Clarification In Relation To Acceptance Of Goods And Services Tax Audit Report And Payment Of Goods And Services Tax Under Change In Law To The Contractors And Concessionaires

NHAI, in its policy circular dated May 27, 2024, issued the following clarifications in relation to payment of Goods and Services Tax ("GST") to the concessionaires/contractors:

1. GST audit report and payment of GST under the change in law provision (blue?)
   
   In view of the change in law provision of the concession agreement/NHAI contract, concessionaires/contractors are required to discharge the liability of GST since the introduction of GST Act, 2017. Accordingly, the aforesaid policy circular sets out the following requirements in relation to GST compliance:
   1. Timeline for GST audit: The GST audit must be completed within the timeline specified in the policy circular. The concessionaires/contractors must submit the relevant information and documents to the GST auditor to complete the GST audit.
   2. Methodology: NHAI outlined the following steps to streamline the acceptance of GST audit report and payment of GST to the concessionaires/contractors:
      • after completion of the GST audit report (interim/final), the GST audit report is forwarded to the concessionaire/contractor for acceptance;
      • concessionaire/contractor will submit acceptance within 7 (seven) days;
      • upon receipt of acceptance from the concessionaire/contractor, an 'in-principle approval' is obtained by the GST Cell within 3 (three) working days from the competent authority;
      • upon receipt of the 'in-principle approval', a letter is issued by the GST Cell immediately to the Project Implementation Unit ("PIU") along with the GST audit report;
      • PIU will seek approval from the Regional Office ("RO") (if any) and release ad-hoc payment of 90% as per the concession agreement/contract upon receipt of the auditor's report, within 3 (three) working days;
      • after making the ad-hoc payment, observations on the GST audit report by the Project Director ("PD")/Authority Engineer ("AE")/Independent Engineer ("IE"), if any, is forwarded to the GST Cell within 15 (fifteen) days of issuance of the 'in-principal approval'. If no observations are provided, the GST audit report is deemed to be accepted by NHAI authorities and the balance 10% is released by PIU; and
      • upon completion of the project, a final audit report is sent to the GST Cell immediately by the PD.
2. Clarification regarding monthly payment of GST to consultants/contractors/service providers/other vendors
   
   NHAI asked the authorities to implement its earlier policy circulars dated November 14, 2017, and September 22, 2020, wherein NHAI had instructed the release of GST amount claimed by the concessionaires/contractors along with their running bills after obtaining proof of deposit of GST. This clarification is issued as several PIUs had not adhered to the said procedure for payment of GST amount.

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