Mahatma Education Society (Regd) vs. The Estate Officer

Held

The Court allowed the petition and quashed the impugned notice. The Court found merit in the petitioner's contention that they had made payments via Demand Drafts/Pay Orders and that the respondents had failed to encash them. The Court held that the inaction and omission on the part of the respondents to encash the Demand Drafts/Pay Orders could not be attributed to the petitioner. Consequently, the liability to pay interest for delayed payment could not be fastened upon the petitioner, given the evidence of payments. The Court directed the petitioner to submit revalidated Demand Drafts/Pay Orders to the respondents within three weeks. Upon submission, the respondents were directed to take account of all payments, including the revalidated drafts, and pass an appropriate decision within two months. The Court clarified that the petitioner would not be liable to pay interest on payments already made.

Facts

The petitioner, Mahatma Education Society, filed a writ petition seeking to quash a notice dated 30.06.2022 issued by the Estate Officer of the Bengaluru Development Authority (BDA). The notice demanded payment of Rs.10,01,214/- from the petitioner. The petitioner argued that GST is not payable on the annuity as the lease agreement was executed in 1991, prior to the GST regime which commenced on 01.07.2017. Furthermore, the petitioner contended that they had already made payments towards the annuity via Demand Drafts/Banker's Cheques, as evidenced by documents annexed to the petition. The petitioner claimed that the BDA failed to encash these instruments, and therefore, any delay in payment and subsequent interest liability was attributable to the respondents, not the petitioner.

Key Issues

1. Whether GST is leviable on the annuity payment when the lease agreement was executed prior to the introduction of GST on 01.07.2017? 2. Whether the petitioner is liable to pay interest on delayed annuity payments when the delay is attributable to the respondent's failure to encash the Demand Drafts/Pay Orders submitted by the petitioner? Petitioner's contentions: The petitioner argued that no GST is payable on the annuity because the lease agreement predates the GST regime. They also contended that they had fulfilled their payment obligations by submitting Demand Drafts/Pay Orders, and the respondent's failure to encash these instruments caused the delay. Therefore, the petitioner should not be held liable for interest on delayed payments. The petitioner relied on the documents annexed to the petition as proof of payment and communication. Respondents' contentions: The respondents argued that the petition lacked merit and should be dismissed. However, they also submitted that if the petitioner were to revalidate and resubmit the Demand Drafts/Pay Orders, the respondents would reconsider the claim and pass appropriate orders in accordance with the law.