The Government of Maharashtra on July 05, 2024, issued clarification on the time of supply in respect of the supply of services of construction of road and maintenance thereof of National Highway Projects of National Highways Authority of India (NHAI) in Hybrid Annuity Mode (HAM) model.
The following has been stated namely: -
• Under the Hybrid Annuity Model (HAM) of concession agreements, the highway development projects are under the Design, Build, Operate, and Transfer model (DBOT), wherein the concessionaire is required to undertake new construction of the Highway, as well as the Operation and Maintenance (O&M) of Highways. The payment terms for the construction portion as well as the O&M portion of the contract are provided in the agreement between the National Highways Authority of India(NHAI) and the concessionaire.
• It is clarified that the tax liability on the concessionaire under the HAM contract, including on the construction portion, would arise at the time of issuance of the invoice, or receipt of payments, whichever is earlier, if the invoice is issued on or before the specified date or the date of completion of the event specified in the contract, as applicable. If invoices are not issued on or before the specified date or the date of completion of the event specified in the contract, tax liability would arise on the date of provision of the said service (i.e. The due date of payment as per the contract), or the date of receipt of the payment, whichever is earlier.
• It is also clarified that as the installments/annuity payable by NHAI to the concessionaire also includes some interest component, the amount of such interest shall also be includible in the taxable value for payment of tax on the said annuity/installments given the provisions of section 15(2)(d) of the CGST Act.
The detailed circular is given in the attached document.
[Trade Circular no. - 16T of 2024]
