1.

Potential iissue iin iintroduction iof ithe ie-way ibills: iThe igovernment ihad ipostponed ithe
iimplementation iof ithe ie-way ibill isystem i(to iOctober) iwhereby ievery itransport iof igoods

irequired ithe icreation iof ian ielectronic iway ibill ifrom ithe iGSTN igiving idetails iof ithe iparties ito

ithe itransaction iand iof ithe igoods ibeing itransported. iIt iis ilikely ithat ithis iwill iadd ito ithe iburden

iof ithe ibusinesses ias iwell ias itransporters. iTransporters ihave ibeen ireporting ireduced itime ion

ithe iroad ibecause iof ithe iintroduction iof ithe iGST iwhich imay iget iundermined iby ithe ie-way ibill

irequirement. i i

2. Issues irelated ito itransitional icredits ifor igoods ilying iin istock ion iappointed idate:i
Under itransitional iprovisions ienacted, ithe icredit iof igoods ilying iin istock, iwhether iin ithe iform
i

iof istock iin itrade ior iin ithe iform iof iwork iin iprogress, ias ion ithe iappointed idate iis iavailable ionly
ifor ithose istocks iwhich iare inot iolder ithan ione iyear. iConstruction icompanies itend ito

iaccumulate istock iand ikeep ithe isame iover iseveral iyears. iThus, ireversing iinput itax ipertaining

ito istock iolder ithan itwelve imonths ipreceding ithe iappointed idate iof iGST iwould ibe i i i i i i i i

iextremely idifficult. iThe itransition iprovisions ias ienacted iby ithe iGST ilaws ido inot iconsider ithe

ilong igestation iperiod iof ithe iroadways iand ihighways i i i i i i iconstruction iprojects iand ithus,

irepresentations ihave ibeen imade ito ithe iGST iCouncil ifor ipreparation iof itransition irules

ispecific ito ibuilders iand i i i i i i i i i i i i icontractors. iFurther, imixing iof imaterials iis ivery icommon iand

iat itimes iit iis idifficult ito ispecifically iidentify iwhich iraw imaterial iwas iused ifor iwhich iproject.

iThere ihas ibeen ino i iprogress ion ithese iaspects itill idate ibased ion ithe iinformation iavailable iin

ithe ipublic idomain iand ithus, iit iis iexpected ithat ithere iwould ibe imuch ilitigation iarising iout iof

itransitional icredits irelatable ito istocks ion iappointed idate. i i i i

ii3. iAccumulation iof iInput iTax iCredit iin ithe icase iof iSpecial iPurpose iVehicles i(SPVs) i i iWe ihave

ialready idiscussed iin ithe iprevious ipart iof ithis iwhitepaper, ithe itypical istructure iof iroad iconstruction

iprojects iand ithe icreation iof iSPVs. iSPVs iwhich itypically irender inil irated ior iexempted isupplies iwill,

iunder ithe iGST iregime ihave ian iaccumulation iof iITC ibecause ithere iis ino imechanism iunder ithe iGST

ilaw ito iprovide irefund iof iaccumulated iinput itax icredit ito icompanies ihaving inil irated ioutward

isupplies. iRefund iof ithe iaccumulated iITC ican ibe iclaimed ionly iin ithe ifollowing itwo icases; i iWhere ithe

isupplier ieffects izero-rated isupplies iwithout ipayment iof itax. i iWhere ithe icredit ihas iaccumulated ion

iaccount iof ithe irate iof itax ion iinputs ibeing ihigher ithan ithe irate iof itax ion ioutput isupplies i(i.e. iInverted

iDuty iStructure) iBoth ithe irefund imechanisms iare inot iavailable ito ithe iroad iand ihighway iconstruction

icompanies ias isuch ientities ihave ia ibusiness ithat iis ilargely idomestic iand iinbound. iThe iprovisions

irelated ito irefund iarising iout iof ian iinverted iduty istructure icannot ibe iinvoked iin ithose isituations

iwhere ithe ioutward isupplies iare inil irated. iThus, iinput itax icredit iaccumulating iin ithe ibooks iof

iaccounts iof ithe iSPVs ishall ibe ia icost iand iadd ito ithe icost iof iconstruction iof iprojects. i

i4. iIssues ifaced iby iindustry iin irelation ito irefunds iunder ithe iinverted iduty istructure i i iIn
iInfrastructure isector, iconstruction iof iroads i& ihighways iis icharged iat ithe irate iof i12% iwhile iinput itax

