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In the instant case, respondent no.1 has issued the notifications under Section 11 of the CGST Act exempting the consideration received by concessionaires from highway authorities as annuity from GST. The clarification issued by circular no. 150/06/2021 is contrary to the said notification accordingly set aside.

GST on Annuity (deferred Payment) — Circular No. 150/06/2021-GST dated 17.06.2021 - The Petitioners are concessionaires who have been entrusted with construction of road by Karnataka Road Development Corporation Limited. The petitioners are paid certain amounts termed as ‘annuity’. In certain contracts where construction and maintenance of the roads has been out sourced to private persons consideration is paid by permitting the concessionaires/contractors to collect tolls from the vehicles plying on the road. 100% exemption under GST was granted towards collection of toll charges by way of notification No.12/2017 dated 28.06.2017. Subsequently, it was proposed that annuity, paid as a consideration to the concessionaires instead of permitting them to collect toll charges be also exempted from GST. The matter was discussed in 22nd GST Council meeting held on 06.10.2017. Two notifications no.32/2017 and notification no.33/2017 were issued on 13.10.2017 and the service by way of access to a road or a bridge on payment of annuity was also exempted. Further, a Circular bearing No.150/06/2021-GST dated 17.06.2021 was issued. The petitioners contended that the annuity (deferred payments) paid for construction of roads is exempt from GST and the clarification issued by the GST Council and the subsequent Circular dated 17.06.2021 is contrary to the exemption notifications and are liable to be set aside. The court observed that the GST Council has clarified that the annuity paid as deferred payment for construction of roads/highways was not exempted from GST and accordingly, the impugned Circular dated 17.06.2021 was issued. A Circular which clarifies the notification cannot have the effect of overruling the notification. The deliberation of GST Council in its meeting held on 06.10.2017 and the notifications issued pursuant thereto clearly exempts the entire annuity being paid to the petitioners towards construction and maintenance of roads. It cannot be construed to have not exempted the annuity (deferred payments). The impugned circular has the effect of overriding the notifications and has to be held as bad in law. The clarification issued is contrary to the said notifications.

Held that:- The Hon’ble High Court set aside the impugned Circular dated 17.06.2021. Consequently, all actions pursuant to the said Circular are set aside.

In the instant case, respondent no.1 has issued the notifications under Section 11 of the CGST Act exempting the consideration received by concessionaires from highway authorities as annuity from GST. The clarification issued by circular no. 150/06/2021 is contrary to the said notification accordingly set aside.

Held that:- The Hon’ble High Court set aside the impugned Circular dated 17.06.2021. Consequently, all actions pursuant to the said Circular are set aside.