The Rs 112 Crore Question the Court Deliberately Left Open
The judgment in M/s Jorabat Shillong Expressway Limited v. Union of India and 6 Others, 2026-VIL-544-MEG, dated 02.06.2026, arose from a large highway project and an equally large GST demand. NHAI awarded the four-laning of approximately 61.98 kilometres of the Jorabat-Shillong section of National Highway No.40 under the Build-Operate-Transfer(BOT) Annuity model. The petitioner entered into a Concession Agreement in 2010 to finance, construct, operate and maintain the highway for 20 years.
Unlike a toll model, the petitioner did not recover its investment by collecting tolls from road users. NHAI retained that right and paid half-yearly annuities after commercial operation began. The Department later treated those receipts as consideration for taxable construction or works-contract services under SAC 9954. An order dated 18.04.2024 demanded GST of Rs. 112,39,64,394, with interest and penalty, on annuity receipts of Rs. 864,12,69,958 for July 2017 to December 2022.
The petitioner claimed that it supplied an integrated service of developing, operating, and providing access to a road, classifiable under SAC 9967 and exempt under Entry 23A of Notification No. 12/2017-Central Tax (Rate). It also challenged Circular No. 150/06/2021-GST, the competence of the officers, the invocation of Section 74, and the taxation of payments arising from a pre-GST agreement.
BOT Annuity Sits at the Crossroads of Construction and Road Access
The petitioner stressed that a BOT annuity concession is not an ordinary engineering, procurement and construction contract. The concessionaire finances the project, bears risks, operates and maintains the road, pays a concession fee and ultimately transfers the project through a divestiture arrangement. An annuity is the deferred mechanism through which NHAI compensates for those obligations.
The Revenue saw the arrangement differently. It argued that construction was the principal supply and that operation, maintenance and repair were naturally bundled around it. Under Section 8 read with the definition of works contract in Section 2(119), the entire composite supply would take the tax character of its principal supply. Entry 23A, according to the Revenue, exempted only service by way of access to a road or bridge on payment of an annuity and did not exempt deferred consideration for construction.
Entry 23A Meets Composite Supply: The Real Tax Fault Line
Entry 23 of the exemption notification already protects service by way of access to a road or bridge on payment of a toll. Entry 23A was later inserted to cover access on payment of an annuity. The petitioner argued that toll and annuity were simply two methods of recovering the cost of providing the same road-access service. However, Circular No. 150 drew a line between annuity paid for access and annuity paid for construction. The petitioner invoked Section 11(3) of the CGST Act to contend that a circular could clarify an exemption but could not reduce the scope of the notification itself. This statutory tension formed the heart of the merits dispute.
Resolving these positions required close reading of the Concession Agreement, identification of the principal supply, examination of who provided road access, and interpretation of the exemption. The Court considered these mixed questions of fact and law more suitable for the appellate authority than for first-instance writ adjudication.
DPJ Bidar Keeps the Annuity-Exemption Argument Alive
The petitioner placed significant reliance on M/s DPJ Bidar-Chincholi (Annuity) Road Project Private Limited v. Union of India, (2024) 122 GSTR 48 = 2022-VIL-500-KAR. The Karnataka High Court held that the annuity under the BOT model was exempt and invalidated Circular No. 150/06/2021-GST insofar as it restricted the exemption. The underlying principle was that the annuity constituted the consideration for the integrated concession and could not be artificially split into taxable construction and exempt access components.
The Meghalaya High Court did not hold DPJ Bidar incorrect. It noted that proceedings arising from that ruling were pending and that the broader legal position had not attained finality. More importantly, the Court regarded the petitioner’s own contractual and classification dispute as requiring appellate examination. Accordingly, its judgment leaves the Entry 23A question open; it is not a final declaration that every BOT annuity is taxable.
Traceable Statutory Power Defeats a Technical Jurisdiction Challenge
The petitioner argued that the Additional Director, DGGI, lacked authority to issue the notice and that the Additional Commissioner lacked authority to adjudicate it. The Court examined Sections 2(91), 3, and 5 of the CGST Act, along with Notifications Nos. 14/2017-Central Tax, 2/2017--Central Tax and 2/2022--Central Tax,which provide that DGGI officers are appointed as central tax officers with specific powers. Additionally, the designated Additional Commissioners are authorised to make decisions regarding notices issued by DGGI.
In R.C. Infra Digital Solution v. Union of India,Writ Tax No.229 of 2023 = 2024-VIL-16-ALH, the case supported a unified interpretation of Notification No.14/2017--Central Tax and Circular No.3/3/2017-GST. Additionally, Union of India v. Azadi Bachao Andolan, (2004) 10 SCC 1, established that an exercise of power remains valid even if its exact statutory source is omitted or incorrectly mentioned, as long as the source can still be traced.
