A.Rabindran Kamak vs. State Of Tamilnadu

Held

The Court held that the respondents cannot collect GST from 2008 onwards, as GST was implemented only from 2017, and such collection would be against Article 265 of the Constitution. Regarding the liability for rent, the Court opined that the appellants should only be liable for ground rent and not for the superstructure they constructed. The Court found the steep increase in rent from Rs. 6 to Rs. 59 per square foot to be erroneous. Consequently, the Court modified the writ petition orders, directing the respondents to grant a personal hearing for finalizing the rent. Until the enquiry is completed, the appellants are directed to pay Rs. 10 per square foot from 14.03.2021 to 13.03.2024, with a 15% increase for subsequent years. The Court also left the plea of limitation open for the appellants to raise before the respondents, who shall consider it as per law.

Facts

The appellants are lessees of land in Tiruchirapalli Corporation, leased before 1947, for manufacturing defence logistics. They constructed shops and paid lease rent without default for over 75 years. Initially, rent was Rs. 0.30 per square foot. In 2001, an enhancement was proposed but cancelled. Subsequently, rent was fixed at Rs. 6 per square foot from 2001. The Corporation issued proceedings dated 24.04.2021, demanding significantly increased rent (Rs. 59 per square foot) for the ground alone, effective from 14.03.2021. The appellants filed a writ petition challenging these proceedings, seeking to quash them and continue paying rent at the prevailing rate. The Writ Court directed payment of arrears from 01.04.2001 to 31.03.2021 and rent at Rs. 29.50 per square foot (50% of the demanded rate) for the period from 01.04.2001 onwards, with a condition to pay any difference upon finalization of rent through public auction. The eviction notice was quashed subject to these conditions. The appellants filed these writ appeals against this order.

Key Issues

1. Whether the demand for GST from 2008 onwards is legally sustainable, given that GST came into effect in 2017? The appellants argued that demanding GST from 2008 violates Article 265 of the Constitution, as tax can only be levied and collected by the authority of law. The respondents did not record any specific argument on this point. 2. Whether the appellants are liable to pay rent for the superstructure constructed by them or only for the ground? The appellants contended that since they constructed the superstructure, the respondents should fix rent only for the ground. The respondents' position on this was not explicitly recorded. 3. Whether the steep increase in rent demanded by the respondents is arbitrary and erroneous? The appellants argued that the demand for Rs. 59 per square foot, a tenfold increase from Rs. 6 per square foot, is erroneous and disproportionate. 4. Whether the demand is barred by limitation? This issue was raised by the appellants.