Karnataka High Court
Sundera Ramireddy vs The Regional Officer on 30 July, 2026
Author: S.R.Krishna Kumar
Bench: S.R.Krishna Kumar
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IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH
DATED THIS THE 30TH DAY OF JULY, 2026
BEFORE
THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR
WRIT PETITION NO. 202666 OF 2026 (GM-RES)
BETWEEN:
SUNDERA RAMIREDDY
S/O KOTIREDDY,
AGE: 75 YEARS,
OCC: AGRICULTURE
R/O POTHAPUR VILLAGE,
HOBLI: KOWTHAL, TQ. SIRWAR
DIST. RAICHUR-584129.
...PETITIONER
(BY SRI. MAHANTESH PATIL, ADVOCATE)
AND:
Digitally signed
by NIJAMUDDIN 1. THE REGIONAL OFFICER,
JAMKHANDI
MINISTRY OF ROAD TRANSPORT AND HIGHWAYS,
Location: HIGH
COURT OF NO.32, 2ND FLOOR,
KARNATAKA KSCFL BUILDING,
DR. DEVARAJ URS ROAD,
(RACE COURSE ROAD)
BENGALURU-560001.
2. THE SPECIAL LAND ACQUISITION OFFICER
AND COMPETENT AUTHORITY,
NATIONAL HIGHWAYS,
VIDHYAGIRI,
BAGALKOTE-587101.
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3. THE DEPUTY COMMISSIONER,
OF INCOME TAX, TDS CIRCLE,
C. R. BUILDING, NAVA NAGAR,
HUBBALLI-580025.
4. THE JOINT COMMISSIONER,
COMMISSIONER OF CENTRAL
GST AND CENTRAL EXCISE (APPEALS),
NO.71, CLUB ROAD,
BELAGAVI-590001.
5. PROJECT DIRECTOR,
NATIONAL HIGHWAY AUTHORITY OF INDIA
RAICHUR-584101.
(CAUSE TITLE AMENDED AS PER ORDER
DATED 30.07.2026)
...RESPONDENTS
(BY SRI. SANTOSH KUMAR MARADI, ADVOCATE FOR R1 & R2;
SRI. M. TIRUMALESH, ADVOCATE FOR R3;
SRI. GIRISH HULIMANI, ADVOCATE FOR R4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
A) ISSUE A WRIT IN THE NATURE OF CERTIORARI TO QUASH
THE IMPUGNED ENDORSEMENT DATED 08.05.2025 VIDE
ANNEXURE-D, IMPUGNED ENDORSEMENT DATED 28.05.2025
VIDE ANNEXURE-D1, PASSED BY THE RESPONDENT NO.2 IN
SO FAR AS DEDUCTION OF RS.3,82,241/- TOWARDS GST,
B) ISSUE SUCH OTHER WRIT OR ORDER OR DIRECTION AS
THIS HON'BLE COURT DEEMS JUST AND PROPER IN
CIRCUMSTANCES OF THE CASE AND ALLOW THIS WRIT
PETITION, IN THE INTEREST OF JUSTICE AND EQUITY.
THIS PETITION, COMING ON FOR PRELIMINARY
HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR
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ORAL ORDER
In this petition, the petitioner seeks the following
reliefs:
“(a) Issue a Writ in the nature of Certiorari to quash
the impugned endorsement dated: 08-05-2025
vide Annexure-D, impugned endorsement
dated 28-05-2025 vide Annexure-D1, passed
by the respondent No.2 in so far as deduction
of Rs.3,82,241/- towards GST, in the interest
of justice and equity.
(b) Issue such other writ or order or direction as
this Hon’ble Court deems just and proper in
circumstances of the case and allow this Writ
Petition, in the interest of justice and equity.”
2. Heard learned counsel for the petitioner,
learned counsel for respondents 1 and 2, learned counsel
for respondent No.3 and learned counsel for respondent
No.4 and perused the material on record.
3. A perusal of the material on record will indicate
that the subject land of the petitioner having been
acquired under the provisions contained in Section 3G of
the National Highways Act, 1956 and the Right to Fair
Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013, the respondent
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Nos.1 and 2 passed an award, determining the
compensation payable to the petitioner. However, while
making payment of compensation, the respondents 1 and
2 deducted a sum of Rs.3,82,541-00 towards GST on the
said compensation amount and the representations
submitted by the petitioner dated 03.05.2025 and
05.05.2025 seeking payment of the said sum illegally
deducted by the respondent nos.1 and 2, having been
rejected by the respondent nos.1 and 2, vide impugned
communication at Annexures-D and D1 dated 08.05.2025
and 28.05.2025, the petitioner is before this Court by way
of the present petition.
