurement Agreement, which detailed how Dow Europe independently conducted procurement strategy development, governance, supplier risk management, analytics, strategic sourcing, and quality audits. She characterised these as substantive, core operations rather than ancillary facilitation, and relied heavily on the Karnataka High Court’s April 2025 ruling in Columbia Sportswear India Sourcing Pvt. Ltd. — which held that a group entity providing buying-support services was an independent service provider, not an intermediary.

    The Tribunal’s Reasoning

    The GSTAT acknowledged a genuine tension in the existing case law. Two competing streams have emerged: one treating intra-group facilitation as intermediary services; the other — endorsed by the Karnataka and Delhi High Courts — treating substantive support rendered on a principal-to-principal basis as independent services. The Tribunal noted that Revenue has applied these standards inconsistently depending on the direction of cross-border supply, observing that “both views cannot be taken — one view is to be taken.”

    Applying the four prerequisites for intermediary classification laid down in CBIC Circular No. 159/15/2021-GST, the Bench found that while the first requirement — a minimum of three parties — was satisfied, the second was not. The services provided by Dow Europe could not be characterised as an ancillary supply facilitating a main supply between two independent principals because Dow Europe is itself a dedicated procurement hub whose very existence and purpose is to serve the global Dow Group — including Dow India — as a core, structural function of the group’s operations.

    The Tribunal aligned with the reasoning in Columbia Sportswear and the Delhi High Court’s Blackberry India ruling, holding that Dow Europe renders services on its own account as an independent contractor without authority to bind Dow India. The place of supply was therefore confirmed to be India, and the transaction held to constitute an import of services outside the scope of Section 13(8)(b) — which was itself omitted by the Finance Act, 2026 with effect from March 30, 2026.

    The Final Holding — Para 26 : Operative finding of the Tribunal

    The Tribunal expressly held that Dow Europe’s services cannot be termed “intermediary services” and are not in the nature of ancillary services. Rather, they constitute a core service rendered by Dow Europe to a sister concern — Dow India — both being subsidiaries operating within the same global group, Dow Inc. The intra-group, global-hub character of the arrangement was itself a decisive ground for rejecting the intermediary classification, independent of the principal-to-principal analysis.

    This framing is significant for practitioners. The Tribunal did not merely apply the Columbia Sportswear/Blackberry line of reasoning about independent contractors. It went a step further: where a foreign entity exists specifically as a centralised service hub for an entire global group, the very nature of that entity’s role makes it structurally incapable of being a “facilitator” between two other principals — it is itself the principal service provider to each group company it serves.

    On the Refund Claim

    The Tribunal did take issue with one finding of the First Appellate Authority. The lower authority had partly dismissed the refund claims on the ground that Dow India had originally paid tax voluntarily and was raising the intermediary argument as an afterthought. The GSTAT rejected this characterisation, noting that Section 54 of the CGST Act expressly provides for refund of taxes paid within a prescribed limitation period, and that a bona fide change of legal interpretation cannot disentitle a taxpayer from seeking a statutory refund. That observation, however, carried no practical weight given the Tribunal’s conclusion on the substantive issue.

    All six appeals were dismissed and the orders of the First Appellate Authority confirmed.

    Significance

    The ruling carries two practical lessons. First, where a foreign group entity functions as a dedicated centralised hub — for procurement, treasury, IT, HR, or any other shared function — serving the entire group worldwide, courts and tribunals are likely to treat its services to Indian affiliates as core imports rather than intermediary facilitation, regardless of the fee structure or three-party appearance of individual transactions. Second, the Tribunal’s pointed observation that Revenue has applied contradictory standards to outbound versus inbound intra-group services may give future litigants a basis to press for parity in cases where the flow runs the other way. The omission of Section 13(8)(b) by the Finance Act, 2026 will, going forward, significantly narrow the practical scope of such disputes.

    Dow Chemical International Private Limited was represented by Shri Mihir Prashant Deshmukh and Shri Shamik Gupte. The Commissioner of State Tax, Mazgaon, Mumbai was represented by Ms Shwetal Shepal.

  • Allahabad High Court Refuses to Entertain Belated Writ Petition; Holds Statutory Appeal Deadline Under GST Act Cannot Be Circumvented

    Allahabad High Court Refuses to Entertain Belated Writ Petition; Holds Statutory Appeal Deadline Under GST Act Cannot Be Circumvented

    PRAYAGRAJ, May 26, 2026 — In a judgment that reinforces the principle that writ jurisdiction cannot be used as a backdoor to bypass statutory limitation periods, the Allahabad High Court has dismissed a writ petition challenging an assessment order that was nearly a year old, holding that the petitioner’s failure to file a timely statutory appeal under the GST Act was fatal to his case.

    A division bench of Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary was hearing a petition filed by M/s Mishra Security Services, whose proprietor Smt. Sunita Mishra had sought to quash an assessment order dated June 4, 2025, and the preceding show-cause notice dated March 17, 2025.

    The petitioner had earlier filed a writ petition in January 2026 — itself beyond the limitation period — which was dismissed as withdrawn with liberty to file afresh with better particulars. The present petition was the second attempt.

    The court expressed its inability to countenance how the petitioner could file a writ petition at such a belated stage “merely to bypass the limitation prescribed for filing a statutory appeal under Section 107(1) of the GST Act.”

    Section 107(1) provides for filing an appeal within three months from the date of communication of the order, with a further condonable period of one month under Section 107(4). The court noted that the outer limit had long since expired.

    Relying on the Supreme Court’s authoritative pronouncements in Singh Enterprises vs. C.C.E., Jamshedpur (2008) and Commissioner of Customs and Central Excise vs. Hongo India Private Limited (2009), the bench held that the appellate authority under the GST Act has no power to condone delay beyond the statutorily prescribed period. The court also drew from the coordinate bench ruling in Atlantis Intelligence Ltd. vs. Union of India (2025), where Justice Saraf himself had distilled the principles governing maintainability of writ petitions after expiry of the statutory appeal period.

    The Atlantis Intelligence ruling had established, among other things, that when a statute prescribes a maximum condonable delay (here, one additional month), Section 29(2) read with Section 3 of the Limitation Act applies, and courts have no power to condone any further delay — even in writ jurisdiction under Article 226 of the Constitution.

    “We are rather surprised,” the bench observed, noting that the petitioner had been “a fence sitter” who had not been diligent in pursuing his rights. The court underscored the Latin maxim quando aliquid prohibetur ex directo, prohibetur et per obliquum — what cannot be done directly cannot be done indirectly.

    The court, however, clarified that if the petitioner files an appeal, the observations made in the order shall not affect the decision of the appellate forum.

    The judgment serves as a cautionary reminder to litigants that the extraordinary writ jurisdiction of the High Court is not a substitute for statutory remedies, and that courts will not readily assist those who sleep over their rights.