M/S Ebisu Convention Centre vs. The Deputy Commissioner Of Commercial Taxes (Audit) - 5.9.

Facts

The petitioner, M/s. Ebisu Convention Centre, a proprietorship concern, filed a writ petition before the High Court of Karnataka challenging an Order-In-Original (bearing No. DGSTO-5/DC-5.9/ADJ-238/2024-25) and a summary of an order in FORM GST DRC-07, both issued by the Deputy Commissioner of Commercial Taxes (Audit) - 5.9. The petitioner also challenged a show cause notice (bearing no. ADCOM.SZACCT/ENF-15/Sum No.05/2023-24 under Section 73(5) of the KGST Act, 2017) and its summary, issued by the Assistant Commissioner of Commercial Taxes (EN-15). These actions pertained to the tax period April 2020 to March 2021. The core dispute involved the imposition of GST on the quantum of solatium awarded to the petitioner following the acquisition of their land.

Held

The Court held that GST is not applicable to the quantum of solatium awarded to the petitioner in pursuance of the acquisition of their land. The Court found that this issue was no longer res integra, referencing a prior decision by a coordinate bench of the same High Court in (2025) 29 CENTAX 391 (Kar.). The reasoning was that the said coordinate bench had already considered and decided that GST would not be applicable to amounts awarded as solatium to land users. Consequently, the Court quashed the impugned Order-In-Original, the summary of the order in FORM GST DRC-07, the show cause notice, and the summary of the show cause notice. The Court directed the respondents to reverse any coercive steps taken, including the freezing of the petitioner's bank account, in light of the quashed orders.

Key Issues

1. Whether GST is applicable to the quantum of solatium awarded to a land owner in pursuance of the acquisition of their land, under Section 73(5) of the KGST Act, 2017? The Petitioner argued that GST is not applicable to the solatium amount awarded for land acquisition. The Petitioner relied on a coordinate bench decision of the High Court of Karnataka in (2025) 29 CENTAX 391 (Kar.), which held that GST would not be applicable to amounts awarded as solatium to land users. The Revenue did not record any specific arguments in the judgment. However, their action of issuing the Order-In-Original, summary of order, show cause notice, and summary of show cause notice implies they contended for the applicability of GST on the solatium amount.