Decided 7 October 2026. The Lucknow State Bench of the GST Appellate Tribunal (GSTAT) has held that road restoration charges paid by a gas distribution company to the Public Works Department (PWD) for laying its pipeline are consideration for a taxable service, on which GST is payable by the recipient under the reverse charge mechanism (RCM). The refund of the RCM tax was therefore rightly rejected.
Case at a glance
| Case | Torrent Gas Limited v. Commissioner, CGST & Central Excise, Kanpur |
| Forum | GSTAT, State Bench Lucknow (Court I) |
| Appeal No. | APL/40/LCK/2026 |
| Date of order | 7 October 2026 |
| Amount | Refund of ₹7,264 (CGST ₹3,632 + SGST ₹3,632) |
| Key provisions | Section 54 CGST Act; Notification Nos. 12/2017, 13/2017 and 14/2017-Central Tax (Rate) |
| Result | Taxpayer's appeal dismissed |
Facts of the case
Torrent Gas supplies natural gas through a pipeline network in Uttar Pradesh. To lay the pipeline it obtained permission from the PWD, which was conditional on payment of road restoration charges. The company paid these charges in October 2020 and discharged GST of ₹7,264 on them under RCM in its GSTR-3B.
In February 2024 it filed a refund application (RFD-01) claiming that no GST was payable at all. The proper officer rejected the claim, and the Additional Commissioner (Appeals), Allahabad upheld the rejection in August 2025.
Issue before the Tribunal
Are road restoration charges paid to a government department for cutting and restoring a public road, at the request of a business, exempt from GST as a sovereign or local-authority function, or are they consideration for a service taxable under RCM?
What the Tribunal held
- The service was rendered to a specific business on a fee-for-service basis to enable its commercial pipeline, not a public welfare activity for citizens. The exemption for functions entrusted to panchayats and municipalities under Articles 243G and 243W does not extend to it.
- Serial No. 6, clause (d) of Notification No. 12/2017-Central Tax (Rate) specifically excludes services provided by the government or a local authority to a business entity from the general exemption.
- The words "in relation to" in the exemption entries cannot be stretched to defeat the express exclusion in the notification. Whether the work was original construction or restoration does not change the answer.
- Refunds allowed by proper officers to the same company's registrations in Rajasthan and Punjab are not binding precedents and do not operate as res judicata for the Lucknow Bench.
- There was no evidence that PWD had charged GST under forward charge, so the plea of double taxation failed. Under Notification No. 13/2017, the registered recipient must pay the tax under RCM.
- The absence of a DIN on the notice and order did not invalidate proceedings that were conducted entirely on the GST portal, where the taxpayer had fully participated and replied.
Practical takeaways for taxpayers
- Charges paid to PWD, NHAI, municipal bodies or development authorities for road cutting, right of way or restoration in the course of business will generally attract GST under RCM.
- A favourable refund order in one State is not authority in another State; prepare each claim on its own legal footing.
- A DIN objection is unlikely to succeed where the whole proceeding ran on the GST portal and you participated in it.
- Before filing a refund for RCM paid "by mistake", check whether the service falls under the business-entity exclusion in Notification No. 12/2017.
Frequently asked questions
Is GST payable on road restoration charges paid to PWD?
According to this GSTAT ruling, yes. Where the charges are paid by a business for its own commercial project, GST is payable by the business under the reverse charge mechanism.
Can a refund granted in another State be relied on?
The Tribunal held that a refund sanctioned by a proper officer in another State is not binding on it and does not create res judicata.
Facing a similar GST dispute?
GST Folio prepares replies to show cause notices, appeals before the Appellate Authority and GSTAT, refund claims and ITC reconciliations for businesses across India. Call or WhatsApp +91 80513 31315 or email gstfolio@zohomail.in.
This summary is based on the order of the GST Appellate Tribunal, State Bench Lucknow in Appeal No. APL/40/LCK/2026. It is general information, not legal advice; the outcome of any case depends on its own facts and the full text of the order.