GST Update

Desk of CA. Praveen Sharma – 892 Series (CAPS)

Delhi High Court in the case of NBCC (India) Limited

NBCC (India) Limited challenged a GST demand order dated 29 January 2025 relating to the Kidwai Nagar (East) redevelopment project before the Delhi High Court.

NBCC had entered into an MoU in 2013 with the Ministry of Urban Development and functioned only as the executing and implementation agency for redevelopment of residential and commercial spaces.

Lease rentals from the project were collected through an escrow mechanism, where ownership, control, and final utilisation of funds rested with the Ministry and not with NBCC.

GST authorities alleged that NBCC was liable to pay GST on lease receipts kept in the escrow account and raised a demand of ?45.36 crore for FY 2017–18.

NBCC contended that several lessees were government departments, autonomous bodies, and PSUs enjoying GST exemption, and that wherever applicable, GST was payable under reverse charge by non-exempt entities.

The High Court directed inter-departmental consultations, after which it was clarified that NBCC acted only as an agent and did not treat lease proceeds as its own income.

It was concluded that Section 86 of the CGST Act applies only to goods and not to services, and therefore GST proceedings against NBCC as an agent were not legally sustainable.

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CAPS