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Informist, Friday, Dec. 12, 2025

 

NEW DELHI – The Delhi High Court has set aside an order of the principal commissioner of Central Goods and Service Tax, Delhi South Commissionerate, demanding INR 453.6 million from NBCC (India) Ltd. in relation to the Kidwai Nagar project in New Delhi. The tax department had alleged that NBCC acted as an agent of the urban development ministry for development of Kidwai Nagar (East), rendered leasing services which are taxable in nature, and failed to discharge GST amounting to INR 453.6 million on receipts of around INR 2.52 billion during 2017-18 (Apr-Mar).

 

The high court noted the finance ministry's office memorandum on the issue that Section 86 of the Central Goods and Services Tax Act, 2017 creates joint and several liability only for goods, not for services, and does not cover the present case. Where the urban development ministry is the principal supplier and remains available to accept any GST demand, initiation of proceedings against its agent NBCC appears to be unnecessary and without authority of law, noted the court. The finance ministry had said that the demand raised by the tax department had no merit.

 

NBCC, a government enterprise, was appointed as the implementing agency for the redevelopment of Kidwai Nagar (East), pursuant to a Memorandum of Understanding with the urban development ministry in 2013. An escrow agreement was also executed between NBCC, the urban development ministry, and Union Bank of India for operation and management of the lease proceeds from the Kidwai Nagar project. The funding for the project was structured through lease proceeds from commercial and residential properties, with ultimate ownership and regulatory control resting with the urban development ministry. The tax department sought payment of GST from NBCC on the amounts lying in the escrow account. Challenging the GST demand, NBCC moved the high court.

 

While the case was on, NBCC made a representation to the finance ministry on the issue. NBCC argued that it acted solely as the executing arm of the urban development ministry, did not appropriate lease proceeds as revenues and all funds were deposited into an escrow arrangement, managed by a committee constituted by the urban development ministry.

 

At 1347 IST, shares of NBCC were up 0.7% at INR 109.05 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Ashish Shirke

 

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