THE HON’BLE THE CHIEF JUSTICE SRI APARESH KUMAR SINGH AND THE HON’BLE SRI JUSTICE G.M.MOHIUDDIN WRIT PETITION No.28654 of 2025

ORDER:

Learned counsel Sri Karan Talwar appears for the petitioner.

Sri Swaroop Oorilla, learned Special Government Pleader for State Tax, appears for respondents No.1 to 3.

Learned counsel Sri Pulimamidi Shashidhar Reddy appears for respondent No.4.

2. Impugned herein is the order-in-appeal dated 20.06.2025 passed by the Appellate Joint Commissioner (ST), Hyderabad Rural Division, Hyderabad (Annexure P1). The order-in-original (Annexure P3) concerning the financial year 2019-2020 passed under Section 73 of the Telangana Goods and Services Tax Act, 2017 (hereinafter referred to as, “the Act”), imposed tax, interest and penalty under Section 73(9) of the Act and confirmed the demand.

3. Along with its appeal, the petitioner, a Concessionaire with the National Highways Authority of India (NHAI), had submitted service concession agreement, balance sheet for the year 2019-2020, GSTR-9 and GSTR-9C for the same year, GSTR-3B and GSTR-1 and the agreement entered with the KNR Constructions to execute the work. The petitioner had taken a plea that under the aforesaid arrangement, it was required to construct the asset (road) and at the end of the concession period, the road will be transferred to NHAI. In lieu of the services provided, the petitioner would be entitled to receive 40% of the bid project cost as ‘Construction Support’ during the construction phase and remaining 60% is due and payable in the form of bi-annual annuity installments after the Commercial Operation Date (COD) i.e., after construction of the road, over a period of 15 years. The petitioner follows the Indian Accounting Standards (Ind AS) for accounting and reporting purposes. Its financial statements were prepared in accordance with the Ind AS as per the Companies (Indian Accounting Standards) Rules, 2015, notified under Section 133 of the Companies Act, 2013, and other relevant provisions of the said Act. According to the petitioner, the GST obligations become due and payable for the year 2019-2020. However, the turnover reported in the monthly GST filings (GSTR-1 and GSTR-3B) was based on the amounts that were due and receivable by the petitioner during the construction period in terms of the concession agreement. While submitting GSTR-9 and GSTR-9C forms for financial year 2019-2020, the petitioner inadvertently classified the variation (difference in turnover according to Financial Statements versus GST returns) as exempt turnover, rather than correctly reporting it as an adjustment needed to reconcile the turnover figures between the Financial Statements and the GST returns. This led to the issuance of show cause notice in Form DRC-01 from the Deputy Commissioner – Enforcement Wing, dated 23.02.2024. The adjudicating authority proposed to disallow the turnover reported as exempt in the GST returns filed by the petitioner for the financial year 2019-2020 and proposed to levy tax on the exempted turnover reported by the petitioner. The petitioner in its response explained as to why the differential amount of turnover (inadvertently reported as exempted turnover) was not subject to taxation during the financial year 2019-2020. The petitioner also got an opportunity to attend personal hearings. The petitioner, inter alia, contended that the adjudicating authority has stated that the petitioner is in receipt of annuity amounts against the annuity invoices raised post introduction of GST. According to the petitioner, for the financial year 2019-2020, specifically relevant to the show cause notice, it was engaged in the construction phase of the contract and did not receive any annuity payments from NHAI. The construction support received by the petitioner during this phase should not be classified as an annuity under the Hybrid Annuity Model (HAM). The annuity refers to the predetermined sum that is paid after the COD i.e., during the operati