- 1 - HC-KAR NC: 2025:KHC:52280 WP No. 12564 of 2017 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9TH DAY OF DECEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE R. NATARAJ WRIT PETITION NO. 12564 OF 2017 (LB-TAX) BETWEEN: M/S. KARNATAKA WASTE MANAGEMENT PROJECT (A DIVISION OF RAMKY ENVIRO ENGINEERS LTD.,) HAVING ITS OFFICE TOWARDS DODDABALLAPUR ROAD, NH-207, KIADB INDUSTRIAL AREA, DODDASPET, NELAMANGALA TALUQ, BANGALORE RURAL DISTRICT, REPRESENTED HEREIN BY ITS PROJECT HEAD, MR. AMIT CHAUDHARY. …PETITIONER (BY SRI. RAHUL DEV, ADVOCATE) AND: 1. THE PANCHAYAT DEVELOPMENT OFFICER SOMPURA GRAMA PANCHAYATH, NELAMANGALA TALUK, BANGALORE RURAL DISTRICT-562 111. 2. SOMPURA GRAMA PANCHAYATH SOMPURA, NELAMANGALA TALUK, BANGALORE RURAL DISTRICT-562 111. BY ITS PANCHAYAT DEVELOPMENT OFFICER 3. STATE OF KARNATAKA REPRESENTED BY ITS PRINCIPAL SECRETARY, PANCHAYATH RAJ AND RURAL DEVELOPMENT DEPARTMENT, M.S. BUILDING, AMBEDKAR VEEDHI, BANGALORE-560 001. Digitally signed by MARKONAHALLI RAMU PRIYA Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:52280 WP No. 12564 of 2017 4. THE KARNATAKA INDUSTRIAL AREAS DEVELOPMENT BOARD 49, 4TH FLOOR, KHANIJA BHAVAN, RACE COURSE ROAD, BANGALORE-560001. REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER AND EXECUTIVE MEMBER (AMENDED VIDE ORDER DATED 13.02.2024) …RESPONDENTS (BY SRI. M.S.DEVARAJU, ADVOCATE FOR RESPONDENT NOS.1 AND 2; SRI. B. BOPANNA, ADDITIONAL GOVERNMENT ADVOCATE FOR RESPONDENT NO.3; SRI. P.V.CHANDRASHEKAR, ADVOCATE FOR RESPONDENT NO.4) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THE NOTICE DATED 19.07.2016 [ANNEXURE-A] ISSUED IS DISCRETIONARY, ARBITRARY AND UNCONSTITUTIONAL AND ULTRA VIRES THE PROVISIONS OF THE KARNATAKA GRAMA SWARAJ AND PANCHAYATH RAJ ACT AND THEREBY SET ASIDE THE SAME AND CONSEQUENTLY QUASH ALL FURTHER PROCEEDINGS THERETO. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE R. NATARAJ ORAL ORDER The petitioner has challenged a notice bearing No.¸ÉÆÃ.UÁæ.¥ÀA.£É®/2016-17 dated 19.07.2016 issued by respondent No.1. It has also sought for a declaration that the aforesaid notice as discriminatory, arbitrary and unconstitutional and - 3 - HC-KAR NC: 2025:KHC:52280 WP No. 12564 of 2017 ultra vires the provisions of the Karnataka Grama Swaraj and Panchayat Raj Act, 1993 (henceforth referred to as 'Act, 1993'). 2. (i) The petitioner claims that the State Government had leased 93.18 acres of land in Sompura village, Nelamangala Taluk, Bengaluru Rural District to it vide Government Order bearing No.FEE/124/ECO/2003 dated 30.11.2006 for establishment of Hazardous Waste Treatment Storage Disposal Facility called "Karnataka Waste Management Project" for a period of 51 years on a yearly rent of Rs.100/- per acre subject to enhancement at the rate of 5% per annum on the last paid rent. The petitioner had constructed the buildings and had put up other equipments needed for the purpose of processing hazardous waste. The respondent No.1 issued a notice dated 07.09.2015 demanding tax on property. The petitioner replied to the said notice and sought clarification as the notice was bereft of any details. The respondent No.1 replied and requested for certain documents from the petitioner, which were submitted. Thereafter, the petitioner was served with a notice dated 15.02.2016 demanding payment of total amount of Rs.2,23,00,288/- being the property tax, cess and licence fee. The petitioner issued a - 4 - HC-KAR NC: 2025:KHC:52280 WP No. 12564 of 2017 detailed reply and brought it to the notice of the respondent No.1 that the tax demanded exceeded the prescribed limit under Schedule IV of the Act, 1993. However, the respondent No.1 stuck to its demand and issued a final demand notice dated 19.07.2016 demanding a sum of Rs.2,76,46,352/-. (ii) The petitioner is therefore, before this Court challenging the computation as well as the authority of the respondent Nos.1 and 2 in demanding the property tax. 3. When this petition was taken up for 'Preliminary Hearing - B Group', the learned counsel for the petitioner brought to the notice of this Court that similar question arose in W.P.No.26031/2017 and connected petitions and the said petitions were allowed by a Co-ordinate Bench of this Court and it was declared that Panchayat has no authority to demand and collect the property tax for the properties, which lay in industrial areas formed by the Karnataka Industrial Areas Development Board unless those areas are withdrawn and handed over to the Panchayat. He therefore, submitted that notwithstanding the fact that the calculation of the property tax was not in accordance with the Schedule IV of the Act, 1993, - 5 - HC-KAR NC: 2025:KHC:52280 WP No. 12564 of 2017 the writ petition itself could be disposed off in view of the law declared by the Co-ordinate Bench of this Court, referred supra. 