S M Varadaraju vs. State Of Karnataka

Facts

The petitioners, represented by their GPA holder M/s Sruthika Builders and Developers, challenged a demand notice dated February 17, 2020, issued by the Joint Director, Town Planning (South), Bruhat Bangalore Mahanagara Palike (BBMP). The demand notice included charges for ground rent, Goods and Services Tax (GST) at 18% on ground rent, and scrutiny fees. The total disputed amount, as per the prayer, includes Rs. 41,11,966/- towards ground rent, Rs. 7,40,154/- towards GST, and Rs. 2,14,340/- towards scrutiny fees. The petitioners sought to quash this demand notice. The present writ petition raises issues identical to those considered in W.P. No. 4601/2020 and connected cases.

Held

The Court disposed of the writ petition by following its order dated August 4, 2021, in W.P. No. 4601/2020 and connected cases, as the issues were identical. The judgment does not provide the specific findings or reasoning for the earlier order. However, since the current petition is disposed of by following that order, it implies that the outcome of the earlier decision governs this case. The operative directions would have been those contained in the August 4, 2021 order, which are not detailed here. The specific findings on the legality of GST on ground rent and scrutiny fees, and the reasoning behind them, are not elaborated in this order as it relies on a previous decision.

Key Issues

1. Whether the demand for GST at 18% on ground rent is legally sustainable, considering the nature of ground rent and its taxability under GST laws? 2. Whether the demand for scrutiny fees is justified and legally permissible under the relevant provisions of law? The petitioners argued that the demand for GST on ground rent is erroneous. They contended that ground rent is a statutory charge and not a supply of goods or services that would attract GST. They likely argued that the demand for scrutiny fees was also without legal basis or excessive. The respondents, represented by the State and the BBMP, would have argued for the validity of the demand notice, asserting that the charges, including GST and scrutiny fees, were levied in accordance with applicable laws and bylaws. They would likely rely on the statutory powers of the BBMP to levy such charges and collect taxes.