Sai Sravanthi Infra Projects Pvt Ltd Vs State of Karnataka (Karnataka High Court)
The Karnataka High Court partly allowed the petition challenging the demand dated 18.02.2022 for charges relating to sanction of a building plan. The petitioners were required to pay scrutiny fee, ground rent, development fee, plan paper fee, CGST, SGST, labour welfare fund and security deposit, totalling ₹4,43,00,450/-. They challenged the authority to levy these charges and the upfront collection of labour welfare cess.
The Court held that under Section 29 of the Bangalore Development Authority Act, 1976, the authority could exercise certain municipal powers only after notification by the State Government, and found no provision authorising collection of ground rent, scrutiny fee or security deposit. Relying on the decision in Mr.Sunderam Shetty, the Court held that such fees require authority of law and quid pro quo. It also considered M/s Sapthagiri Shelters, noting that its decision was under challenge in W.A.No.1226/2025.
The Court quashed the demand for scrutiny fee, ground rent and security deposit. Regarding labour welfare cess, it held that the petitioners were liable to pay it, but not upfront; collection had to follow Rule 4 of the Building and Other Construction Workers’ Welfare Cess Rules, 1998. The Court further held that CGST and SGST could not be collected because sanctioning a building plan involved no supply of goods or provision of services.