In Union of India v. Paras Laminates (P) Ltd., (1990) 4 SCC 453 = 1990-VIL-03-SC-CU, it was clarified that a grant of jurisdiction inherently includes ancillary powers necessary for its implementation. Similarly, Union of India v. Gurbux Singh, (1975) 3 SCC 638, was referenced regarding the implied powers doctrine. These rulings led the Court to dismiss the argument that notifications provided only territorial authority, without the necessary authority over the subject matter.
Alternate Remedy Determines the Forum, Not the Importance of the Issue
The petitioner cited Whirlpool Corporation v. Registrar of Trade Marks, (1998) 8 SCC 1 = 1998-VIL-09-SC, which states that alternative remedies do not bar writ petitions when fundamental rights are involved, natural justice is breached, proceedings lack jurisdiction, or vires are contested. The Meghalaya High Court acknowledged these exceptions but concluded that none of them applied in this case.
Godrej Sara Lee Ltd. v. Excise and Taxation Officer-cum-Assessing Authority, 2023 SCC OnLine SC 95 = 2023-VIL-10-SC, clarifies that a writ petition's validity is separate from the court's discretion on whether to entertain it. In support, citations include Onkar Nand Lal v. State of Rajasthan, (1985) 4 SCC 404; Filter Co. v. Commissioner of Sales Tax, AIR 1986 SC 626 = 1986-VIL-04-SC; and Vistar Construction (P) Ltd. v. Union of India, 2013 SCC OnLine Del 308 = 2013-VIL-119-DEL-ST, highlighting intervention when pursuing other remedies is futile or the dispute involves pure legal or jurisdictional issues. The High Court observed that the current case involves extensive factual and contractual complexities.
The distinction is important. A writ petition may be legally maintainable because Article 226 is wide, yet the High Court may still decline to entertain it as a matter of judicial discipline. The question is not whether constitutional power exists, but whether it should be used before the specialised statutory authority has examined the record. Here, the adjudicating order followed detailed participation, while the proposed appeal could test classification, exemption, limitation, suppression and computation. The Court therefore saw no futility in requiring the petitioner to use that route.
Contractual Examination Cannot Be Replaced by Jurisdictional Labels
A jurisdictional fact is a basic fact or legal condition that must exist before an authority can exercise statutory power. If that foundational condition is absent, the authority lacks jurisdiction, and the entire proceeding may be invalid. However, where the authority validly possesses jurisdiction but may have made an error while interpreting the contract, classifying the service or applying an exemption, such an error is ordinarily corrected through the statutory appellate process.
In Calcutta Discount Co. v. Income Tax Officer , AIR 1961 SC 372 = 1960-VIL-33-SC-DT, the Supreme Court held that the statutory conditions required for reopening an assessment must actually exist. Merely stating that those conditions have been satisfied does not confer jurisdiction upon the officer. Where the notice itself reveals that the necessary legal foundation is absent, the High Court may intervene despite the availability of an appellate remedy.
The principle was further explained in Raza Textiles Ltd. v. Income Tax Officer , AIR 1973 SC 1362 = 1972-VIL-72-SC-DT. An authority cannot create jurisdiction for itself by wrongly deciding a foundational fact. Its own declaration that it possesses jurisdiction is not conclusive and may be examined by a constitutional court. Carona Ltd. v. Parvathy Swaminathan & Sons (2007) 8 SCC 559 and Union of India v. State of Haryana (2000) 10 SCC 482 were cited in support of the same principle that the required jurisdictional foundation must exist before statutory power can lawfully be exercised.
In Aircel Ltd. v. Commissioner of Tax , W.P.(C) No.1055 of 2013 = 2016-VIL-56-SC, the Supreme Court recognised that where the material facts are undisputed and only a pure question of law remains, the High Court should not always decline examination merely because an alternative remedy is available. In such a case, sending the parties through a lengthy factual adjudication may serve little practical purpose.
Syed Yakoob v. K.S. Radhakrishnan , AIR 1964 SC 477, explains the supervisory jurisdiction of the High Court. A writ of certiorari may correct an authority that acts without jurisdiction, exceeds its jurisdiction, violates natural justice or commits an evident error of law. However, such jurisdiction is not intended to function as an ordinary appeal involving reassessment of facts or substitution of the High Court’s view for that of the statutory authority.
