M/S Shri Ushoodaya Builders vs. The State Of Karnataka
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The petitioner, M/s. Shri Ushoodaya Builders, filed a writ petition challenging a demand notice dated August 29, 2019, issued by the Joint Director (Town Planning, North), Bruhat Bengaluru Mahanagara Palike (BBMP). The petitioner also sought to quash a circular dated September 21, 2017, issued by the Commissioner, BBMP, and sought directions to prevent the BBMP from demanding ground rent for the issuance of an approved plan. The petitioner argued that the BBMP had no authority to collect taxes under the guise of ground rent or other fees without government sanction, and that the ground rent levied was bad in law as they were not using public land for stocking building materials. The demand notice was for the period 2012-13.
Held
The Court allowed the writ petition, quashing the demand notice dated August 29, 2019, issued by the Joint Director, BBMP, as per Annexure-A. The Court held that the issues raised in the petition were squarely covered by the authoritative pronouncement of a coordinate bench in W.P.No.36017/2018 and connected matters. This prior judgment 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. The Court further noted that the coordinate bench had struck down Clause 3.8 of the BBMP Building Bye-laws, 2003, which provided for ground rent, and had also quashed impugned circulars and government orders directing the collection of such fees without statutory backing. The Court directed the BBMP to issue a fresh/modified plan, an Occupancy Certificate in accordance with law, and to forthwith process the petitioner's applications for building license, plan sanction, and occupancy certificate. It was clarified that these approvals should not be withheld due to the BBMP contemplating an appeal, but would be subject to the outcome of any such appeal.
Key Issues
1. Whether the demand notice dated 29/8/2019, issued by the Joint Director, BBMP, demanding ground rent and other fees, is legally sustainable? (Question of law) 2. Whether the circular dated 21/9/2017, issued by the Commissioner, BBMP, is legally sustainable? (Question of law) 3. Whether the BBMP has the authority to collect ground rent and other fees without proper sanction from the government? (Question of law) Petitioner's arguments: The petitioner contended that the levies of Ground Rent, License Fee, Building License Fee, Scrutiny Fee, and Security Deposit lacked statutory sanction and were ultra vires the Karnataka Municipal Corporations Act, 1976. They relied on a coordinate bench judgment in W.P.No.36017/2018 and connected matters, which had held similar bye-laws and circulars to be ultra vires the Act. The petitioner argued that Clause 3.8 of the BBMP Building Bye-laws, 2003, providing for ground rent, was devoid of legal authority. They also argued that the BBMP had no authority to collect taxes under the guise of ground rent without government sanction and that the ground rent was not applicable as they were not using public land for stocking materials. Revenue/State's arguments: The judgment does not record specific arguments from the respondents (State of Karnataka and BBMP) beyond their representation through counsel. However, the court's decision implies that the respondents' actions were based on the impugned circulars and bye-laws which were later found to be without statutory backing.
Sections Cited
Section 423(20-b)
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Cause title — parties, addresses and appearances
ORAL ORDER The captioned petition is filed seeking for the following reliefs:
"WHEREFORE under circumstances, the Petitioner above named prays that this Hon'ble Court be HC-KAR NC: 2025:KHC:21715 pleased to issue a writ in the nature of Certiorari or any other writ, order or direction (a) Quashing the Demand Notice Dt: 29/8/2019, bearing No. BBMP/Addl.Dir/JD North/LP/0431/ 2012-13, issued by 3rd Respondent, the Joint Director, (Town Planning North), BBMP, N. R. Circle, Bengaluru-560002, vide Annexure-A; (b) Quashing the Circular dated: 21/9/2017 bearing No. Mu.Le.Aa/PR/GST-01/2017-18, issued by the 2nd Respondent i.e., The Commissioner, Bruhat Bangalore Mahanagara Palike, vide Annexure-B; (c) Issue such writ in the nature of Mandamus directing the respondents not to insist/demand the petitioner for the payment of Ground rent for issuance approved plan in favour of petitioner in view of the Annexure-B. and grant such other reliefs; (d) declare that the BBMP has no authority to collect the taxes under the guise of collection of ground rent and other fee under various heads, without sanction by the Government; (e) declare that the ground rent levied on the petitioner for obtaining approved plan is bad in law, since the petitioner is not using the public HC-KAR NC: 2025:KHC:21715 land/property for stocking of building materials for construction purposes; (f) Pass such other orders including the order as to costs as this Hon'ble Court deems fit to grant under the 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 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:21715 (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. HC-KAR NC: 2025:KHC:21715 (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 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 HC-KAR NC: 2025:KHC:21715 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 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 HC-KAR NC: 2025:KHC:21715 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 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; HC-KAR NC: 2025:KHC:21715 ORDER (i) The writ petition is allowed. (ii) The impugned demand notice dated 29.08.2019 issued by respondent No.3 as per Annexure-A is hereby set-aside. (iii) Respondent- BBMP is hereby directed to issue fresh/modified plan as the case may be. (iv) 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. (v) Respondent- BBMP is hereby directed to forthwith process the petitioner's application seeking building license, sanction of the building plan and occupancy certificate , strictly in accordance with law. (vi) It is made clear that the issuance of the building license, approval plan and occupancy certificate shall not be withheld merely on the ground that the BBMP is HC-KAR NC: 2025:KHC:21715 contemplating to file an appeal against the reported judgment. (vii) If the building license, sanction plan and occupancy certificate 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.: 12
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.