Demand for GST in accordance with law : Bombay High Court

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Mumbai : The Bombay High Court recently said the demand for payment of Goods and Services Tax is in accordance with the law and dismissed a petition saying its demand “cannot be said to be vitiated by any error of law.”

In non-legal terms, the verdict meant the demand cannot be blamed on a shortcoming in the law. A Division Bench of Justice (Bombay High Court) S.C. Dharmadhikari and Justice P.D. Naik was hearing a petition filed by Builders Association of Navi Mumbai and Neelsidhi Realties.

They were challenging an order relating to the levying of GST on the one-time lease premium charged by City Industrial and Development Corporation (CIDCO).

The petitioners said they have contributed to the growth and development of Navi Mumbai by constructing and developing several residential and commercial properties. The projects, they said, have been carried out after CIDCO exercised its statutory functions under the Maharashtra Regional and Town Planning Act.

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After accepting the invite from CIDCO, the petitioners obtained plots in Navi Mumbai and Panvel on a long-term lease of 60 years. What the petitioners are questioning is that when the allotment letter was issued, they were called upon to pay, on the one-time lease premium amount, 18% GST through a demand draft drawn in the name of CIDCO.

Therefore, they approached the GST Commissionerate and when the authorities did not respond to their correspondence, they moved court.

The counsel appearing for the petitioners said that such a tax cannot be levied, assessed and recovered and a long-term lease of 60 years amounts to sale of the immovable property.

‘No merit in plea’

The Bombay High court said, “On a plain reading of the GST Act, we do not see how we can agree with the petitioners. We are of the clear view that the demand for payment of GST is in accordance with the law. The demand cannot be said to be vitiated by any error of law apparent on the face of the record. In these circumstances, we do not find any merit in the writ petition and dismiss it.”


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