Case Law Details
SSP Private Limited Vs Joint Director Directorate General of Goods And Services Tax Intelligence Delhi Zonal Unit & Anr. (Delhi High Court)
The Delhi High Court granted interim relief by staying proceedings arising from a show cause notice issued by the Directorate General of GST Intelligence demanding differential GST from a contractor executing works for the Delhi Jal Board. The dispute concerned whether works contracts awarded by the Delhi Jal Board attract GST at 12% or 18%, depending on whether the Board qualifies as a “local authority” under Central Goods and Services Tax Act, 2017. The petitioner had already paid GST at the concessional rate of 12%, while the tax department contended that the Delhi Jal Board is not a local authority and demanded an additional 6% tax. The Court observed that the determination of the Delhi Jal Board’s legal status under Section 2(69) of the CGST Act is a significant legal issue affecting numerous contractors. Considering the need to avoid prolonged adjudication and noting similar pending cases on the issue, the Court stayed further proceedings on the show cause notice and directed the respondents to file counter affidavits.
Facts:
SSP Private Limited (“the Petitioner”) is a contractor engaged by the Delhi Jal Board for carrying out certain works and had executed works contracts for the said authority.
Joint Director, Directorate General of GST Intelligence, Delhi Zonal Unit & Anr. (“the Respondent”) issued a Show Cause Notice dated September 19, 2025 calling upon the Petitioner to pay differential GST of 6% on works contracts executed for the Delhi Jal Board.
The Petitioner contended that the works assigned by the Delhi Jal Board attract GST at 12%, and GST at such rate had already been deposited. The Petitioner further submitted that the issue affects numerous contractors who have been issued similar notices.
The Respondent contended that the Delhi Jal Board is not a local authority, and therefore the contractor is not entitled to the concessional GST rate applicable where services are supplied to a local authority under Section 2(69) of the CGST Act, 2017.
Aggrieved by the issuance of the impugned SCN and the demand of differential tax, the Petitioner approached the Court by way of a writ petition seeking quashing of the SCN and interim protection.
Issue:
Whether works contracts assigned by the Delhi Jal Board to private contractors attract GST at 12% or 18%, dependent upon whether the Delhi Jal Board qualifies as a “local authority” under Section 2(69) of the CGST Act, 2017?
Held:
The Hon’ble Delhi High Court in W.P.(C) 18890/2025 held as under:
- Observed that, the Petitioner was issued an SCN seeking differential GST of 6% on works contracts executed for the Delhi Jal Board.
- Noted that, the core question is whether works assigned by the Delhi Jal Board to private contractors would attract GST at 12% or 18%.
- Observed that, the GST Department took the position that the Delhi Jal Board is not a local authority, whereas the Delhi Jal Board itself submitted that it is a local authority.
- Held that, the issue whether the Delhi Jal Board is a local authority is a legal issue which deserves consideration and accordingly proceedings in the impugned SCN were stayed and counter affidavits were directed to be filed, with the matter listed for further hearing.
Our Comments:
The Court has extended interim protection following the approach adopted in Tirupati Cement Products v. Joint Director Directorate General of GST Intelligence Delhi Zonal Unit & Anr., [W.P.(C) 16799/2025 order dated November 6, 2025]wherein this court recorded that determination of whether the Delhi Jal Board is a “local authority” is a pure legal issue warranting writ jurisdiction and proceedings pursuant to the SCN were stayed. The reasoning in the present case aligns with the said decision as the Court applied the interim order mutatis mutandis and emphasized avoidance of protracted adjudication.
Relevant Provisions:
Section 2(69) of the Central Goods and Services Tax Act, 2017
“(69) “local authority” means-
(a) a “Panchayat” as defined in clause (d) of article 243 of the Constitution;
(b) a “Municipality” as defined in clause (e) of article 243P of the Constitution;
(c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal fund or local fund;
Explanation.– For the purposes of this sub-clause —
a. “local fund” means any fund under the control or management of an authority of a local self-government established for discharging civic functions in relation to a Panchayat area and vested by law with the powers to levy, collect and appropriate any tax, duty, toll, cess or fee, by whatever name called;
b. “municipal fund” means any fund under the control or management of an authority of a local self-government established for discharging civic functions in relation to a Metropolitan area or Municipal area and vested by law with the powers to levy, collect and appropriate any tax, duty, toll, cess or fee, by whatever name called;
(d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006 (41 of 2006);
(e) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution;
(f) a Development Board constituted under article 371 and article 371J of the Constitution; or
(g) a Regional Council constituted under article 371A of the Constitution;”
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. This hearing has been done through hybrid mode.
CM APPL. 78666/2025 (for exemption)
2. Allowed subject to all just exceptions. Accordingly, the application is disposed of.
W.P.(C) 18890/2025 & CM APPL. 78665/2025 (for stay)
3. The present petition has been filed by the Petitioner under Article 226 and 227 of the Constitution of India, inter alia, challenging the impugned Show Cause Notice dated 19th September, 2025 issued by Joint Director, Directorate General of GST Intelligence, Delhi Zonal Unit (hereinafter, ‘impugned SCN’).
4. The Petitioner in the present petition is a contractor engaged by the Delhi Jal Board for carrying out certain works. Vide the impugned SCN, the Petitioner has been called upon to pay the differential Goods and Services Tax (hereinafter, ‘GST’) of 6% on works contracts executed by the Petitioner for the Delhi Jal Board.
5. The question for consideration in the present petition is whether the works assigned by the Delhi Jal Board to private contractors would attract GST at the rate of 12% or 18%.
6. The Court is already considering similar matters being W.P. (C) 16799/2025 titled Tirupati Cement Products v. Joint Director Director at General Of Goods and Services Joint Director Tax Intelligence Delhi Zonal Unit & Anr. and W.P.(C) 17005/2025 titled Delhi Jal Board Contractors Welfare Association, Regd. v. State of NCT of Delhi & Ors.
7. In Tirupati Cement Products (supra) this Court has on 6th November, 2025 already passed an interim order in the following terms:
“14. The question raised as to whether DJB is a local authority is a legal issue which would have to be determined, so as to avoid protracted proceedings. Accordingly, the same deserves consideration in a writ petition. Accordingly, in the meantime, proceedings in the impugned SCN are hereby stayed.”
8. The interim order passed in Tirupati Cement Products (supra) would apply to the Petitioner as well.
9. Issue Notice. Mr. Anurag Ojha, ld. SSC, is requested to accept notice on behalf of the GST Department. Mr Tushar Sannu, ld. Counsel is requested to accept notice on behalf of Delhi Jal Board.
10. SSC for the GST Department has taken the position that the Delhi Jal Board is not a local authority, and hence the contractor is not entitled to the benefit of Delhi Jal Board being a local authority, in terms of Section 2(69) of the Central Goods and Services Tax Act, 2017.
11. Further, ld. Counsel for the Petitioner submits that the issue concerned in the present petition would affect many contractors who have been issued notices by the GST Department.
12. Additionally, ld. Counsel for the Petitioner submits that applying the 12% rate, the GST has already been deposited by the Petitioner.
13. Mr. Tushar Sannu, ld. Counsel on behalf of Delhi Jal Board, submits that the stand of Delhi Jal Board is also that it is a local authority.
14. Let counter affidavits be filed by the Respondents.
15. List on 03rd February, 2026.
16. The question raised as to whether DJB is a local authority is a legal issue which would have to be determined, so as to avoid protracted proceedings. Accordingly, the same deserves consideration.
17. In the meantime, proceedings in the impugned SCN are hereby stayed.
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