M/S Sri Sushmeendra Swamy Developers LLP vs. State Of Karnataka
Original PDF →Facts
The petitioner, M/s. Sri Sushmeendra Swamy Developers LLP, filed a writ petition challenging a demand notice dated August 22, 2019, issued by the Joint Director of Town Planning (North), Bruhat Bengaluru Mahanagara Palike (BBMP). The demand notice sought Rs. 73,57,000/- towards ground rent and GST on ground rent. The petitioner contended that this demand was illegal, arbitrary, and unconstitutional. The BBMP, represented by its Commissioner and Joint Director of Town Planning, and the State of Karnataka were the respondents. The writ petition was filed under Articles 226 and 227 of the Constitution of India.
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. Specifically, Clause 3.8 of the BBMP Building Bye-laws, 2003, providing for Ground Rent, was found to be devoid of legal authority and was struck down. The Court also quashed the circular dated 04.09.2015 and government orders dated 27.01.2017 and 30.03.2017. The Court noted that the only charging provision available under the Act was sub-section (20-b) of Section 423, which was not applicable for imposing unrelated charges like ground rent. Consequently, the present writ petition was allowed, and the impugned demand notice dated 22.08.2019 was set aside. The BBMP was directed to issue an Occupancy Certificate in accordance with law, subject to the outcome of any appeal the BBMP might file.
Key Issues
1. Whether the demand notice dated August 22, 2019, for Rs. 73,57,000/- levying ground rent and GST on ground rent is illegal, arbitrary, and unconstitutional, as contended by the petitioner? The petitioner argued that the demand notice, which includes ground rent and GST on ground rent, is illegal and unconstitutional. The petitioner relied on a coordinate bench's decision in W.P.No.36017/2018 and connected matters, which had held certain bye-laws ultra vires the Act and quashed similar circulars and demands. The respondents, the State of Karnataka and the BBMP, did not present separate arguments but were represented by their respective counsel.
Sections Cited
Section 423(20-b)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER The captioned petition is filed seeking for the following reliefs:
"WHEREFORE, the Petitioners prays that this Hon'ble Court be Pleased to: a) Issue a writ of certiorari for quashing ANNEXURE-A, Communication/Demand Notice issued by the Respondent No.3 bearing No. BBMP/ADDL.DIR/JD NORTH/LP/009/2012-13 dated 22/08/2019 for demand of Rs.73,57,000/- (Rupees Seventy Three Lakhs and Fifty Seven Thousand Only) levying Ground Rent, GST on Ground Rent as illegal and arbitrary and unconstitutional. b) Issue any other writ or order, direction and declaration as this Hon'ble court may deem fit in the facts and circumstances of the case, in the interest 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 HC-KAR NC: 2025:KHC:21714 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. (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. HC-KAR NC: 2025:KHC:21714 (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:21714 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 HC-KAR NC: 2025:KHC:21714 dated 04.09.2015 issued by respondent No.4, as well as 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 HC-KAR NC: 2025:KHC:21714 survive for independent adjudication, as the grievance of 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 22.08.2019 issued by respondent No.3 as per Annexure-A is hereby set-aside. (iii) Respondent - BBMP is hereby directed to issue Occupancy Certificate in accordance with law in compliance of the construction strictly adhering to the approved building plan. HC-KAR NC: 2025:KHC:21714 (iv) Respondent- BBMP is hereby directed to forthwith process the petitioner's application seeking occupancy certificate, strictly in accordance with law. (v) It is made clear that the issuance of occupancy certificate shall not be withheld merely on the ground that the BBMP is contemplating to file an appeal against the reported judgment. (vi) If the occupancy certificate is 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.: 11
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.