The Allahabad High Court has stayed the operation of a GST assessment order and the underlying show cause notice issued against a Residents Welfare Association (RWA) over the alleged levy of GST on electricity distributed to apartment owners. 

The bench of Justice J.J. Munir and Justice Arun Kumar has also agreed to examine the constitutional validity of a CBIC circular that forms the basis of the tax demand.

The writ petition was filed by a Residents Welfare Association, which challenged an assessment order dated 27 February 2026 for the financial year 2019-20, along with a show cause notice dated 30 September 2025. 

The petitioner contended that it merely facilitates the supply of electricity received in bulk from the electricity distribution company and apportions the cost among individual flat owners without engaging in any taxable supply.

According to the petitioner, the electricity is supplied by the Distribution Corporation through a common meter installed in the name of the RWA only for administrative convenience. The association argued that this arrangement does not amount to an independent supply of electricity under the Goods and Services Tax regime. It further submitted that apartment owners are already paying GST on maintenance charges, and merely redistributing electricity received in bulk cannot attract an additional GST liability.

The RWA also challenged CBIC Circular No. 206/18/2023-GST dated 31 October 2023, arguing that the circular seeks to impose tax without any statutory backing. It contended that a circular cannot create a tax liability where none exists under the provisions of the GST law, making the circular ultra vires the statute. Since the assessment order was founded upon the disputed circular, the petitioner argued that the order itself was legally unsustainable.

The court observed that the petitioner had made out a prima facie case warranting judicial consideration. The Court accordingly issued notice to the respondents and granted them two weeks to file their counter affidavits. The matter has been directed to be listed along with the connected Writ Tax No. 4592 of 2025.

Pending further consideration, the High Court ordered that the assessment order dated 27 February 2026 as well as the show cause notice dated 30 September 2025 shall remain stayed until the next date of hearing. The Court further directed its Registrar (Compliance) to communicate the interim order to the Deputy Commissioner, State Tax, Gautam Budh Nagar, within 24 hours through the Chief Judicial Magistrate.

Membership Required to Access Case Details & Order Copy

To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.

Read More: Supreme Court Reduces Jail Term to Period Already Undergone in 29-Year-Old Culpable Homicide Case