Case Law Details
NBCC (India) Limited Vs Additional Commissioner CGST Delhi South (Delhi High Court)
Delhi High Court has intervened in a dispute concerning a Goods and Services Tax (GST) demand raised by the Directorate General of GST Intelligence (DGGI) on M/s NBCC (India) Limited. The demand pertains to funds held in an ESCROW account, which NBCC maintains for the re-development of the Kidwai Nagar (East) area and are ultimately intended for the Ministry of Urban Development (MoUD) or the Consolidated Funds of India.
NBCC (India) Limited, the petitioner, developed the Kidwai Nagar (East) project for residential and commercial spaces under a Memorandum of Understanding (MoU) with the MoUD, signed on July 16, 2013. An ESCROW agreement was subsequently established between NBCC, the MoUD, and Union Bank of India to manage lease proceeds from the project, with NBCC acting as the implementing agency.
The DGGI initiated an investigation into NBCC regarding the Kidwai Nagar project, alleging that GST was payable on the amounts collected in the ESCROW account. The impugned order, dated January 29, 2025, from the Principal Commissioner of Central Goods and Service Tax, Delhi South Commissionerate, formalized this demand.
NBCC contends that the funds are received from two types of entities: business and non-business. Non-business entities include Government Departments, Autonomous Bodies, and Public Sector Undertakings (PSUs). NBCC highlights that Government Departments and Autonomous Bodies are exempt from GST. For other entities, GST is to be deposited under the reverse charge mechanism, rendering the demand against NBCC “completely untenable.”
Acknowledging the inter-ministerial nature of the dispute, the Delhi High Court has directed the Joint Secretaries of the Ministry of Urban Development and the Ministry of Finance to hold a meeting. The purpose of this meeting is to formulate a clear stand on whether the GST Department will continue to press these demands, or if the matter should be resolved internally between the GST authorities and the MoUD.
The court noted that while the current challenge concerns the Financial Year 2017-18, similar proceedings have commenced for subsequent years, indicating a broader issue. The meeting has been mandated to take place before July 10, 2025, and an affidavit detailing the minutes of the meeting must be filed by July 31, 2025. In the interim, the court has ordered that no coercive measures be taken against NBCC (India) Limited. The matter is scheduled for further hearing on August 18, 2025.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This hearing has been done through hybrid mode.
CM APPL. No. 30336/2025 (Exemption)
2. Allowed, subject to all just exceptions. Application is disposed of. P.(C) 6687/2025 and CM APPL. No. 30335/2025
3. The present petition has been filed by the Petitioner– M/s NBCC (India) Limited challenging the order dated 29th January, 2025 (‘hereinafter, the impugned order’) passed by the Office of Principal Commissioner of Central Goods and Service Tax, Delhi South Commissionerate.
4. In this case, the Petitioner- NBCC (India) Limited has developed the Kidwai Nagar (East) Area for General Pool Residential Accommodation, as also the commercial spaces.
5. It is the case of the Petitioner that a Memorandum of Understanding (hereinafter, ‘MOU’) was entered into between the NBCC (India) Limited and the Ministry of Urban Development (hereinafter, ‘MoUD’) on 16th July, 2013 for re-development of Kidwai Nagar (East).
6. An ESCROW agreement was also executed between the Petitioner, the MoUD and the Union Bank of India for operation and management of the lease proceeds from the Kidwai Nagar project. The Petitioner was identified as the implementing agency.
7. Thereafter, the Directorate General of GST Intelligence, Mumbai (hereinafter, ‘DGGI’) started an investigation upon the Petitioner regarding the Kidwai Nagar project and the allegation by the DGGI was that an ESCROW Account was opened for collection of the lease amounts which is ultimately meant to be transferred to either the MoUD or the Consolidated Funds of India. In respect of the amounts lying in the ESCROW account, the impugned order has been passed seeking payment of Goods and Service Tax (hereinafter, ‘GST’).
8. It is the case of the Petitioner that so far, there are two kinds of entities from whom these amounts are received by the NBCC (India) Limited: business entities and non-business entities.
9. The said entities include: (1) Government Departments, (2) Autonomous Bodies and (3) Public Sector Undertakings (PSUs). Insofar as the Government Departments and the Autonomous Bodies are concerned, there is an exemption granted to the institutions from paying GST.
10. However, in respect of others, the GST is to be deposited by reverse charge. The demand is, therefore, completely untenable qua NBCC (India) Limited.
11. Issue notice.
12. Let instructions be sought in this matter as to whether the GST Department is in fact pressing for the GST demands, as raised in the impugned order, or whether the same ought to be resolved between the GST and the MoUD.
13. Let a meeting be held between the concerned Joint Secretaries at the MoUD and the Finance Ministry, in order to take a stand in this matter since as per the NBCC (India) Limited, the challenge in this case pertains to the Financial Year 2017-18 but the proceedings have also been commenced for subsequent years.
14. Let the meeting be held before 10th July, 2025. Subsequently, an affidavit be filed placing the Minutes of Meeting of the Joint Secretaries, by 31st July, 2025.
15. List on 18th August, 2025.
16. No coercive measures shall be taken against the Petitioner in the meantime.
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