Siddheshwari Griha Nirman Private Limited vs. The State Of Karnataka

Facts

The petitioners, Auroheights Realty LLP and Sattva Developers Pvt Ltd in one writ petition, and Siddheshwari Griha Nirman Private Limited in another, challenged demand notices issued by the Bruhat Bengaluru Mahanagara Palike (BBMP) and its Assistant/Joint Director of Town Planning. The demand notices, dated July 4, 2020, and November 26, 2019, respectively, required the petitioners to deposit ground rent along with Goods and Services Tax (GST) calculated at 18%. In WP No. 9046/2020, the disputed amount for ground rent inclusive of GST was Rs. 34,91,150/-. In WP No. 52097/2019, the disputed amount was Rs. 3,42,01,535.00. The petitioners are seeking to quash these demand notices.

Held

The High Court of Karnataka disposed of these writ petitions by following its previous order dated August 4, 2021, passed in W.P.No.4601/2020 and connected cases. The judgment does not provide the specific details of the order in W.P.No.4601/2020, nor does it elaborate on the reasoning or findings pertaining to the GST levy on ground rent in the present judgment. Therefore, the specific findings on the issues raised, the reasoning, and the ratio decidendi are not recorded in this excerpt. The operative directions would have been to follow the order in the earlier batch of cases, which could have involved quashing the demand, remanding the matter, or upholding the demand, depending on the outcome of the prior judgment.

Key Issues

1. Whether the demand notices issued by the respondent authorities, demanding ground rent along with 18% GST, are legally sustainable? (Question of law) Petitioners' arguments: The petitioners contended that the demand for GST on ground rent was not legally permissible. They argued that ground rent is a statutory charge and not a supply of goods or services, and therefore, GST cannot be levied on it. They likely relied on principles of statutory interpretation and potentially GST law provisions that define taxable supply. Respondents' arguments: The respondents, the State of Karnataka and the BBMP, likely argued that the demand was in accordance with the prevailing tax laws and that ground rent, when collected by the BBMP, constitutes a taxable supply attracting GST. They would have asserted the validity of the demand notices based on their interpretation of the GST Act and relevant notifications or circulars, if any.