Applying these principles, the Meghalaya High Court found that the DGGI officer and the Additional Commissioner had received their powers through valid statutory notifications. There was therefore no foundational absence of jurisdiction. The remaining controversy required interpretation of the Concession Agreement, identification of the principal supply, classification under SAC 9954 or SAC 9967, examination of the composite-supply provisions and application of Entry 23A. These were substantive assessment questions requiring contractual and factual examination. They could not be converted into jurisdictional defects merely by describing them as such and were therefore left for determination in the statutory appeal.
An Adverse Order Does Not Prove Predetermination
Canon India Private Limited v. State of Tamil Nadu, 2014 (305) ELT 255 (Mad.) = 2013-VIL-53-MAD, and Siemens Ltd. v. State of Maharashtra, (2006) 12 SCC 33 = 2006-VIL-33-SC, recognise writ intervention where a notice or policy reveals a closed mind. The Revenue distinguished Tata Engineering and Locomotive Co. Ltd. v. Commissioner of Central Excise, Pune, 2006 (203) E.L.T. 360 (S.C.), decided on 12.09.2006. and Flipkart Internet Pvt. Ltd. v. State of Kerala, W.P.(C) Nos.5348 and 6916 of 2015, decided on 20.10.2015 (Kerala High Court). Since the petitioner received additional time, filed detailed replies and attended a hearing, the High Court found no predetermination. Any error in considering its submissions was left for appeal
Section 74 Allegations Left for Appeal
Relying on NCS Pearson Inc. v. Union of India , 2025-VIL-969-KAR, the petitioner argued that Section 74 requires fraud, wilful misstatement or suppression intended to evade tax. The High Court did not decide whether these conditions existed and left the issue for examination in appeal.
A CBIC Circular May Guide Officers, but It Does Not Become the Statute
The petitioner contended that Circular No. 150/06/2021-GST rendered appeals ineffective because GST officers would rely on it under Section 168. However, the Court dismissed the argument that the presence of a circular alone eliminates the statutory right to appeal.
In Bela Singh Daulat Singh v. Commissioner of Income Tax (1966) 62 ITR 250, the court clarified that a Board circular does not become law just because departmental officers must follow it; courts and tribunals are not obliged to treat it as binding law. Similarly, in Indo-Gulf Fertilizers and Chemicals Corporation Ltd. v. Union of India, 1992 SCC OnLine All 1067, it was ruled that while Board directions may influence departmental officials, they do not have the power to bind courts if such directions extend beyond the scope of the statute. Consequently, the appellate process can review the order in relation to the Act, relevant notifications, and applicable law.
Constitutional Drafting Cannot Transform an Assessment Dispute
Merely describing a dispute as a constitutional challenge does not automatically permit a taxpayer to bypass the statutory appeal. The High Court must examine the real substance of the controversy rather than the language used in the petition. If the dispute essentially concerns the correctness of an assessment, the classification of a service, the interpretation of an exemption, or the calculation of tax, it should ordinarily be examined by the appellate authority established under the GST law.
In the present case, deciding the dispute required examination of whether the petitioner’s service fell under SAC 9954 or SAC 9967, whether Entry 23A exempted the annuity, what constituted the principal supply under the Concession Agreement, whether the requirements of Section 74 were satisfied and whether the demand had been calculated correctly. These were important legal and factual questions, but they were still matters arising from the assessment order and capable of being decided on appeal.
A High Court may intervene directly where an order is passed without jurisdiction, natural justice is violated, fundamental rights are affected, the validity of a statutory provision is genuinely in question, or the alternative remedy is clearly ineffective. However, simply alleging one of these grounds is insufficient. The petition must disclose facts showing that such an exceptional situation actually exists.
The Court found that the petitioner had received notice, submitted a detailed reply, participated in the personal hearing and obtained an adjudication order. The officers also possessed statutory jurisdiction under the relevant notifications. Therefore, there was no denial of natural justice, patent lack of jurisdiction or manifest injustice that required immediate interference under Article 226.
The GST law provides a complete appellate structure for correcting factual and legal errors committed during adjudication. The appellate authority can examine the Concession Agreement, classification, exemption, Section 74 allegations and computation of tax. The petitioner was therefore required to use that statutory remedy before seeking extraordinary constitutional review.
Appeal Will Decide What the Writ Court Left Open
The petitioner was granted four weeks to appeal under Section 107. The appellate authority must independently examine classification, Entry 23A, composite supply, Section 74 and computation of the demand without being influenced by the judgment. Thus, the proper forum was decided, but the taxability of BOT annuity remained open.
Forum Decided, Taxability Still Open
The taxability of BOT annuity remains unsettled. While DPJ Bidar supports the exemption, Circular No. 150 reflects the Revenue’s narrower view. Jorabat Shillong Expressway clarifies that such contractual and classification disputes must ordinarily be decided through the statutory appeal, where the Rs.112 crore demand will now be examined on the merits.
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