Sri Salman Khalid vs. State Of Karnataka
Original PDF →Facts
The petitioner, Sri Salman Khalid, acting as a GPA holder for property owners, filed a writ petition challenging a demand notice dated June 10, 2020, issued by the Joint Director (Town Planning South) of the Bruhat Bangalore Mahanagara Palike (BBMP). The demand notice included charges for scrutiny fee, license fee, ground rent, GST, and construction workers welfare cess. The petitioner sought to quash this demand notice and also challenged a Government Order dated January 18, 2007, and its corrigendum dated February 28, 2007, which mandated upfront collection of labour welfare cess. Additionally, the petitioner sought to declare Bye-law No. 3.9 of the Bangalore Mahanagara Palike Building Bye-laws, 2003, as unconstitutional and sought a direction to issue the building plan and license without insisting on the payment of the disputed amounts.
Held
The Court held that the issues raised in the present writ petition were squarely covered by the authoritative pronouncement of a coordinate bench in W.P.No.36017/2018 and connected matters. The coordinate bench had categorically held that the imposition of Ground Rent, Licence Fee, Building Licence Fee, Scrutiny Fee, and Security Deposit lacked statutory sanction and were ultra vires the Karnataka Municipal Corporations Act, 1976. Clause 3.8 of the BBMP Building Bye-laws, 2003, was also struck down as devoid of legal authority. The Court further noted that the coordinate bench had quashed the impugned Circular dated 04.09.2015 and Government Orders dated 27.01.2017 and 30.03.2017. Regarding the labour welfare cess, the coordinate bench upheld the State's competence to levy it but set aside the directive for upfront collection. The Court found that the only charging provision available under the Act, Section 423(20-b), could not be used for the disputed levies. Consequently, the present writ petition was allowed, applying the ratio and operative portion of the cited judgment. The impugned demand notice was set aside, and the respondents were directed to process the petitioner's application for building license and sanction of the building plan strictly in accordance with law.
Key Issues
1. Whether the demand notice dated June 10, 2020, issued by the Joint Director (Town Planning South) for scrutiny fee, license fee, ground rent, GST, and construction workers welfare cess is legally sustainable? 2. Whether the Government Order bearing G.O.No.LD 300 LET 2006 dated January 18, 2007, and its corrigendum dated February 28, 2007, directing upfront collection of labour welfare cess, are valid? 3. Whether Bye-law No. 3.9 of the Bangalore Mahanagara Palike Building Bye-laws, 2003, is unconstitutional, arbitrary, illegal, and ultra vires the Karnataka Municipal Corporations Act? Petitioner's Arguments: The petitioner argued that the levies demanded in the notice lacked statutory sanction and were ultra vires the Act. They relied on a coordinate bench's judgment in W.P.No.36017/2018 and connected matters, which had held similar bye-laws and circulars to be ultra vires. The petitioner also challenged the upfront collection of labour welfare cess as mandated by the impugned Government Orders. Revenue/State's Arguments: The judgment does not record specific arguments made by the respondents (State of Karnataka and BBMP).
Sections Cited
Section 423(20-b)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER This caption petition is filed seeking for the following reliefs:
"WHEREFORE, the Petitioner respectfully pray that this Hon'ble Court may be pleased to:
i) Issue a writ of certiorari or similar writ or order or direction to quash the demand notice bearing No.BBMP/Addl.Dir/ JD SOUTH/0055/ 19 -20 dated: 10-06-2020 at ANNEXURE-C issued by the respondent No.4 in so far as the demand of Rs. 1,23,637/-towards Scrutiny Fee, Rs.24,72,743.31 paisa towards License Fee, Rs.22,92,586.29 paisa towards Ground Rent and GST, Rs.3,74,808/- towards security deposit and also insofar as the Construction Workers Welfare cess of Rs.6,638/- is concerned
ii) Issue Writ of Certiorari quashing the Government Order issued by the 2nd Respondent bearing G.O.No.LD 300 LET 2006 dated 18/01/2007 and the corrigendum bearing No. LD 300 LET 2006 dated 28.02.2007 directing upfront collection of labour welfare cess, as contained in ANNEXURE-D.
iii) Issue a writ of Mandamus or any other appropriate writ or order or direction declaring that Bye-law No.3.9 in the Bangalore Mahanagara Palike Building Bye-laws, 2003 framed under the Karnataka Municipal Corporations Act as unconstitutional, arbitrary, illegal and ultravires; HC-KAR NC: 2025:KHC:21722 iv) Issue writ of mandamus or similar writ or order or direction directing the respondent Nos. 3 and 4 to issue building plan and license pursuant to the communication bearing No. BBMP/Addl. Dir/JD SOUTH/0055/19-20 dated 10-06-2020 at ANNEXURE-C issued by the respondent No.4 without insisting for payment of amount mentioned above.
v) Issue any other appropriate writ or order or direction deemed fit in the circumstances of the case in theinterest of justice and equity."
