Oriental InfraTrust says Rs 403.241 crore GST claim won't devolve

Oriental InfraTrust disclosed that Oriental Nagpur Betul Highway Limited received a Rs 403.241 crore goods and services tax demand, including penalty, on National Highways Authority of India annuity income for financial years 2019-20 to 2022-23. Management said it expects no liability to devolve on Oriental InfraTrust because of its GST position and recovery rights under the concession agreement.

Why did Oriental InfraTrust's subsidiary receive a GST demand?

Oriental Nagpur Betul Highway Limited, or ONBHL, received an order confirming a Rs 403.241 crore GST demand, including penalty, on annuity income received from the National Highways Authority of India, or NHAI. The demand concerns income under the Design-Build-Finance-Operate-Transfer, or DBFOT, model across financial years 2019-20, 2020-21, 2021-22 and 2022-23.

The disclosure does not give a split between GST and penalty within the Rs 403.241 crore order. It also does not state the order date, whether ONBHL has filed an appeal, whether any payment or deposit has been made, or whether a stay has been obtained. Oriental InfraTrust reported the matter separately from its contingent-liability table as at 30 September 2026.

ONBHL was listed as a subsidiary of Oriental InfraTrust in the unaudited results for the quarter and half year ended 30 September 2026. The filing identifies NHAI annuity income as the subject of the order, rather than toll income or a separate project activity, and specifies the DBFOT contractual model.

Will the Rs 403.241 crore claim become an Oriental InfraTrust liability?

Management said it does not expect the Rs 403.241 crore claim to devolve on Oriental InfraTrust. Its stated position is that annuity received by ONBHL up to 31 December 2022 is not liable to GST, based on management's assessment and an independent legal opinion obtained from a legal expert.

Management also said that, if a liability crystallises, it would be recoverable from NHAI under the concession agreement. This is management's disclosed assessment, not a reported final adjudication in ONBHL's favour. The filing does not quantify the annuity income received before 31 December 2022 or identify the portion, if any, received after that date.

The GST demand is far larger than ONBHL's reported cash and cash equivalents of Rs 401.649 crore at 30 September 2026. That cash balance rose from Rs 371.276 crore at 31 March 2026, but the financial results do not describe it as a provision, payment, deposit or reserve against the GST order.

How does the GST order compare with reported contingent liabilities?

The Rs 403.241 crore GST order was disclosed in addition to the Rs 20.2826 crore of contingent liabilities reported in Oriental InfraTrust's formal table at 30 September 2026. The table total fell by Rs 0.0430 crore from Rs 20.3256 crore at 31 March 2026, while the separate ONBHL order means the table does not capture all disclosed tax-related matters.

Income-tax cases in appeals increased by Rs 0.0051 crore between 31 March 2026 and 30 September 2026. Indirect-tax cases and GST demands declined by Rs 0.0481 crore over the same period, producing the Rs 0.0430 crore reduction in the reported total. The filing does not say that the separate ONBHL GST order is included in any row of this table.

Certain subsidiaries have also received show-cause notices, or SCNs, from the GST Department. The subsidiaries submitted detailed replies, and management said their positions are sustainable based on its internal assessment; it therefore expects no liability to devolve on Oriental InfraTrust. No value, subsidiary names or periods were disclosed for those SCNs.

Which Oriental InfraTrust tax matters were resolved by September 2026?

Etawah Chakeri (Kanpur) Highway Private Limited, or ECKHPL, received a favourable order on value-added-tax matters totalling Rs 48.359 crore for assessment years 2015-16, 2016-17 and 2017-18. Oriental InfraTrust said the demands stand resolved in ECKHPL's favour and no liability existed for those matters at 30 September 2026.

ECKHPL also received a favourable adjudication of a Rs 39.680 crore income-tax demand relating to the valuation of shares issued to its parent company. The Assessing Officer had rejected ECKHPL's Discounted Cash Flow, or DCF, valuation method and used the Net Asset Value, or NAV, method, resulting in an addition under Section 56(2)(viib) of the Income-tax Act, 1961.

ECKHPL had relied on judicial precedents supporting the DCF method, and Oriental InfraTrust said the income-tax demand was resolved following the favourable order. These two outcomes differ from ONBHL's GST matter: the filing expressly says no liability exists for the Rs 48.359 crore VAT matters and Rs 39.680 crore tax demand, whereas the GST disclosure records management's assessment of the potential outcome.

Oriental InfraTrust also disclosed Rs 9 crore of ongoing direct-tax litigation covered by sale and transfer agreements. Under those agreements, any liability that may arise is to be borne by sponsors Oriental Structural Engineers Private Limited and Oriental Tollways Private Limited, up to the consideration defined in the agreements.

What other NHAI matters remain relevant to Oriental InfraTrust?

NHAI had raised Rs 44.280 crore and Rs 12.560 crore of demands on one project special purpose vehicle, or SPV, during the year ended 31 March 2024. The first concerned penalties charged by the SPV to overloaded vehicles while collecting toll between 1 January 2016 and 31 August 2020, while the second concerned alleged non-maintenance of the project highway.

The SPV wrote to its bank on 12 July 2023 directing it not to deposit the demanded penalty because it disputed the claims and said NHAI had not followed the concession agreement's dispute-resolution process. The board of Oriental InfraTrust's investment manager said, based on legal advice and sponsor obligations, that any resulting liability would be borne by the sponsors and would not devolve on Oriental InfraTrust.

NHAI also approved commencement of capacity-augmentation works during the period ended 30 September 2026 for a 22-kilometre Jamtha-Borkhedi section and a 19.5-kilometre Nagpur Bypass section. Discussions with NHAI and the independent engineer continued to finalise the scope, design and implementation, which remain subject to detailed engineering, site requirements and land availability.

Conclusion

Oriental InfraTrust's main newly disclosed tax matter is the Rs 403.241 crore GST order against ONBHL over NHAI annuity income for financial years 2019-20 to 2022-23. Management's position combines an assertion that annuities received until 31 December 2022 are outside GST with an expectation of recovery from NHAI should a liability crystallise. Separately, ECKHPL's Rs 48.359 crore VAT and Rs 39.680 crore income-tax matters were resolved favourably.

The next disclosed developments to watch are any action on the ONBHL GST order and the operation of the concession-agreement recovery mechanism cited by management. Oriental InfraTrust also has pending finalisation of the detailed scope, design and implementation for the 22-kilometre Jamtha-Borkhedi and 19.5-kilometre Nagpur Bypass capacity works, with land availability remaining a stated condition.