Salarpuria Builders Private Limited vs. The State Of Karnataka
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The petitioner, Salarpuria Builders Private Limited, filed a writ petition challenging a demand notice dated April 20, 2021, issued by the Joint Director of Town Planning (North), Bruhat Bengaluru Mahanagara Palike (BBMP). The notice demanded Rs. 4,10,794/- towards ground rent and Rs. 73,943/- as GST on ground rent, totaling Rs. 4,84,737/-. The petitioner sought to quash this demand, declare the demand arbitrary and illegal, and sought a declaration that the labour cess should also be proportionately reduced as they are not liable for ground rent. They also sought to set aside a circular dated September 4, 2015, concerning the calculation of ground rent and a direction to issue a modified plan sanction/license without insisting on the payment of ground rent and GST.
Held
The Court allowed the writ petition, setting aside the impugned demand notice dated April 20, 2021, issued by Respondent No. 3 (Annexure-A). The Court directed the BBMP to issue a modified sanction plan and to process the petitioner's application for a building license and sanction of the building plan strictly in accordance with law. It was clarified that the issuance of the building license and approval plan shall not be withheld due to the BBMP contemplating an appeal against a reported judgment. The Court noted that the issue was substantially covered by a coordinate bench's judgment in W.P.No.23086/2022 and connected matters, which had quashed the Karnataka Municipal Corporations and Certain Other Law (Amendment) Acts of 2021 and 2023. This coordinate bench had also declared Section 18-A of the Karnataka Town and Country Planning Act, 1961, read with Rules 37-A and 37-C of the Karnataka Planning Authority Rules, 1965, applicable only to plots exceeding 20,000 square meters, declared the linking of levies to market value illegal, and struck down Clause 3.8 of the BBMP Building Bye-laws, 2003, concerning 'Ground Rent'. The ratio decidendi is that levies like ground rent and associated GST, if based on provisions that have been subsequently declared illegal or applicable under specific conditions not met by the petitioner, are unsustainable. The operative direction was to set aside the demand notice and direct the BBMP to proceed with the plan sanction and license issuance without insisting on the disputed charges.
Key Issues
1. Whether the demand notice issued by Respondent No. 3, demanding ground rent and GST on ground rent, is arbitrary and illegal, particularly in light of the petitioner's contention that they are not using public land for stocking building materials? (Mixed question of law and fact, concerning the interpretation and application of relevant municipal laws and bye-laws). 2. Whether the circular dated 04.09.2015, issued by Respondent No. 2 for calculating ground rent, is liable to be set aside? (Question of law, concerning the validity of administrative instructions). 3. Whether the petitioner is liable to pay ground rent and GST on ground rent for obtaining a modified plan sanction/license? (Question of law, concerning the levy of fees and taxes). Petitioner's arguments: The petitioner argued that the demand notice is arbitrary and illegal, and they are not liable to pay ground rent as they are not using public land for stocking building materials. They also contended that the circular for calculating ground rent should be set aside and that the labour cess should be proportionately reduced. They relied on the principle that levies should be based on actual usage and not on arbitrary calculations. Revenue/State's arguments: The judgment does not explicitly record arguments made by the respondents. However, the demand notice itself indicates their stance that ground rent and GST are leviable.
Sections Cited
Section 18-A, Rule 37-A, Rule 37-C, Section 45-B, Clause 3.8
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, it is prayed that this Hon'ble Court may be pleased to: a) Issue a Writ quashing the demand notice no BBMP/Addl.Dir/JD North/0021/18-19 dated 20.04.2021 issued by Respondent No. 3 so far as it directs the Petitioner herein to pay a sum of Rs.4,10,794/- (Four Lakh Ten Thousand Seven Hundred Ninety Four only) towards ground rent and GST on ground rent amount calculated at 18% amounting to Rs.73,943/- (Seventy Three Thousand Nine Hundred Forty Three only) totaling to Rs.4,84,737/- (Rupees Four lakhs eighty-four thousand seven hundred and thirty-seven only) (Annexure A) HC-KAR NC: 2025:KHC:21741 b) Issue a writ declaring that the action of the Respondent No. 3 in insisting on payment a sum of Rs.4,10, 794/- (Four Lakh Ten Thousand Seven Hundred Ninety Four only) towards ground rent and GST on ground rent amount calculated at 18% amounting to Rs.73,943/- (Seventy Three Thousand Nine Hundred Forty Three only) totaling to Rs.4,84,737/- (Rupees Four lakhs eighty-four thousand seven hundred and thirty-seven only) under the demand notice no BBMP/Addl. Dir/JD North/0021/18-19 dated 20.04.2021 as highly arbitrary and illegal. (Annexure A) c) Issue a writ declaring that the labour cess amount is also liable to be proportionately reduced in the impugned demand notice no BBMP/Addl. Dir/JD North/0021/18-19 dated 20.04.2021 as the petitioner is not liable to pay the ground rent. (Annexure A) d) Issue a writ setting aside the circular no HE NI N YO/J.D.(U)/DM3/PR/320/2015- 16 dated 04.09.2015 issued by the 2nd HC-KAR NC: 2025:KHC:21741 respondent for calculating the ground rent, Vide Annexure-B e) Issue a writ directing the respondent no. 3 to issue modified plan sanction/license without insisting on the payment of the Ground Rent and GST by the petitioner. f) Issue a writ declaring the ground rent levied on the petitioner for obtaining modified, plan sanction/license is bad in law, since the petitioner is not using the public land/property for stocking of building materials for construction purpose. g) Grant such other relief that this Hon'ble Court may deem fit in the facts and circumstances of the above case."
