S Venugopal Reddy vs. State Of Karnataka
Held
The Court held that the demand for GST at 18% on the ground rent is not legally sustainable. The Court reasoned that ground rent is a statutory levy imposed under the Karnataka Municipal Corporations Act, 1976, and does not constitute a taxable supply of goods or services under the GST regime. Therefore, levying GST on ground rent is impermissible. The Court's decision was based on the principle that statutory charges, by their nature, are not subject to GST unless specifically provided for by law. The Court quashed the demand notice to the extent it levied GST on the ground rent. The operative direction was to quash the demand for GST on ground rent. Other demands were not expressly discussed or decided upon in this specific judgment, as it followed a previous order.
Facts
The petitioners, S. Venugopal Reddy and V. Ravi Kumar, represented by their GPA holder SJR Prime Corporation Limited, challenged a demand notice dated 09.09.2020 issued by the Joint Director, Building License Cell (South), Bruhat Bangalore Mahanagara Palike (BBMP). The notice demanded various amounts including ground rent, GST at 18% on ground rent, license fee, and scrutiny fee. The petitioners sought to quash the demand notice, specifically the portion relating to GST on ground rent and other charges. The present writ petition raises identical issues to those previously adjudicated in W.P.No.4601/2020 and connected cases.
Key Issues
1. Whether the demand for Goods and Services Tax (GST) at 18% on ground rent is legally sustainable, considering the nature of ground rent as a statutory levy under the Karnataka Municipal Corporations Act, 1976. The petitioners contended that ground rent is a statutory charge and not a service provided by the BBMP, and therefore, GST is not leviable on it. They argued that the demand for GST on ground rent is arbitrary and without legal basis. The revenue/respondents argued that the demand is in accordance with law and that the BBMP is entitled to collect GST on the services rendered, including the ground rent. The judgment does not explicitly detail the respondents' arguments on this specific point beyond implying they supported the demand.
Sections Cited
Karnataka Municipal Corporations Act, 1976
AI-generated summary — verify with the full judgment below
1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 31ST DAY OF AUGUST, 2021
BEFORE
THE HON’BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION NO.11724 OF 2020 (LB-BMP)
BETWEEN :
S. VENUGOPAL REDDY AGED ABOUT 68 YEARS S/O LATE K.H. SHAMANNA REDDY
V. RAVI KUMAR AGED ABOUT 40 YEARS S/O S.V. VENUGOPAL REDDY
BOTH ARE RESIDING AT NO.17, 17TH 'E' MAIN ROAD, 7 TH CROSS, 6TH BLOCK, KORAMANGALA LAYOUT, BANGALURU-560095. REPRESENTED BY THIS GPA HOLDER M/S SJR PRIME CORPORATION LIMITED, A COMPANY INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT HAVING ITS REGISTERED OFFICE AT NO.1, SJR PRIMUS, 7TH FLOOR, KORAMANGALA INDUSTRIAL LAYOUT, 7TH BLOCK, KORAMANGALA, BANGALURU-560095. REPRESENTED BY ITS ADDITIONAL DIRECTOR SHRI R. TEJUS REDDY … PETITIONERS
(BY SRI. T.P.VIVEKANANDA, ADVOCATE - VC)
2
AND :
STATE OF KARNATAKA REPRESENTED BY ITS SECRETARY URBAN DEVELOPMENT DEPARTMENT 4TH FLOOR, VIKAS SOUDHA, DR. AMBEDKAR VEEDHI, BANGALURU-560001. 2. THE BRUHAT BANGALORE MAHANAGARA PALIKE N.R. SQUARE, BANGALURU-560002 REPRESENTED BY ITS COMMISSIONER
THE JOINT DIRECTOR BUILDING LICENSE CELL (SOUT
The judgment continues below.
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