Smt Manjula Vs the Deputy Commissioner

THE SPECIAL LAND ACQUISITION OFFICER AND COMPETENT AUTHORITY, NATIONAL HIGHWAY-275 (MYSORE - MADIKERE DIVISION), NO.984, 1^ST FLOOR, GEETHA ROAD CHAMARAJPURAM, MYSORE-570005

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HC-KAR

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NATIONAL HIGHWAY AUTHORITY OF INDIA MINISTRY OF ROAD TRANSPORT AND HIGHWAYS GOVT OF INDIA, REGIONAL OFFICE, BESIDE NAGASANDRA METRO STATION BANGALORE-560073 REP BY ITS DEPUTY GENERAL MANAGER

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PROJECT DIRECTOR NATIONAL HIGHWAY AUTHORITY OF INDIA PROJECT IMPLEMENTATION UNIT BASAVANAPURA (RAMADEVARAPADA) RAMANAGARA -562159

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…RESPONDENTS

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(BY SRI. ADITYA DIWAKAR, ADDITIONAL GOVERNMENT ADVOCATE FOR RESPONDENT NO.1;

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SRI. N. KUMAR, ADVOCATE FOR RESPONDENT NOS.2 TO 4)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE RESPONDENTS NO.2 TO 4 TO PAY THE AMOUNT DEDUCTED AS GST A SUM OF RS.1,84,655.59/- TOWARDS THE ACQUISITION OF LAND TO AN EXTENT OF 2 ACRE 27 GUNTAS WHICH INCLUDES HOUSES IN SY.NO.91/2 OF MANCHADEVANAHALLI VILLAGE, KASABA HOBLI, PERIYAPATNA TALUK, MYSORE DISTRICT VIDE ANNEXURE-C MADE IN NO.LAQ/NHAI/NH-275/ADDL-AWD-2/MANEHADEVANAHALLI/ 15/2023-24 DATED 10.09.2024 AND ETC.

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE R. NATARAJ

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ORAL ORDER

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The petitioners have sought for a writ in the nature of mandamus directing the respondent Nos.2 to 4 to reimburse the Goods and Services Tax (GST) amount of Rs.1,84,655.59 that was deducted out of the compensation paid in respect of

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the acquisition of the land measuring 2 acres 27 guntas in Sy.No.91/2 of Manchadevanahalli, Kasaba Hobli, Periyapatna Taluk, Mysuru District, and award interest on the deducted amount of GST from the date of the award till the date of payment.

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The petitioners claim that the land belonging to them measuring 2 acres 27 guntas in Sy.No.91/2 of Manchadevanahalli, Kasaba Hobli, Periyapatna Taluk, Mysuru District, was acquired by the Union of India for the purposes of respondent No.3 for widening Mysuru - Madikeri Highway. An award was passed determining the compensation payable at a sum of Rs.10,43,69,084.05. The respondent No.2 deducted a sum of Rs.1,84,655.59 being 18% GST out of the compensation payable to the petitioners. The petitioners claim that they are not liable to pay GST as acquisition of land cannot be construed as sale of goods or providing of service. The petitioners are therefore, before this Court challenging the deduction of GST from the compensation payable to them.

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The learned counsel for the petitioners reiterated the above contentions and submitted that the provisions of the

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Central Goods and Service Tax Act, 2017 (henceforth referred to as 'GST Act') is not applicable to an acquisition of land. He also contends that provisions of the Income Tax Act, 1961, also are not applicable whenever agricultural land is acquired and compensation is paid. He submits that this Court in W.P.No.35685/2025 and connected cases has already taken a view that no TDS can be deducted from the compensation payable. He also contends that there is no sale of any goods or provision of any service for provisions of the GST Act to be attracted. He therefore, submits that the deduction of GST from

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the compensation payable to the petitioners is not only arbitrary but a colourable exercise of power.

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Respondent Nos.3 and 4 have filed a statement of objections in the connected petition in W.P.No.26239/2025, which is adopted in this petition. It is contended that the GST Act mandates levy of GST on works contract/structure valuation and the same was applied uniformly to all landlosers. It is contended that the petitioners' claim that compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, is exempt from any tax misconstrues the statutory framework. It

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is claimed that while compensation for land acquired may not attract GST, the structural component assessed under the award is liable to GST as per law.

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Learned counsel for respondent Nos.2 to 4

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reiterated the above contentions.

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I have considered the submissions of the learned counsel for the petitioners as well as the learned counsel for respondent Nos.2 to 4.

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The fact that the property of the petitioners is acquired for widening of the road by the Union of India is not in dispute. It is also not in dispute that a sum of Rs.10,43,69,084.05 was determined as compensation payable in respect of the land and building/s acquired. It is also not in dispute that the respondent No.2 has deducted a sum of Rs.1,84,655.59 towards 18% GST. An immovable property is defined under Section 3 of the Transfer of Property Act, 1881, to include everything attached to it or imbedded for the beneficial enjoyment of the immovable property. This therefore means that even buildings constructed on land are treated as immovable property. The GST is a tax on supply of goods or

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services or both as provided under Article 366(12A) of the Constitution of India, which was inserted with effect from 16.09.2016. An immovable property cannot at any stretch of imagination be construed as goods. Therefore, there is neither supply of goods nor services, but an expropriation of property of a citizen using statutory power. The petitioners have neither sold any goods nor provided any service in giving away their property. Therefore, even if a wide latitude is given to the words "supply of goods or service", the acquisition of property by the State in exercise of its power of eminent domain, cannot fall within the definition of the words "supply of goods or service".

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Though the respondent Nos.3 and 4 have filed a statement of objections boisterously contending that GST Act mandates levy of GST on works contract/structure valuation and the same was applied uniformly to all landlosers, they failed to explain under what provision of the GST Act, the acquisition of a land or structure would amount to supply of goods or provision of service. As a matter of fact, the High Court of Judicature at Madras in W.P.No.3278/2024 while considering a similar contention, has held that

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"In view of the admission of the third respondent (third respondent is National Highways Authority of India) in their counter affidavit, that no levy of GST is applicable and charged on the compensation amount paid to the petitioner and no GST has also been paid by the petitioner to any GST authorities of the Central Government or the State Government, no direction as sought for by the petitioner is necessary in this writ petition."

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This Court, while considering whether income tax could be deducted at source on the interest on compensation paid to a landloser, held that tax cannot be deducted at source even on the interest awarded under Section 28 of the Land Acquisition Act, 1894, as that forms part of the compensation and such interest is intended to factor inflation during the period between the determination of compensation and its payment.

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Therefore, this Court has no hesitation to hold that the respondents have acted in excess of their power in deducting GST from compensation payable to the petitioners.

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In that view of the matter, the award notice bearing

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No.LAQ / NHAI / NH-275 / Additional - AWD2 /

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HC-KAR

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Manchadevanahalli / 15 / 2023-24 dated 10.09.2024 issued by the respondent No.2 in so far as deducting GST from the compensation payable to the petitioners is quashed.

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The respondent No.2 is directed to refund the GST of Rs.1,84,655.59 deducted from the compensation payable to the petitioners along with interest at the rate of 15% per annum from the date of the award till the date of payment. Interest payable on the deducted GST shall be recovered from the respondent No.2 personally. The respondent No.2 shall pay cost of Rs.50,000/- (Rupees Fifty Thousand only) to the petitioners within a month, towards the expenses incurred in filing this unwanted petition.

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This petition stands disposed off on the above terms.

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Sd/(R. NATARAJ) JUDGE

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PMR

Smt Manjula v. the Deputy Commissioner

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Smt Manjula v. the Deputy Commissioner

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