Apco Arasavalli Expressway Private Limited Vs Assistant Commissioner St and Others (Andhra Pradesh High Court)
The Honourable Andhra Pradesh High Court, in the recent case of Apco Arasavalli Expressway (P.) Ltd. vs. Assistant Commissioner, State Tax has addressed a significant issue regarding the time of supply for discharging GST liability in relation to annuity payments under the Hybrid Annuity Model (HAM). The case discussed that when GST should be levied on payments received by contractors involved in the construction and maintenance of National Highways.
The tax authorities argued that GST should be paid on the entire annuity amount upfront, starting from the concession period, regardless of when payments are actually received or invoices raised. The petitioner, however, contended that GST liability should align with Section 13 of the CGST Act, 2017, which states that the liability arises only when payments are actually received or invoices are raised, whichever is earlier.
The Hon’ble High Court relied on Circular No. 221/15/2024-GST, dated 26th June 2024, issued by the Central Board of Indirect Taxes and Customs (CBIC). This circular has clarified that GST on annuities is payable at the time of issue of invoice or receipt of payments, whichever is earlier. This circular further explained that contracts like these fall under the definition of ‘Continuous supply of services’ as per Section 2(33) of the CGST Act. According to Section 13(2) of the CGST Act, read in conjunction with Section 31(5) of the CGST Act, and the time of supply is determined by the date of invoice issuance or receipt of payment—whichever is first— in cases where the invoice is issued within the specified period or upon event completion, as stipulated in the contract. If the invoice is not issued within the specified timeframe, the time of supply defaults to the date of service provision or payment receipt.
