Interim Relief Granted Amidst Legal Debate Over Delhi Jal Board's Classification as 'Local Authority' under GST Act
In a significant development, the Delhi High Court has granted interim relief to Aggarwal Construction Co., staying proceedings initiated by the Commissioner of Central Goods and Services Tax Delhi East Commissionerate. The legal contention centers around the classification of the Delhi Jal Board (DJB) as a 'local authority' under the Central Goods and Services Tax Act, 2017, which directly impacts the applicable GST rate for services provided to the DJB.
Aggarwal Construction Co., represented by Advocates Mr. Rakesh Kumar, Mr. Parveen Kumar Gambhir, and Mr. Naveen, had entered into a works contract with DJB, paying GST at the rate of 12%. The Department, however, contends that DJB does not qualify as a 'local authority,' thereby necessitating a GST rate of 18%. This led to the issuance of a summary Show Cause Notice (Form DRC 01) dated September 30, 2025, which the petitioner is challenging.
Presided over by Justices Prathiba M. Singh and Shail Jain, the bench has deemed the classification of DJB a critical legal issue that requires determination in the writ petition. In alignment with a similar matter titled "Tirupati Cement Products v. Joint Director at General of Goods and Services Tax Intelligence Delhi Zonal Unit & Anr.," where interim relief was granted, the court has applied the same interim stay to Aggarwal Construction Co.'s proceedings.
The court has issued notices to the respondents, represented by Mr. Gibran Naushad, SSC, along with Advocates Mr. Harsh Singhal and Mr. Suraj Shekhar Singh. Respondents are tasked with filing a counter affidavit within four weeks, followed by a rejoinder from the petitioner within the subsequent four weeks. The matter is scheduled for its next hearing on February 3, 2026.
This interim relief effectively puts a hold on the proceedings under the impugned Show Cause Notice, providing respite to Aggarwal Construction Co. as the court deliberates on the broader legal implications concerning the DJB's status under the GST framework. The outcome of this case is poised to influence similar disputes and clarify GST liabilities for entities engaged in contracts with DJB.
Bottom Line:
GST Law - Determination of GST liability on works contract with Delhi Jal Board (DJB) - Whether DJB is to be classified as a "local authority" under GST Act is a legal issue requiring adjudication - Interim order staying proceedings in summary of Show Cause Notice issued under Section 73 of the Central Goods and Services Tax Act, 2017.
Statutory provision(s): Central Goods and Services Tax Act, 2017 Section 73
