M/S Sureshchandra Khandelwal Thru. Partner Sanjay Tolani vs. Indore Development Authority

Held

The Court held that the imposition of a compounding fee and GST on the petitioner was not justified. The Court found that the petitioner had taken all necessary steps to obtain permissions for developing a multiplex complex and had received NOCs from the IDA. Furthermore, resolutions passed by the IDA, including the one dated 27.03.2018, indicated that no violation of lease conditions was found. The Court observed that the respondents themselves certified through their resolutions and other documents that the petitioner had not committed any breach of lease conditions. Therefore, there was no occasion for the respondent IDA to invoke Rule 22(i) of Vyayan Niyam 2018 and impose compounding fees. Consequently, the impugned communication dated 03.10.2020 was quashed. The respondents were directed to refund the total amount of Rs.1,12,44,044/- along with interest at 6% per annum to the petitioner within three months. The petition was allowed.

Facts

The petitioner, M/s Sureshchandra Khandelwal, filed a writ petition challenging a communication dated 03.10.2020 from the Indore Development Authority (IDA), respondent No.1. The IDA refused to refund a compounding fee of Rs.87,94,118/- and GST of Rs.24,49,926/-, totaling Rs.1,12,44,044/-, which the petitioner claimed was wrongly collected. The petitioner held a lease for a plot of land granted in 1980, which was renewed in 2018 for 30 years. The petitioner intended to develop a multiplex complex, obtained necessary sanctions and NOCs from the Town and Country Planning Department and IDA. Subsequently, the petitioner applied for conversion of the leasehold plot to freehold. The IDA sought guidance from the Town and Country Planning Department, which permitted the conversion. The petitioner deposited Rs.1,60,60,621/- for the conversion. Upon receiving the registered transfer deed, the petitioner discovered the compounding fee and GST charges, which they contended were illegal as no lease violations were found.

Key Issues

1. Whether the imposition of a compounding fee and GST on the petitioner was justified under The Madhya Pradesh Vikas Pradhikarano Ki Sampatiyon Ka Prabandhan Tatha Vyayan Niyam, 2018 (Vyayan Niyam 2018), when no violation of lease conditions was found? Petitioner's arguments: The petitioner argued that the demand for compounding fee and GST was illegal and unsustainable. They contended that Vyayan Niyam 2018 does not provide for charging a compounding fee, and Rule 6 of the said rules prohibits charging such a fee once freehold conversion is done. The petitioner asserted that they had not violated any lease conditions, as evidenced by various communications and resolutions from the respondents, including Annexures P/5 and P/10, and a resolution dated 27.03.2018. Therefore, the compounding fee and GST were wrongly imposed. Revenue/State's arguments: The respondent IDA, in its reply, stated that no illegality had been committed. However, the judgment does not record specific arguments from the revenue or state regarding the justification of the compounding fee and GST in light of the petitioner's claim of no violation.