Gram panchayats not authorised to demand property tax from units in KIADB campuses: Karnataka HC

Bengaluru: The Karnataka High Court has said that Gram panchayats have no authority or jurisdiction to demand property tax from industrial establishments set up in industrial areas/estates of the Karnataka Industrial Areas Development Board (KIADB).

Justice Sachin Shankar Magadum said this while allowing a batch of petitions filed by various industrial property owners within the notified industrial area established and maintained by the KIADB. The court added that the gram panchayats get the jurisdiction only when the industrial areas/estates are withdrawn from the jurisdiction of KIADB.

The petitioners, with industries set up in Tumakuru city, Sompura, Thyamagondlu and Dabaspet KIADB industrial areas on the outskirts of Bengaluru city, had challenged the demand notices for payment of property tax issued by their respective gram panchayats.

The petitioners submitted that section 37 of KIAD Act stipulates that the provisions of the Karnataka Municipalities Act or the Panchayat Raj Act can apply to an industrial area only upon its withdrawal from the purview of the KIADB by way of an express notification issued by the state government. According to them, in their cases, no such notification has been issued. The KIADB supported the argument placed by the petitioners.

On the other hand, the gram panchayats contended that they are authorised under Schedule-IV of the Panchayat Raj Act to levy property tax on industrial establishments as they provide basic civic amenities and infrastructure to the concerned industrial plots.

Justice Magadum noted that there are no materials placed that confer any statutory authority on the Panchayat to levy or collect taxes in respect of industrial establishments 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, the court said. “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,” the court said.