FACTS OF THE CASE

  1. M/s NBCC (India) Limited (“NBCC”), a Government of India enterprise, was appointed as the implementing and executing agency for the redevelopment of Kidwai Nagar (East) in New Delhi under a Memorandum of Understanding with the Ministry of Urban Development (now Ministry of Housing and Urban Affairs) dated 16th July 2013.
  2. An Escrow Agreement was executed between NBCC, the Ministry, and Union Bank of India to manage and operate lease proceeds from commercial and residential spaces in the project.
  3. The Directorate General of GST Intelligence (DGGI) initiated an investigation against NBCC, alleging that lease proceeds collected and held in the escrow account were subject to Goods and Services Tax (GST).
  4. The Principal Commissioner of Central GST, Delhi South Commissionerate passed an adjudication order dated 29th January 2025 demanding GST of approximately ₹45.36 crore for the financial year 2017‑18, holding that NBCC rendered taxable leasing services and was liable to discharge GST on the receipts.

ISSUES INVOLVED

  1. Whether NBCC, acting solely as an agent implementing the project on behalf of the Ministry, becomes liable to pay GST on lease proceeds collected and credited to the escrow account.
  2. Whether Section 86 of the CGST Act, 2017 imposes joint and several liability on an agent in respect of services, or such liability applies only to goods.
  3. Whether the GST demand raised against NBCC was sustainable in law in view of its role as agent and availability of the principal for acceptance of any GST liability. 

PETITIONER’S ARGUMENTS

  • NBCC contended that it acted only as an implementing agency/agent of the Ministry and did not appropriate lease proceeds as its revenue.
  • All lease funds were deposited into an escrow account under the Ministry’s control and ultimately flowed to the Consolidated Fund of India.
  • NBCC argued that any GST liability, if at all attracted, would be payable by the recipients (some of whom were Government Departments or autonomous bodies exempt from GST) or under reverse charge provisions.
  • It was further argued that Section 86 of the CGST Act applies only to goods, and there is no statutory provision that imposes joint and several liability for services supplied by an agent on behalf of a principal.

RESPONDENT’S ARGUMENTS

  • The GST Department contended that NBCC, by collecting lease rentals and holding them in escrow, rendered taxable leasing services and discharged GST was therefore payable by NBCC.
  • The Department held that NBCC had failed to discharge GST liability on the receipts amounting to approximately ₹252.01 crore during the relevant period. 

COURT ORDER / FINDINGS

  1. The Delhi High Court noted that, pursuant to directions from the Court, a meeting was held between senior officials of the Ministry of Housing and Urban Affairs and the Ministry of Finance.
  2. An Office Memorandum dated 30th November 2025 from the Ministry of Finance was placed on record, which concluded that:
    • Section 86 creates joint and several liability only for goods supplied by an agent and there is no statutory sanction for extending such liability to services.
    • Since the principal (Ministry) was available to accept any GST liability, initiation of proceedings against the agent (NBCC) was unsustainable and without authority of law.
  3. In view of the Ministry of Finance’s clear position that the GST demand against NBCC lacked merit, the Delhi High Court set aside the impugned order of 29th January 2025 and disposed of the writ petition accordingly. 

IMPORTANT CLARIFICATION

  • Section 86 of the CGST Act, 2017 provides for joint and several liability of an agent and principal only in respect of goods, and does not extend to services.
  • GST liability, if any, arising from the leasing of commercial space under the Kidwai Nagar East redevelopment project lies with the principal (Ministry) and not with NBCC acting as its implementing agency.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/PMS09122025CW66872025_143836.pdf

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