It is brought to the notice of this Court that across the Bar, the issue is dealt by the Co-ordinate Bench in the reported judgment in W.P.No.36017/2018 and connected matters. The Co-ordinate Bench, while deciding the issue, has held that the bye-laws under which Ground Rent, License Fee, Building License fee, Scrutiny fee are levied are ultra vires the Act. The Co-ordinate Bench also quashed the circular dated 04.09.2015 and Government circulars dated 27.01.2017 and 30.03.2017. Therefore, this Court deems it fit to cull out the operative portion of the order, which reads as under; "O R D E R (a) All the Writ Petitions are allowed. HC-KAR NC: 2025:KHC:21722 (b) The bye-laws under which Ground Rent, Licence Fee, Building Licence Fee, Scrutiny Fee, Security Deposit are all held ultravires the Act and are resultantly rendered unenforceable. (c) The Circular bearing No.ºÉ¤£ÀAiÉÆÃ/eÉ.r(G)/rJªÀiï3/¦Dgï/320/2015-16 dated 04.09.2015 stands quashed. (d) The Circular bearing No.£ÀCE 36 ¨ÉªÀÄ¥Áæ 2016 (¨sÁUÀ) dated 27.01.2017 and the Circular bearing No. ºÉ¤£ÀAiÉÆÃ/¦Dgï/1533/2016-17 dated 30.03.2017 demanding Lake Rejuvenation Fee are quashed. (e) Imposition of labour cess under the Welfare Cess Act is upheld, but its demand for payment upfront in terms of Government Orders dated 18.01.2007 and 28.02.2007 stands quashed. (f) The State or the BBMP is not precluded from bringing in the impugned levies under the provisions of the Act or the Rules by making suitable amendments to the Act and the Rules. 368 (g) Petitioners in all these petitions who have deposited certain amounts in terms of the interim order passed by this Court before this Court are entitled to refund of the amounts so deposited. (h) Insofar as refund in other cases who have paid to the Corporation under protest, they shall be entitled to such refund only if the same is not collected from the consumers of the apartments, businesses as the case would be. (i) Insofar as all other payments made, they would all be at liberty to give representation to the BBMP and the BBMP would consider the refund of the amounts, in accordance with law and the findings of this Court. (j) If representations are made by the petitioners for refund, the BBMP shall pass HC-KAR NC: 2025:KHC:21722 appropriate orders within 12 weeks from the date of such representations. In view of disposal of the petitions, all pending Interlocutory Applications also stand disposed."
In the considered view of this Court, the issues raised in the present writ petition stand squarely covered by the authoritative pronouncement rendered by the Co- ordinate Bench of this Court in W.P.No.36017/2018 and connected matters. The Co-ordinate Bench, after examining the statutory framework and the impugned levy mechanisms adopted by the BBMP, categorically held that the imposition of Ground Rent, Licence Fee, Building Licence Fee, Scrutiny Fee, and Security Deposit lacked statutory sanction and were ultra vires the Karnataka Municipal Corporations Act, 1976. The Co-ordinate Bench further held that Clause 3.8 of the BBMP Building Bye- laws, 2003, which provided for imposition of Ground Rent, was also devoid of legal authority and consequently struck it down. The Court also quashed the impugned Circular dated 04.09.2015 issued by respondent No.4, as well as HC-KAR NC: 2025:KHC:21722 the Government Orders dated 27.01.2017 and 30.03.2017, which had directed collection of such fees without statutory backing. With specific reference to labour welfare cess, the Co-ordinate Bench upheld the competence of the State to levy the cess under the Building and Other Construction Workers’ Welfare Cess Act, 1996, but set aside the directive mandating its upfront collection through Government Orders dated 18.01.2007 and 28.02.2007, thereby rendering the demand raised in anticipation of sanction of building plans unlawful. The Co-ordinate Bench also clarified that the only charging provision available under the Act was sub- section (20-b) of Section 423, which merely enabled collection of fees for services relating to burial grounds and crematoria, and could not be relied upon for the imposition of unrelated charges such as ground rent or scrutiny fee. In light of these clear and binding findings, the controversy raised in the present writ petition does not survive for independent adjudication, as the grievance of HC-KAR NC: 2025:KHC:21722 the petitioner is directly addressed and resolved by the said judgment. Therefore, this Court is of the considered opinion that the present writ petition deserves to be allowed by applying the ratio and operative portion of the judgment rendered in W.P.No.36017/2018 and connected matters.
In view of the above, this Court proceeds to pass the following; ORDER (i) The writ petition is allowed. (ii) The impugned demand notice dated 10.06.2020 issued by respondent No.4 as per Annexure-C is hereby set-aside. (iii) Respondent Nos. 3 and 4 are hereby directed to issue fresh/modified plan as the case may be. (iv) Respondent Nos. 3 and 4 are hereby directed to forthwith process the petitioner's application seeking building HC-KAR NC: 2025:KHC:21722 license and sanction of the building plan, strictly in accordance with law. (v) It is made clear that the issuance of the building license and approval plan shall not be withheld merely on the ground that the BBMP is contemplating to file an appeal against the reported judgment. (vi) If the building lease and sanction plan are issued, the same shall be subjected to the outcome of any appeal that may be filed by the BBMP against the judgment. Pending applications, if any, are also disposed off. (SACHIN SHANKAR MAGADUM) JUDGE
VMB List No.: 2 Sl No.: 18
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.