Facts of the Case

The petitioners, BSES Rajdhani Power Ltd. & Anr., filed W.P.(C) 7724/2021 before the Delhi High Court, seeking reimbursement from the erstwhile North Delhi Municipal Corporation (now the unified Municipal Corporation of Delhi, MCD) of Goods and Services Tax paid by them under the CGST Act, 2017 and the DGST Act, 2017 on the maintenance of street lights, for the period commencing 1st July 2017 and continuing. The petitioners had paid CGST and DGST at 9% each between 01.07.2017 and 20.09.2017, and thereafter at 6% each pursuant to subsequent rate notifications. The MCD resisted reimbursement, contending the services were "pure services" exempt at nil rate under Notification dated 28.06.2017. The petitioners maintained their services were composite in nature, involving supply of cables and other components exceeding 25% of invoice value, so the exemption did not apply and they had correctly paid GST. The matter, first heard on 14.08.2023, was finally decided on 23rd November 2023 by a Division Bench.

Issues Involved

  1. Whether the maintenance of street lights performed by the petitioners for the Municipal Corporation constituted "pure services" exempt at nil rate under Notification dated 28.06.2017, or a taxable composite supply.
  2. Whether the MCD, as recipient of the service, was liable to reimburse the GST paid by the petitioners.
  3. Whether an alternate statutory remedy barred the writ petition.

Petitioner's Arguments

  • The services rendered were composite, involving not just maintenance labour but also supply of goods such as cables, and the value of goods supplied exceeded 25% of the invoice value, taking the transaction outside the "pure services" nil-rate exemption.
  • The petitioners had, accordingly, correctly and continuously paid CGST and DGST since 01.07.2017 and were entitled to reimbursement from the MCD, which was the ultimate recipient bearing the tax burden.
  • The petitioners had no alternate remedy under the CGST/DGST Acts to claim reimbursement of tax already paid, and the issue was already settled by a coordinate Bench decision affirmed by the Supreme Court.

Respondent's Arguments

  • The MCD contended it was not obliged to reimburse GST since the petitioners rendered "pure services" taxable at nil rate under the exemption notification dated 28.06.2017.
  • The MCD argued that the petitioners had an alternate remedy available and that the writ petition should not be entertained.

Court Order/Findings

  • The affidavit filed by the Central tax authorities (respondent no.4) confirmed that the services were not "pure services" but composite services involving repair and maintenance, and that no exemption from GST obtained under the GST regime.
  • The Court held that the issue was directly covered by the coordinate Bench decision in BSES Rajdhani Power Ltd. v. Municipal Corporation of Delhi, 2022:DHC:3352-DB, which required the MCD, as recipient of the service, to bear the burden and reimburse the tax paid by the service provider, a ruling later affirmed by the Supreme Court in dismissing MCD's Special Leave Petition on 30.01.2023.
  • The Court rejected the alternate-remedy objection, holding that the doctrine of exhaustion of remedies is one of self-imposed judicial restraint and does not oust the writ court's jurisdiction, particularly where the issue stood settled by binding precedent.
  • The MCD was directed to reimburse the GST paid by the petitioners along with interest at 9% per annum with effect from 01.07.2017, to be paid within eight weeks from receipt of the order.

Important Clarification

Maintenance of street lights involving supply of goods (such as replacement cables and spares) exceeding 25% of invoice value is a composite works-contract-type service, not a "pure service," and therefore does not qualify for the nil-rate GST exemption under Notification dated 28.06.2017; the municipal recipient of such composite services must bear and reimburse the GST paid by the service provider.

Sections Involved

  • Notification dated 28.06.2017 and subsequent rate notifications issued under the Central Goods and Services Tax Act, 2017 and the Delhi Goods and Services Tax Act, 2017.
  • Article 226 of the Constitution of India.

Decision – In Favour of

The decision clearly favours the Assessee/petitioners. The Court directed the MCD to reimburse the GST paid on street-light maintenance services from 01.07.2017 onward, together with 9% interest, following binding coordinate Bench and Supreme Court authority on the identical issue.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Delhi at New Delhi
  • Case No.: W.P.(C) 7724/2021
  • CNR: Not available
  • Coram: Justice Rajiv Shakdher and Justice Girish Kathpalia
  • Decision Date: 23-11-2023
  • Disposal Nature: Writ petition allowed; MCD directed to reimburse GST paid with interest

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