The High Court of Meghalaya refused to entertain a writ petition filed by Jorabat Shillong Expressway Limited challenging a GST demand of over Rs 112.39 crore, holding that disputes involving the classification of services and taxability must ordinarily be pursued through the statutory appellate mechanism provided under the CGST Act. A Division Bench comprising Justice H.S. Thangkhiew and Justice B. Bhattacharjee dismissed the writ petition while granting liberty to the assessee to file an appeal under Section 107 of the CGST Act.

The petitioner was incorporated to execute the Jorabat-Shillong highway project under the Built-Operate-Transfer (BOT) Annuity model. Under the concession arrangement, the National Highways Authority of India (NHAI) retained toll collection rights, while the petitioner received periodic annuity payments for constructing, financing, operating and maintaining the highway project.

The controversy arose after the Directorate General of Goods and Services Tax Intelligence (DGGI) issued a show cause notice under Section 74 of the CGST Act, alleging that the annuity receipts were taxable as works contract services under SAC 9954. The department subsequently passed an Order-in-Original confirming a GST demand of Rs 112.39 crore. The petitioner, however, contended that the annuity payments were exempt under Entry 23A as services by way of access to a road or bridge falling under SAC 9967.

Before the High Court, the petitioner not only challenged the tax demand but also questioned the jurisdiction of the officers who issued the show cause notice and adjudicated the proceedings, contending that they were not “Proper Officers” under the CGST framework. “The core controversy revolves around classification of services, characterization of annuity receipts and determination of principal supply in a composite contract.”

The High Court rejected the jurisdictional challenge and held that the Additional Director of DGGI was duly empowered to issue the show cause notice pursuant to Notification No. 14/2017-Central Tax. It further held that the Additional Commissioner of CGST was competent to adjudicate the proceedings under the relevant statutory notifications vesting such powers.

On the issue of maintainability, the Court observed that the dispute involved a detailed examination of contractual terms, classification of services, taxability of annuity receipts and factual determinations arising from the concession agreement. Such issues, the Court noted, are not pure questions of law warranting direct interference under Article 226 of the Constitution.

The Bench further clarified that the appellate authority under Section 107 is competent to independently examine all legal and factual issues and is not bound by departmental circulars while deciding the appeal on merits. “Finding no violation of natural justice or inherent lack of jurisdiction, the Court declined to invoke its extraordinary writ jurisdiction.”

Holding that an effective alternate remedy was available under the CGST Act, the High Court dismissed the writ petition and granted the petitioner four weeks’ time to approach the appellate authority for appropriate relief.