CG Tollway Ltd. v. Union of India

Analytical Video : https://youtu.be/2D8HuwkyqO4?si=v_-hcCSd1_LfbO33 

Introduction

The Rajasthan High Court in CG Tollway Ltd. v. Union of India delivered an important ruling on the GST implications of Build-Operate-Transfer (BOT) road projects. The dispute centered around whether a concessionaire constructing and maintaining a highway under a BOT (Toll) arrangement is liable to GST on works contract services provided to NHAI when the consideration received is not in the form of direct monetary payment but in the form of toll collection rights and other commercial benefits. The judgment clarifies the concepts of “supply”, “consideration”, applicability of exemption for toll services, and the tax treatment of BOT infrastructure projects under the GST regime.

Facts of the Case

The petitioner, CG Tollway Ltd., entered into a concession agreement with the National Highways Authority of India (NHAI) for the development of a national highway project under the BOT (Toll) model. Under the terms of the agreement, the petitioner was responsible for constructing, operating, and maintaining the highway for the concession period. Instead of receiving direct monetary payment from NHAI for undertaking these activities, the petitioner was granted valuable commercial rights, including the right to collect toll from road users, licence rights over project land, and various operational rights connected with the highway project. The concession agreement also required the petitioner to pay concession fees and premium amounts to NHAI in accordance with the contractual terms.