M/S Dharamkeshav Infra Private Limited vs. State Of Karnataka

Facts

The petitioner, M/s Dharamkeshav Infra Private Limited, filed a writ petition challenging a demand notice dated February 2, 2019, issued by the Bruhat Bengaluru Mahanagara Palike (BBMP). The demand notice, bearing reference number BBMP/ADDL.DIR/JDSOUTH/0024/18-19, included a demand for ground rent and Goods and Services Tax (GST) calculated at 18% thereon. The petitioner sought to quash this demand notice specifically concerning the ground rent and the associated GST. The respondents are the State of Karnataka and various authorities of the BBMP. The petitioner is represented by its Director. The court noted that the issue of ground rent had been previously considered in another writ petition, WP No. 4601/2020, and both counsels agreed that the judgment in that case would be applicable here.

Held

The Court allowed the writ petition. It held that the bye-laws under which Ground Rent, Licence Fee, Building Licence Fee, Scrutiny Fee, and Security Deposit were demanded are ultra vires the Act and consequently unenforceable. The Circular bearing No.ºÉ¤£ÀAiÉÆÃ/eÉ.r(G)/rJªÀiï3/¦Dgï/320/2015-16 dated 04.9.2015 was quashed. Similarly, 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 30.3.2017, which demanded Lake Rejuvenation Fee, were also quashed. The imposition of labour cess under the Welfare Cess Act was upheld. However, the demand for upfront payment of labour cess, as stipulated in Government Orders dated 18.01.2007 and 28.2.2007, was quashed. The Court clarified that the State or the BBMP is not prevented from levying these charges if they amend the Act and Rules accordingly. The ratio decidendi is that levies not specifically empowered by the Act or Rules, or those imposed through unenforceable bye-laws or circulars, are invalid. The operative direction was to quash the impugned demand notice in so far as it related to ground rent and GST thereon, and to quash specific circulars and upfront demand for labour cess.

Key Issues

1. Whether the bye-laws under which Ground Rent, Licence Fee, Building Licence Fee, Scrutiny Fee, and Security Deposit were demanded are ultra vires the Act and unenforceable? 2. Whether the Circular bearing No.ºÉ¤£ÀAiÉÆÃ/eÉ.r(G)/rJªÀiï3/¦Dgï/320/2015-16 dated 04.9.2015 is liable to be quashed? 3. Whether 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 30.3.2017 demanding Lake Rejuvenation Fee are liable to be quashed? 4. Whether the 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 28.2.2007 is valid? Petitioner's arguments: The petitioner sought to quash the demand notice concerning ground rent and applicable GST. The judgment indicates that the petitioner relied on a previous judgment in WP No. 4601/2020 concerning ground rent. Revenue/State's arguments: The judgment does not explicitly record arguments made by the respondents. However, it refers to the applicability of the judgment in WP No. 4601/2020, suggesting that the respondents' stance would align with the outcome of that case or that they conceded to its applicability.