M.Poomani Vs. The District Collector/Sole Arbitrator (Madras High Court)
Summary: The High Court disposed of a writ petition seeking payment of ₹70,51,506 allegedly deducted towards Goods and Services Tax (GST) from enhanced compensation awarded for land and buildings acquired for the expansion of National Highway 844 in Dharmapuri District, Tamil Nadu. The petitioner contended that compulsory land acquisition compensation was neither consideration for a sale of goods nor a taxable supply of goods or services and, therefore, no GST could be imposed on the compensation payable. The dispute was resolved in view of the National Highways Authority of India’s (NHAI) categorical statement in its counter affidavit that no GST had been levied on the petitioner and that no GST amount was payable to him.
The acquired properties comprised land and buildings bearing Door Nos. 1/802-D and 1/802-D1, near New National Highways, Vennampatti, in Survey Nos. 498/2F2 measuring 213 square metres and 498/2G measuring 896.04 square metres, situated at Virupatchipuram Village, Dharmapuri Taluk and District. The second respondent had initially passed an acquisition award on 6 July 2022. Dissatisfied with the compensation, the petitioner approached the first respondent under Section 3G(5) of the National Highways Act, 1956. Subsequently, an award dated 8 November 2023, bearing Reference No. S.R.742/2020/U2, fixed the balance or enhanced compensation payable to the petitioner at ₹3,43,57,249.
The petitioner alleged that the respondent authorities had calculated GST at 18% on the compensation and recommended deduction of ₹70,51,506 from the enhanced amount. Maintaining that land acquisition compensation could not attract GST, the petitioner submitted representations dated 15 December 2023 and 8 January 2024 requesting payment without the disputed deduction. As the representations remained unanswered, he approached the High Court seeking a writ of mandamus directing respondents 2 and 3 to release ₹70,51,506 within a time frame fixed by the Court.
During the hearing, the standing counsel representing the third respondent, NHAI, referred to paragraphs 11 and 12 of its counter affidavit. NHAI expressly agreed with the petitioner’s position that compensation for land and structures acquired under the National Highways Act, 1956 did not constitute a sale of goods or a supply of goods or services attracting GST. It clarified that it had neither levied GST on the petitioner nor paid any such amount to the Central or State GST authorities. Consequently, the petitioner had not incurred any GST liability requiring reimbursement.
NHAI further explained that the disputed GST component had been included in the building valuation prepared by the Executive Engineer, Public Works Department, Buildings (C&M) Division, Dharmapuri. According to NHAI, the first respondent had awarded this GST component over and above the building valuation, although its inclusion was erroneous. Since no GST was legally payable on the acquisition compensation, NHAI maintained that the petitioner was not entitled to receive any separate amount representing GST. Its counsel reiterated that the petitioner was not required to deposit any GST amount with the Government.
Considering these admissions, the High Court observed that no GST had been levied or charged on the compensation paid to the petitioner and that the petitioner had not paid GST to any Central or State Government authority. In those circumstances, the Court held that no direction of the nature sought in the writ petition was necessary. It accordingly disposed of the petition without issuing a direction to pay the disputed ₹70,51,506 and made no order as to costs. The order therefore records NHAI’s position that GST is not applicable to the acquisition compensation, while distinguishing the erroneous inclusion of a GST component in the valuation from an actual tax deduction or payment.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
1. This writ petition has been filed seeking for issuance of a writ of mandamus, directing respondents 2 and 3 to pay the amount of Rs.70,51,506/- (Rupees seventy lakhs fifty one thousand five hundred and six only) deducted by them from the enhanced compensation fixed by the first respondent towards compensation for the petitioner’s land and building bearing Door Nos.1/802-D and 1/802-D1, Near New National Highways, Vennampatti, comprised in S.No.498/2F2 (213 sq.mts) and 498/2G (896.04 sq.mts) in Virupatchipuram Village, Dharmapuri Taluk and District as per the Award dated 08.11.2023 Ref.No.S.R.742/2020/U2 fixing the balance/enhanced compensation payable to the petitioner as Rs.3,43,57,249/- (Rupees three crores forty three lakhs fifty seven thousand two hundred and forty nine only) within a time frame as fixed by this Court.
2. The case of the petitioner is that his land was acquired by the respondents for expansion of National Highways 844. Thus, the second respondent passed an Award on 06.07.2022. Challenging the same, the petitioner filed a claim petition before the first respondent under Section 3G(5) of the National Highways Act. While that being so, the respondent authorities, have levied 18% of compensation as GST and they have recommended to deduct the same on the enhanced compensation. The further case of the petitioner is that the Land Acquisition compensation will neither come under sale or goods nor come under goods and services and therefore, no GST can be levied. Hence, he has given representations to the respondents on 15.12.2023 and 08.01.2024, seeking to pay the compensation without deducting GST. Since there was no response from the respondents till date, the present writ petition has been filed.
3. Today, when the matter was taken up for hearing, the learned Standing counsel appearing for the third respondent/National Highways Authority of India, by referring to the counter affidavit filed by the third respondent, reiterated paragraph Nos.11 and 12 and the same read as follows:
”11. It is submitted that the third respondent also agrees with the view of the Petitioner that land compensation including the structure valuation acquired under the provisions of NH Act, 1956 will neither come under sale of goods nor come under goods and services therefore no GST can be levied. The Respondent has not levied any GST on the Petitioner and no GST has been paid by the Petitioner to the any GST Authorities of the Central Government & the State Government to entitle him to get it reimbursed from the third Respondent.
12. The GST has been awarded by the 1st Respondent over and above the valuation report of the building property of the Petitioner based on the valuation report given by the Executive Engineer, PWD, Buildings (C&M) Division, Dharmapuri wherein the GST component has been wrongly included. As rightly contended by the Petitioner in para 8 that land acquisition compensation will neither come under sale of goods nor come under goods and services and therefore no GST over and above the valuation of property cannot be levied and also the petitioner need not to deposit any GST amount with any Government Authorities on land acquisition compensation as such no amount towards GST is payable to the petitioner.”
By relying upon the counter affidavit, learned Standing Counsel for respondents submits that the petitioner need not deposit any GST amount with any Government Authorities on land acquisition compensation.
4. In view of the admission of the third respondent 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.
5. With the above observation, the writ petition is disposed of. However, there shall be no order as to costs.
