Sri B M Chandra vs. State Of Karnataka

Facts

The petitioners, represented by their GPA holder M/s Sundew Homes, challenged a demand notice dated May 30, 2020, issued by the Joint Director, Building License Cell (North), Bruhat Bangalore Mahanagara Palike (BBMP). The demand notice sought payment of various charges including scrutiny fee, license fee, ground rent, GST on security deposit, and construction workers welfare cess. The petitioners sought to quash these demands. The writ petition was filed under Article 226 of the Constitution of India. The respondents are the State of Karnataka (Urban Development Department and Department of Labour) and the BBMP and its Joint Director.

Held

The Court noted that the present writ petition raised identical issues to those considered in W.P.No.4601/2020 and connected cases, which were disposed of by an order dated August 4, 2021. Consequently, the Court decided to dispose of this writ petition by following the order passed in the aforementioned batch of cases. The specific findings on the issues of GST on security deposit and construction workers welfare cess, as decided in the August 4, 2021 order, were not detailed in this judgment. However, the operative direction was to dispose of the present petition in line with the prior decision. No specific issue was left undecided.

Key Issues

1. Whether the demand for GST on the security deposit is legally sustainable, considering the nature of a security deposit as per Section 17(5) of the CGST Act, 2017, and the principles laid down in various judicial pronouncements regarding the taxability of security deposits. The petitioners argued that a security deposit is refundable and therefore not a supply attracting GST. They contended that the demand for GST on the security deposit is arbitrary and contrary to established legal principles. The revenue or State did not record any specific arguments on this point in the judgment. 2. Whether the demand for construction workers welfare cess is justified, considering the scope and applicability of the Cess Act and the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996. The petitioners argued that the cess was levied without proper justification or statutory basis. The revenue or State did not record any specific arguments on this point in the judgment.