Levying fee for building plan sanction and other services based on ‘guidance/market value’ of property is illegal: Karnataka High Court

A view of the High Court of Karnataka.

In a major setback to the State government, the High Court of Karnataka set aside amendments to the Bruhat Bengaluru Mahanagara Palike (BBMP) Act to allow levy of fees for building licence/plan sanction, issuance of completion and occupancy certificates, and ground rent, based on “guidance value or market value” of the properties.

Saying that services related to sanction of plan for building construction rendered by the BBMP has nothing to do with the market value of the property or any logic in linking rates with the guidance value of the properties in different areas, notified by the government under the Karnataka Stamp Act for collection of stamp duty, the court said that at best, a uniform rate can be levied depending upon the size of the plot and the extent of constructions.

Several petitioners

Justice R. Devdas delivered the judgment while disposing of petitions filed by Sapthagiri Shelters, Bengaluru, and several individual owners of the properties and land developers. The petitioners had questioned the amendments made to the BBMP Act and the Karnataka Town and Country Planning Act to levy various fees based on the :guidance value” of the properties.

The court in 2001 set aside these fees saying that such fees cannot be levied through bylaws while giving the liberty to the government to amend the relevant Act and the Rules and the government in 2024 amended the Act.

‘Manifestly arbitrary’

However, Justice Devdas said that amendments were illegal as the government again linked the fees with the “guidance/market value” of the properties.

Meanwhile, the court also declared as illegal the linking of the fee, leviable under Rule 37-A of the Karnataka Planning Authority Rules, 1965, to the ‘market/guidance value’ for development of building or land or sanction for sub-division of plot or layout of Private Street under the Karnataka Town and Country Planning Authority Act.

Re-fix standard fee

However, the court gave liberty to the government and the BBMP to re-fix a standard fees after collecting empirical data.

Consequently, the court quashed the demands raised by the BBMP from the landowners for payment of these fees based on the amendment, and advised the BBMP “to come out with a scheme for one time settlement and settle the levy and collect the fee generally acceptable to the citizens of Bengaluru as this would also augment the present situation.”