SMT. LALITHA S v. THE DEPUTY COMMISSIONER

Digitally signed by HEMALATHA J Location: HIGH COURT OF KARNATAKA

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

#3. NATIONAL HIGHWAY AUTHORITY OF INDIA MINISTRY OF ROAD TRANSPORT AND HIGHWAYS GOVT OF INDIA, DEPT. OF NATIONAL HIGHWAYS AUTHORITY (PWD) REGIONAL OFFICE BESIDE NAGASANDRA METRO STATION BANGALORE-560073 REPRESENTED BY ITS DEPUTY GENERAL MANAGER HC-KAR - 2 - NC: 2026:KHC:43252 WP No. 24040 of 2026 CNR: KAHC010534002026

#4. PROJECT DIRECTOR NATIONAL HIGHWAY AUTHORITY OF INDIA PROJECT IMPLEMENTATION UNIT BASAVANAPURA (RAMADEVARAPADA) RAMANAGARA -562159 (BY SMT. POOJA M. KOORSE, HIGH COURT GOVERNMENT PLEADER FOR RESPONDENT NO.1; SRI. N. KUMAR, ADVOCATE FOR RESPONDENT NOS.2 TO 4) …RESPONDENTS 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.1,14,815.29/- TOWARDS THE ACQUISITION OF LAND OF PETITIONER IN SY.NO.219/2 OF B. AGRAHARA VILLAGE, BELAGOLA HOBLI, SRIRANGAPATNA TALUK, MANDYA DISTRICT VIDE ANNEXURE C AND ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE R. NATARAJ ORAL ORDER The petitioner has 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.1,14,815.29 that was deducted out of the compensation paid in respect of the acquisition of the land measuring 10.08 guntas in Sy.No.219/2 of B. Agrahara Village, Belagola Hobli, Srirangapatna Taluk, Mandya District, and award interest on HC-KAR - 3 - NC: 2026:KHC:43252 WP No. 24040 of 2026 CNR: KAHC010534002026 the deducted amount of GST from the date of the award till the date of payment.

#2. The petitioner claims that the land belonging to her measuring 10.08 guntas in Sy.No.219/2 of B. Agrahara Village, Belagola Hobli, Srirangapatna Taluk, Mandya 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.8,89,035.20. The respondent No.2 deducted a sum of Rs.1,14,815.29 being 18% GST out of the compensation payable to the petitioner. The petitioner claims that she is not liable to pay GST as acquisition of land cannot be construed as sale of goods or providing of service. The petitioner is therefore, before this Court challenging the deduction of GST from the compensation payable to her.

#3. The learned counsel for the petitioner reiterated the above contentions and submitted that the provisions of the 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 HC-KAR - 4 - NC: 2026:KHC:43252 WP No. 24040 of 2026 CNR: KAHC010534002026 are not applicable whenever agricultural land is acquired and compensation is paid. He submits this Court W.P.No.35685/2025 and connected cases has already taken a view that TDS cannot 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 the compensation payable to the petitioner is not only arbitrary but a colourable exercise of power.

#4. Learned counsel for respondent Nos.2 to 4 contends the GST Act mandates levy of GST on works contract/structure valuation and the same was applied uniformly to all landlosers. He contends that the petitioner's 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. He contends that while compensation land acquired may not attract GST, the structural component assessed under the award is liable to GST as per law. HC-KAR - 5 - NC: 2026:KHC:43252 WP No. 24040 of 2026 CNR: KAHC010534002026

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

#6. The fact that the property of the petitioner 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.8,89,035.20 was determined as compensation payable in respect of the land and structure acquired. It is also not in dispute that the respondent No.2 has deducted a sum of Rs.1,14,815.29 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 services of 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 is construed as goods. Therefore, there is neither supply of goods nor services, but an expropriation of the HC-KAR - 6 - NC: 2026:KHC:43252 WP No. 24040 of 2026 CNR: KAHC010534002026 property of a citizen using statutory power. The petitioner has neither sold any goods nor provided any service in giving away his 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".

#7. Though the learned counsel for respondent Nos.2 to 4 contended that GST Act mandates levy of GST on works contract/structure valuation and the same was applied uniformly to all landlosers, he 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 "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 HC-KAR - 7 - NC: 2026:KHC:43252 WP No. 24040 of 2026 CNR: KAHC010534002026 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."

#8. 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.

#9. 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 petitioner.

#10. In that view of the matter, the award notice bearing No.LAQ / NHAI / NH-275 / Missing Trees & Structure Supplementary AWD-1 / B Agrahara / 2024-25 dated

07.07.2025 issued by the respondent No.2 in so far as deducting GST from the compensation payable to the petitioner HC-KAR - 8 - NC: 2026:KHC:43252 WP No. 24040 of 2026 CNR: KAHC010534002026 is quashed. The respondent No.2 is directed to refund the GST of Rs.1,14,815.29 deducted from the compensation payable to the petitioner 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 petitioner within a month, towards the expenses incurred in filing this unwanted petition.

#11. This petition stands disposed off on the above terms.

#12. Learned High Court Government Pleader respondent No.1 and Sri. N. Kumar, learned counsel for respondent Nos.2 to 4 are permitted to file memo of appearance within ten days. Sd/- (R. NATARAJ) JUDGE PMR List No.: 1 Sl No.: 21