GST Update

 Desk of CA. Praveen Sharma – 1103  Series (CAPS) 

KARNATAKA HIGH COURT  IN THE CASE OF Subbaiah A.P. v. The Deputy Commissioner

No GST on Compulsory Land Acquisition Compensation: Refund With 15% Interest Ordered

Outcome: In favour of petitioner

The petitioners are individual landowners, rather than a company. 

 Background: Four landowners’ house property was compulsorily acquired for widening the Mysuru–Madikeri Highway.

GST deduction: Authorities deducted ?12,28,906 as GST from their compensation.

Challenge: The landowners contested the deduction, asserting that they had supplied neither goods nor services.

No taxable supply: The Court held that compulsory acquisition under the State’s statutory powers does not constitute a GST supply.

Immovable property: The acquired land and attached structure were immovable property.

Structure argument rejected: Authorities identified no GST provision authorising taxation of the acquired structure.

Excess of authority: The Court held that deducting GST from the compensation exceeded the respondents’ powers.

Refund ordered: The award notice was quashed to the extent of the GST deduction, and ?12,28,906 was ordered refunded.

Personal recovery of interest: 15% annual interest, from the award date until payment, was directed to be recovered personally from the concerned officer.

Litigation costs: The Court also ordered ?50,000 as costs for expenses incurred in pursuing the petition.

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Regards
CAPS