Quick Summary
When Infrastructure Meets Tax Law Large infrastructure projects are widely regarded as visible symbols of economic progress, improved connectivity, and urban transformation. Metro corridors, highways, and redevelopment initiatives often reshape a city's commercial and social landscape in a positive
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FAQ :
The main issue is whether compensation paid to occupants temporarily displaced due to infrastructure projects, purely to offset loss and inconvenience, constitutes a taxable supply under the GST regime.
For a transaction to be a taxable supply under Section 7(1)(a) of the CGST Act, 2017, there must be a supply of goods or services, it must be made for a consideration, and it must be undertaken in the course or furtherance of business.
No, the occupants vacated their premises due to safety concerns, not as part of a commercial arrangement or to provide a service. Their conduct lacked the essential characteristics of a supply under GST law.
No, the compensation paid is considered remedial and compensatory, intended to mitigate hardship. It lacks the direct, identifiable nexus and quid pro quo required for 'consideration' under GST law.
No, vacating premises solely due to safety concerns arising from external construction activity is a precautionary response and does not bear a meaningful connection to the conduct or promotion of the occupants' business activities.
Judicial forums have repeatedly distinguished between compensation and consideration, stating that compensation arises from frustration or extinction of a contract or to remedy loss, and cannot be equated with consideration which flows from a contract.
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