Pipeline Permission Charges Paid to Goa PWD Attract GST Under RCM:

The Goa Appellate Authority for Advance Ruling has upheld the ruling that Indian Oil-Adani Gas Private Limited is liable to pay GST under Reverse Charge Mechanism (RCM) on permission charges, reinstatement charges, road cutting charges, and ground rent charges levied by the Goa PWD for laying gas pipelines.

The appellate authority rejected the company’s argument that such charges were part of sovereign or statutory functions of the State and therefore outside the scope of GST. It held that the issue before the Authority was limited to whether GST was payable under Serial No. 5 of Notification No. 13/2017-CT(Rate), and since the service provider was the State Government/PWD and the recipient was a business entity, GST under RCM was applicable.

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The authority observed that Goa PWD qualifies as a State Government/local authority and the appellant is admittedly a business entity. Therefore, GST liability under RCM squarely applies.

The AAAR also dismissed the contention that the original advance ruling was invalid for being issued beyond the 90-day period prescribed under Section 98(6) of the CGST Act, observing that the provision is directory and not mandatory because no consequence for delay is prescribed in the statute.

Further, the appellate authority refused to decide the larger issue of taxability of the services per se, as the issue of taxability of the services was not raised before the Advance Ruling Authority at the initial stage. Thus, the appeal was dismissed and the advance ruling dated 30.01.2025 was upheld.