icredit iis iusually iworks icontract iservice itaken ifrom icontractors, iwhich iis iliable ito ibe itaxed iat ithe irate

iof i18%. iThis icreates ian iinverted iduty istructure iand imay icreate iblockage iof iworking icapital iif ithere

iare irestrictions iand idelays iin iobtaining ithe iGST irefunds. i i

It ineeds ito ibe ihighlighted ithat ithere iis ino irefund iof iany iinput itax icredit iarising iin irelation ito icapital
igoods ias iwell ias iinput iservices i(due ito irecent iamendments imade ito irule i89(5) iof ithe iCGST iRules,

i2017) ias ithe isame idoes inot ifall iwithin ithe idefinition iof i‘net iinput itax icredit’ ifor ipurpose iof i i i i i i i i

icomputation iof irefund iarising iout iof iinverted iduty istructure. i

iThus, irefund iunder iinverted iduty istructure iis iavailable ionly ito ithe i‘net iinput itax icredit’ iwhich iis
iattributable ito iinputs. iSuch inet iinput itax icredit ishall inot iinclude iany iineligible icredits iand imay

ifurther ibe isubject ito ifurther ireversal ion iaccount iof iproportionate ireversal ito ibe idone iin irespect iof

iexempted i i i i i i i i iincome. iAs ia iresult, ithe irefund iamount iavailable imay inot ibe isubstantial iand ia ilarge

ipart iof ithe iinput itax icredit imay iget iblocked iin iindustries ihaving ian iinverted iduty istructure, isuch ias

iroad iconstruction. i

5. iIssues iin irespect iof iplace iof isupply i iGiven ithat iroadway iand ihighway iprojects iare itypically isite-
based iservices, ianalysing ithe iplace iof isupply iaspects ibecomes ieven imore iimportant ifor isuch
iservices. iThere iare ispecific irules ienacted iin ithe iIGST iAct, i2017 ifor ithe iplace iof isupply iin irespect iof

iservices irelated ito iconstruction. iIn icase iof iconstruction iof iroads ior ibridges, ithe iplace iof isupply ishall

ibe ithe ilocation iwhere ithe iroads ior ibridges iare iconstructed ior iare iintended ito ibe iconstructed. iPlace

iof iSupply iof iservices idirectly iin irelation ito ian iimmovable iproperty, iinter ialia, iany iservices iprovided

iby iway iof igrant iof irights ito iuse iimmovable iproperty ior ifor icarrying iout ior icoordination iof

iconstruction iwork ishall ibe ithe ilocation iat iwhich ithe iimmovable iproperty iis ilocated ior iintended ito ibe

ilocated i[Section i12(3) iof ithe iIGST iAct, i2017]. iPlace iof isupply irelated iaspects ifor iinterstate iprojects

iwhere iactivities iare icarried iout iin imore ithan ione istate iwould irequire ia icareful iand idetailed ianalysis

iand imay irequire itaxpayers ito iobtain imultiple iregistrations ifor ithe isame iprojects. i

6. Invoicing i iConstruction icontracts itypically ihave ia ilong igestation iperiod, iand ias ia iresult,
iconstruction iof iroads, ibridges iand, ihighways imay ibe iregarded ias ia i i i i i i icontinuous isupply iof

iservice. iInvoicing ifor isuch icontinuous isupplies ineeds ito ibe idone ias iper ithe iprovisions iof isection

i31(5) iof ithe iCGST iAct, i2017. iThe itime iof isupply iin isuch icases idepend ion ithe iclauses ienacted iin ithe

icontract iwith irespect ito ithe idue idate iof ipayment. iThe ifollowing itable ishall i i i i i i i i i i idetermine iwhen ithe

iinvoicing iis ito ibe idone. i i i

iFurther, ias iper isection i31(6) iof ithe iCGST iAct, i2017, iin icase iwhere ithe isupply iof iservices iceases iunder
ia icontract ibefore ithe icompletion iof ithe isupply, ithe iinvoice ishall ibe iissued iat ithe itime iwhen ithe

isupply iceases iand isuch iinvoice ishall ibe iissued ito ithe iextent iof ithe isupply imade ibefore isuch

icessation. i i

7. Bribes Due to GST what happens is the truck drivers on the roads are asked to halt for routine
checking by the officials, and these officials use this as an opportunity the take bribes from the
drivers and if the driver refuses the officials will intentionally stall the driver so that he gets late. If
any driver does not stop when asked then the officials will chase the driver down and put a big
penalty which is deducted from the salary of the driver.