Smt. P. S. Shamala Vs Deputy Commissioner (Karnataka High Court)
The Karnataka High Court allowed the writ petition challenging the deduction of ₹18,39,252 towards 18% GST from compensation awarded for compulsory acquisition of the petitioner’s land measuring 6.5 guntas for widening the Mysuru–Madikeri Highway. The compensation was determined at ₹1,21,33,938, from which GST was deducted by the acquiring authority.
The petitioner contended that compulsory acquisition of land does not amount to a sale of goods or provision of services and therefore the Central Goods and Services Tax Act, 2017, was inapplicable. It was also submitted that this Court had earlier held that no TDS could be deducted from compensation payable in similar land acquisition cases.
The respondents contended that GST was applicable on the works contract or structural component assessed under the award and that the levy had been uniformly applied to all landowners.
The High Court observed that acquisition of the petitioner’s property by the Union of India and the deduction of GST were undisputed. Referring to Section 3 of the Transfer of Property Act, 1881, the Court noted that buildings attached to land form part of immovable property. It further observed that GST is a tax on the supply of goods or services under Article 366(12A) of the Constitution of India, whereas compulsory acquisition involves expropriation of property through statutory power and not a supply of goods or services. The Court held that the petitioner had neither sold goods nor provided services by surrendering property under compulsory acquisition.
