GST Demand raised by DGGI on ESCROW Funds Meant for MoUD & CFI: Delhi HC asks MoUD & FinMin Secretaries to Confer [Read Order]

The Delhi High Court has asked the Joint secretaries of the Ministry of Urban Development ( MoUD ) and the Ministry of Finance to convene a meeting with respect to the GST ( Goods and Services Tax ) demand issued by Directorate General of GST Intelligence ( DGGI ) on ESCROW Funds.

A Division Bench comprising Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta directed that a meeting be convened between the Joint Secretaries of the Ministry of Urban Development (MoUD) and the Ministry of Finance to resolve the issue and clarify the government's position.

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NBCC (India) Limited approached the Court challenging the GST demand raised through an order dated January 29, 2025, issued by the Office of the Principal Commissioner of Central Goods and Service Tax, Delhi South Commissionerate.

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The GST dispute involved M/s NBCC (India) Limited over the treatment of lease receipts collected under an ESCROW mechanism for the redevelopment of the Kidwai Nagar (East) project, which were ultimately intended for transfer to the MoUD or the Consolidated Fund of India.

The Directorate General of GST Intelligence ( DGGI ), Mumbai had initiated an investigation against NBCC, asserting that the amounts collected were liable to GST, leading to the impugned demand.

According to NBCC, the ESCROW account was established through a tripartite agreement with the MoUD and the Union Bank of India, identifying NBCC merely as the implementing agency. NBCC further contended that lease proceeds were received from two categories of entities: business and non-business entities.

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Out of these, payments from Government Departments and Autonomous Bodies were exempt from GST, while liability for other entities such as PSUs would arise under the reverse charge mechanism. Hence, NBCC argued that the GST demand raised against it was untenable.

The court took into consideration the complexity of the issue and the fact that it involved inter-ministerial financial arrangements, it directed both ministries to meet and determine whether the GST department should continue to press the demand or if the matter should be resolved administratively. The meeting is to be held before July 10, 2025, and an affidavit recording the minutes of the meeting is to be submitted by July 31, 2025.

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The case will next be heard on August 18, 2025. In the interim, the Court has granted protection to NBCC by directing that no coercive action shall be taken pursuant to the impugned GST order.

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To Read the full text of the Order CLICK HERE

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