CBIC issued Clarification on Time of Supply with respect to Road Construction and Maintenance Service by NHAI:

CBIC issued Clarification on Time of Supply with respect to Road Construction and Maintenance Service by NHAI The Central Board of Indirect Taxes and Customs (CBIC) has issued clarification regarding the time of supply in respect of the supply of services for road construction and maintenance of National Highway Projects in the Hybrid Annuity Mode (HAM) model, in which a portion of the Bid Project Cost is received during the construction period and the remainder is received through deferred payment (annuity) spread over years.

CBIC's Clarification on Services by NHAI

Tax liability on the concessionaire under the HAM contract, including on the construction portion, would arise: 1. At the time of issuance of invoices, 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. 2. 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 will arise on the date of provision of the said service (i.e. the due date of payment as specified in the contract) or the date of payment receipt, whichever occurs first. 3. Because the installments/annuities payable by NHAI to such concessionaire include some interest component, the amount of such interest must also be included in the taxable value for the purpose of paying tax on the annuity/installment.