4. The writ petition is opposed by the respondent Nos.1 and 2 who have filed statement of objections inter alia contending that the petitioner is bound to pay tax to the Panchayat as prescribed under the Act, 1993 and as per Schedule IV of the Act, 1993. It is therefore, contended that the petitioner is liable to pay tax to the Panchayat as per the demand. The respondent Nos.1 and 2 had referred to the notice dated 15.02.2016 calling upon the petitioner to pay Rs.2,23,00,288/- as tax for the period from 2006-07 to 2012- 13. It is claimed that the petitioner has not paid property tax since 2006-07 till date and thus, the same is affecting the overall budgeting of developmental activities of the Panchayat. It is claimed that since the petitioner has put up construction on the land leased to it, it is bound to pay tax so long it lies within the limits of respondent Nos.1 and 2. It is also contended that the petitioner had offered to pay tax on the rental value and it is claimed that the respondent Nos.1 and 2 were not willing to accept the offer as the property had to be assessed to tax based on the capital value of the property and - 6 - HC-KAR NC: 2025:KHC:52280 WP No. 12564 of 2017 not on the concessional rate of rent, on which the Government had leased. 5. The learned counsel for respondent Nos.1 and 2 reiterated the above contentions and submitted that under Schedule IV of the Act, 1993, the Panchayat is entitled to tax even industrial units established in the industrial areas. He also submitted that under Article 243H of the Constitution of India, the Panchayat being a local authority is entitled to impose and collect tax on properties and therefore, the authority of the respondent Nos.1 and 2 cannot be doubted. 6. The learned counsel for respondent No.4 submitted that a Co-ordinate Bench of this Court has gone through the entire controversy in a great detail and has held that Panchayat has no power to tax buildings lying outside its jurisdiction. 7. I have considered the submissions of the learned counsel for the petitioner as well as the learned counsel for the respondent Nos.1 and 2 and the learned counsel for respondent No.4. - 7 - HC-KAR NC: 2025:KHC:52280 WP No. 12564 of 2017 8. (i) A Co-ordinate Bench of this Court while considering similar issue has held as follows:- "20. Upon careful examination of the additional documents produced by the learned counsel for the Gram Panchayat, this Court is of the clear view that none of the materials placed on record confer any statutory authority on the Panchayat to levy or collect taxes in respect of industrial establishments located within areas notified and developed by the KIADB under the provisions of the KIAD Act. Mere execution of a lease- cum-sale agreement or any administrative communication cannot vest such power in the Gram Panchayat in the absence of express delegation or statutory backing. 21. In this backdrop, any reliance on previous circulars is misplaced and unsustainable in law. Consequently, the power to regulate and approve development activities, including the right to levy and collect tax within such industrial estates, vests exclusively with the KIADB. The Gram Panchayat cannot usurp such authority in the absence of a specific statutory conferment. 22. In light of the binding circular dated 16.07.2024 issued by the State Government, which places the responsibility for planning and development approval solely with the KIADB, the claim of the Panchayat to continue exercising fiscal powers over such - 8 - HC-KAR NC: 2025:KHC:52280 WP No. 12564 of 2017 areas is clearly misconceived and without legal foundation. 23. The impugned demand notices, therefore, do not pass the test of legality and are clearly unsustainable in law. In the absence of jurisdiction vested by a valid notification under Section 37 of the KIAD Act, the levy amounts to arbitrary exercise of power and is liable to be set aside. Accordingly, point Nos.1 and 2 framed for consideration are answered in the negative and affirmative, respectively." (ii) While dealing with the contention of the Panchayat that it is authorized to levy tax on the industrial units in the industrial areas, the Co-ordinate Bench of this Court held as follows: "13. The amended Schedule-IV to the Karnataka Panchayat Raj Act, 1993, introduced by Act No.44 of 2015, recognizes the authority of Gram Panchayats to levy property tax, including on buildings situated within industrial areas such as KIADB industrial estates. However, a critical reading of the Schedule shows that such power is not absolute or automatic. The language used in the Schedule is clear: the power to impose tax on properties within KIADB or other notified industrial areas is subject to Government notification. The phrase "subject to notification" is a legislative condition precedent and must be interpreted harmoniously with the - 9 - HC-KAR NC: 2025:KHC:52280 WP No. 12564 of 2017 provisions of the KIAD Act, particularly Section 37. In the absence of a statutory notification by the State Government withdrawing such area from KIADB and conferring jurisdiction upon the Gram Panchayat, the latter cannot unilaterally impose property tax. Any such exercise would be ultra vires and without authority of law." 9. Therefore, the issues arise in this writ petition are squarely covered by the judgment of Co-ordinate Bench of this Court, referred supra. There is no reason why the petitioner should not be given similar benefit. 10. Consequently, this petition is allowed. The impugned demand notice bearing No.¸ÉÆÃ.UÁæ.¥ÀA.£É®/2016-17 dated 19.07.2016 issued by respondent No.1 is quashed. It is open for the respondent Nos.1 to 2 to take necessary steps once a notification is issued by the State Government authorizing them to collect tax. Sd/- (R. NATARAJ) JUDGE PMR List No.: 1 Sl No.: 48