GST Demand on Plot Allotment Cannot Be Challenged in Writ When Dispute is Contractual: Chhattisgarh HC [Read Order]

In a recent ruling, the Chhattisgarh High Court dismissed a writ petition seeking refund of money deposited for allotment of commercial plots and held that such dispute arising from contractual allotment cannot be decided in writ jurisdiction.

The case started after the Raipur Development Authority launched a commercial project called the “Devendra Nagar Commercial Complex Scheme” at Cloth Market, Pandri, Raipur in 2018. The scheme was advertised stating that the land was free from encumbrances and suitable for commercial development.

Based on this, the petitioners applied for commercial plots and were allotted Plot Nos. 9, 10 and 11, each measuring 750 square feet. As per the tender conditions, they deposited 25% of the tender amount and paid Rs. 24,38,000 each, totaling Rs. 73,14,000.

Later, the petitioners received a notice stating that 18 percent Goods and ServicesTax (GST) was payable on the allotment amount. The petitioners argued that GST was not mentioned in the tender document or advertisement and challenged the demand before the High Court earlier but those petitions were dismissed in July 2023.

After this, the petitioners claimed that the scheme had serious statutory defects because part of the land included canal or water body land which cannot be used for commercial development. The authority tried to modify the layout plan and sought approval from the State Government but the proposals were rejected in 2019, 2020 and 2022.

The petitioners argued that without an approved layout plan the plots cannot be legally registered or developed. They asked the authority for a fresh approved layout or refund of the deposited money. When no response was received, they filed the present writ petition seeking refund of Rs. 73,14,000 with interest.

The respondents argued that the dispute arose from a contractual relationship between the petitioners and the development authority and such claims for refund cannot be decided in writ jurisdiction.

The division bench of Chief Justice Ramesh Sinha and Justice Ravindra Kumar Agrawal observed that the relationship between the parties arose from a tender-cum-allotment process and the claim for refund of money is essentially enforcement of contractual rights.

The court explained that deciding such a claim would require examination of disputed facts, which cannot be done in proceedings under Article 226. In view of these findings, the High Court dismissed the writ petition and allowed the petitioners to approach the competent civil court or another appropriate forum for relief.

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