The Supreme Court on Tuesday issued notice in a plea filed by CG Tollway Limited challenging a High Court judgment in a GST dispute concerning highway construction and toll operations. The petitioner alleged that tax authorities were effectively seeking to levy GST twice on the same transaction despite tax already having been paid by subcontractors engaged in the project.
The matter arose from conflicting views taken by the Karnataka and Telangana High Courts on the GST treatment of transactions under the Build-Operate-Transfer (BOT) model. Appearing for the petitioner, counsel argued that while one High Court had ruled in favour of the assessee, another had taken a contrary view, leading to uncertainty. Counsel submitted that the entire road construction activity had already suffered GST at the hands of subcontractors and the authorities were now seeking to raise a fresh demand against the principal contractor.
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“The entire road has suffered tax. Full tax has been paid. Why are they again demanding tax on the same amount from me?”
The Bench of Justice BV Nagarathna and Justice Joymalya Bagchi sought to understand the nature of the transaction and observed that toll collection itself was exempt from GST. When counsel clarified that the dispute did not concern toll collection but related to tax demands on road construction works already subjected to GST, the Court engaged with the issue.
Counsel further relied on an earlier Supreme Court ruling involving Larsen & Toubro, contending that a bridge or road could not be taxed twice merely because multiple entities were involved in its execution.
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“A bridge is constructed only once. Full tax has already been paid. There cannot be tax again.”
The Court noted the petitioner’s contention that the impugned judgment had followed the Telangana High Court view despite the existence of conflicting precedents and despite earlier orders passed by the Supreme Court. During the hearing, counsel also expressed apprehension that tax authorities could attach toll collection accounts, thereby affecting operation of national highway projects.
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“What they do is, they go and attach my toll account. I am not able to run the road.”
Counsel pointed out that the High Court had earlier granted protection subject to deposit of 10% of the disputed amount. Finding that the matter required consideration, the Supreme Court issued notice and permitted service on the Union of India and other respondents. The Court also extended interim protection, noting the petitioner’s concerns regarding coercive recovery measures, and directed that the matter be listed at the end of July or in the first week of August.