GST Applicable on Interest Payments on Equated Yearly Annual Model: AAR

The applicant is a company, M/S. Shenwa Infrastructure Private Limited is registered with an address, 303, Third Floor, Lotus B Wing, Near Maharashtra Electricity Board, Shahapur, Thane, Maharashtra, 421601. The company was created specially for the purpose of carrying out a road construction project. This project was given to it by the Public Works Department (PWD), Government of Maharashtra, under a special kind of contract called the Hybrid Annuity Model (HAM). The company was required to build and improve two specific roads in Maharashtra: From Shenva to Dehari (on Major District Road 64) — about 32.4 km, and From Titwala to Eranjad (on Major District Road 49) — about 32.5 km. The total cost to build the roads is called the Bid Project Cost (BPC). The payment was required to be paid in two parts:

1. During Construction (60% of the payment):
PWD was required to pay 60% of the total payment in 5 stages, based on the physical progress of the work:

• 10% work done: 1st payment
• 30% work done: 2nd payment
• 50% work done: 3rd payment
• 75% work done: 4th payment
• 90% work done: 5th payment

2. After Completion (40% of the payment):

• Once construction is fully complete and the roads are open for use (called Commercial Operation Date or COD), the company will receive the remaining 40% of the project payment along with interest, spread out over 19 equal payments every six months for 10 years.