Ajay Kumar Gupta vs. The State Of Madhya Pradesh

Held

The Court held that the petitioner is liable to pay development and street light charges as per the agreement dated 17.10.1986. Regarding the interest, the Court found that under Rule 10(3) of the M.P. Rajya Audyogik Bhoomi Evam Bhawan Prabandhan Niyam, 2019, a levy of 10% interest per annum on development and street light charges is permissible, even on demands made earlier. Therefore, the petitioner is liable to pay interest at 10% on the development and street light charges. Concerning GST, the Court noted that its imposition is governed by the Central Goods and Services Tax Act, 2017. As per Section 142(2)(a) of the Act, GST is to be paid on development and street light charges, which are considered income for respondents No. 2&3 and were withheld by the petitioner since 1986. However, the Court clarified that the petitioner may avail the benefit of input tax credit (ITC) from the Government as per law at a later stage after making the payment of GST. The petition was disposed of with these directions.

Facts

The petitioner, Ajay Kumar Gupta, operates M/s Neeluka Metal Powder and Chemicals. He purchased land in Village Singhwari, Tehsil Gohad, District Bhind. A dispute with the predecessor of respondents regarding industrial development of the adjoining area was resolved by an agreement dated 17.10.1986. This agreement declared the petitioner's land as freehold, with the condition of paying Rs. 500/- per acre per annum for development charges to M.P.A.K.V.N. (now MPIDC). The impugned order dated 06.04.2022 demanded these charges from 17.10.1986, along with 18% GST and 10% interest. The petitioner challenged this order, arguing that only development charges were payable, not GST or interest.

Key Issues

1. Whether the imposition of 18% GST on development and street light charges, retrospectively from 17.10.1986, is legally sustainable under the Central Goods and Services Tax Act, 2017? 2. Whether the levy of 10% interest per annum on the outstanding development and street light charges from 17.10.1986 is permissible under the M.P. Rajya Audyogik Bhoomi Evam Bhawan Prabandhan Niyam, 2019? Petitioner's contentions: The petitioner argued that the respondents' demand for interest and GST was arbitrary and illegal, as the agreement only stipulated payment of development charges. He contended that the imposition of GST and interest was an arbitrary exercise of power. Respondents' contentions: The respondents argued that the petitioner was willing to deposit development/maintenance charges, as indicated by a previous court order. They submitted that the petitioner had confined his relief to the imposition of GST, implying acceptance of other charges. They referred to the M.P. Rajya Audyogik Bhoomi Evam Bhawan Prabandhan Niyam, 2019, to justify the interest levy. They also stated that the petitioner could avail input tax credit (ITC) for GST at a later stage.