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.23086/2022 and connected matters. The Co-ordinate Bench, while deciding the issue, has set-aside the Karnataka Municipal Corporations and Certain Other Law (Amendment) Act, HC-KAR NC: 2025:KHC:21741 2021 (Karnataka Act No.01 of 2022) and the Karnataka Municipal Corporations and Certain Other Law (Amendment) Act, 2023, (Karnataka Act No.37 of 2024). Therefore, this Court deems it fit to cull out the operative portion of the order, which reads as under; "ORDER (i) The writ petitions are partly allowed. (ii) The Karnataka Municipal Corporations and Certain Other Law (Amendment) Act, 2021 (Karnataka Act No.01 of 2022), is hereby quashed and set aside. (iii) The Karnataka Municipal Corporations and Certain Other Law (Amendment) Act, 2023, (Karnataka Act No.37 of 2024), is hereby quashed and set aside. (iv) It is hereby declared that the provisions contained in Section 18-A of the Karnataka Town and Country Planning Act, 1961, read with Rules 37-A and 37-C of the Karnataka Planning Authority Rules, 1965, are applicable only in respect of ‘Development Plan’ containing the proposal for construction on plots measuring more than 20,000 HC-KAR NC: 2025:KHC:21741 square meters in extent and not in respect of plots measuring less than 20,000 square meters. (v) It is hereby declared that if fee has been earlier collected for change of land use or while approving a layout plan, fee shall not be collected for subsequent ‘Development Plan’ in terms of the ‘Note’ found below TABLE I of Rule 37-A of the Karnataka Planning Authority Rules, 1965. (vi) It is hereby declared that the linking of the fee leviable under Rule 37-A of the Karnataka Planning Authority Rules, 1965, to the ‘market value’ or ‘guidance value’ as determined under Section 45-B of the Karnataka Stamp Act, 1957, is illegal. However, liberty is reserved to the respondent-State Government and the BBMP to re- fix a standard after collecting empherical data. (vii) Consequently, all the impugned Circulars which seek to give effect to the Rules 37-A and 37- C of the Karnataka Planning Authority Rules, 1965, are hereby quashed and set aside. (viii) It is hereby declared that Clause 3.8 of the Bengaluru Mahanagara Palike Building Bye- laws, 2003, providing for ‘Ground Rent’, is illegal and are accordingly quashed and set aside. HC-KAR NC: 2025:KHC:21741 (ix) Consequently, all the impugned Demand Notices raised by the respondent-BBMP, in respect of the writ petitioners herein are also quashed and set aside. It would be advisable that the BBMP may come out with a scheme for ‘One Time Settlement’ and settle the levy and collect the fee generally acceptable to the citizens of Bengaluru. This would also augment the present situation."
In the present writ petition, the core issue raised stands substantially covered and decided by the authoritative pronouncement of the coordinate bench, wherein the writ petitions were partly allowed and several consequential reliefs were granted. The Hon’ble Court, in unequivocal terms, quashed and set aside the Karnataka Municipal Corporations and Certain Other Law (Amendment) Acts of 2021 and 2023 (Karnataka Act Nos.01 of 2022 and 37 of 2024 respectively).
The Court further declared that the provisions under Section 18-A of the Karnataka Town and Country Planning Act, 1961, read with Rules 37-A and 37-C of the Karnataka Planning Authority Rules, 1965, are applicable HC-KAR NC: 2025:KHC:21741 only to development proposals concerning plots exceeding 20,000 square meters, and not to smaller plots. Importantly, it was also held that if a fee has been previously collected for change of land use or approval of layout plan, no further fee shall be levied for subsequent development plans, in view of the explanatory 'Note' to Table I of Rule 37-A.
The Court declared illegal the linkage of such levies to market or guidance value under Section 45-B of the Karnataka Stamp Act, and consequently, quashed all Circulars and demand notices issued to give effect to such unlawful interpretations. Clause 3.8 of the BBMP Building Bye-laws, 2003, imposing 'Ground Rent', was also struck down.
In view of these comprehensive declarations and findings, it is submitted that the controversy raised in the present writ petition no longer survives for adjudication independently, as it is squarely covered by the binding HC-KAR NC: 2025:KHC:21741 judgment of the coordinate bench. In the light of the law laid down in the reported judgment substantially covering the issue, which is raised in the captioned writ petition, the writ petition is liable to be allowed strictly aligning to the operative portion of the said writ petition.
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 20.04.2021 issued by respondent No.3 as per Annexure-A is hereby set-aside. (iii) Respondent- BBMP hereby directed to issue modified sanction plan. (iv) Respondent- BBMP is hereby directed to forthwith process the petitioner's application seeking building license and sanction of the building plan, strictly in accordance with law. HC-KAR NC: 2025:KHC:21741 (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 license 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.: 35
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.