4. The question/issue as to whether income tax is
liable to be paid on compensation towards acquisition of
lands including TDS, it came up for consideration before
this Court in the case of Smt. Supriya S. Shetty Vs
Union of India and others in W.P.No.30804 of 2024
dated 20.11.2025 wherein it is held as under:
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"5. xxxx
6. xxxxx
7. A perusal of the material on record will
indicate that the issue in controversy involved in the
present petition as to applicability of Section 96 of the
Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act, 2013
(for short ‘the RFCTLARR Act‘) to compensation
awarded for land acquired under the National Highways
Act, 1956 and as to whether such compensation is
exempt from payment of income tax / TDS came up for
consideration before this Court in Uma’s case supra
and after referring to the relevant statutory provisions
and earlier judgments of the Apex Court and this Court,
it was held as under:-
6. Based on the aforesaid pleadings, the
following points arise for consideration in the
present petition;
(i) Whether Section 96 of the Right to Fair
Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act,
2013, is applicable to compensation payable for
land acquired under the National Highways Act,
1956?
(ii) Whether compensation payable for
acquisition of land under the National Highways
Act, 1956 is exempt from payment of income tax /
TDS under the Income Tax Act, 1961?
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(iii) Whether the respondent was justified in
refusing to condone the delay in filing the Income
Tax returns thereby rejecting the application filed
by the petitioner under Section 119(2)(b) of the
Income Tax Act, 1961?
Re-Point Nos.1 and 2:-
7. Since both the points are interlinked, they are
taken up together for consideration.
7.1 The core issue that arises for
consideration in the present petition is, as to
whether payment of income tax/TDS is applicable
to compensation under the National Highways
Act, 1956 (for short ‘the N.H.Act’) in view of
Section 96 of the RFCTLARR Act.
7.2 Before adverting to the rival
contentions, it would be profitable to extract and
refer to the relevant provisions of the RFCTLARR
Act as well as the N.H.Act; in this context,
Sections 96, 105, 113 and Fourth Schedule of the
Right to Fair Compensation and Transparency in
Land Acquisition, Rehabilitation and Resettlement
Act, 2013, read as under:-
96. Exemption from income-tax, stamp
duty and fees.-No income tax or stamp duty
shall be levied on any award or agreement made
under this Act, except under section 46 and no
person claiming under any such award or
agreement shall be liable to pay any fee for a
copy of the same.
105. Provisions of this Act not to apply
in certain cases or to apply with certain
modifications.-(1) Subject to sub-section (3),
the provisions of this Act shall not apply to the
enactments relating to land acquisition specified
in the Fourth Schedule.
(2) Subject to sub-section (2) of section
106, the Central Government may, by notification,
omit or add to any of the enactments specified in
the Fourth Schedule.
(3) The Central Government shall, by
notification, within one year from the date of
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commencement of this Act, direct that any of the
provisions of this Act relating to the determination
of compensation in accordance with the First
Schedule and rehabilitation and resettlement
specified in the Second and Third Schedules,
being beneficial to the affected families, shall
apply to the cases of land acquisition under the
enactments specified in the Fourth Schedule or
shall apply with such exceptions or modifications
that do not reduce the compensation or dilute the
provisions of this Act relating to compensation or
rehabilitation and resettlement as may be
specified in the notification, as the case may be.
(4) A copy of every notification proposed to
be issued under sub-section (3), shall be laid in
draft before each House of Parliament, while it is
in session, for a total period of thirty days which
may be comprised in one session or in two or
more successive sessions, and if, before the
expiry of the session immediately following the
session or the successive sessions aforesaid,
both Houses agree in disapproving the issue of
the notification or both Houses agree in making
any modification in the notification, the notification
shall not be issued or, as the case may be, shall
be issued only in such modified form as may be
agreed upon by both the Houses of Parliament.
113. Power to remove difficulties.-(1) If
any difficulty arises in giving effect to the
provisions of this Part, the Central Government
may, by order, make such provisions or give such
directions not inconsistent with the provisions of
this Act as may appear to it to be necessary or
expedient for the removal of the difficulty:
Provided that no such power shall be
exercised after the expiry of a period of two years
from the commencement of this Act.
(2) Every order made under this section
shall be laid, as soon as may be after it is made,
before each House of Parliament.
THE FOURTH SCHEDULE
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(See section 105)
LIST OF ENACTMENTS REGULATING LAND
ACQUISITION AND REHABILITATION AND
RESETTLEMENT
1. The Ancient Monuments and Archaeological
Sites and Remains Act, 1958 (24 of 1958).
2. The Atomic Energy Act, 1962 (33 of 1962).
3. The Damodar Valley Corporation Act, 1948
(14 of 1948).
4. The Indian Tramways Act, 1886 (11 of 1886)
5. The Land Acquisition (Mines) Act, 1885 (18
of 1885).
6. The Metro Railways (Construction of Works)
Act, 1978 (33 of 1978).
7. The National Highways Act, 1956 (48 of
1956).
8. The Petroleum and Minerals Pipelines
(Acquisition of Right of User in Land) Act, 1962 (50 of
1962).
9. The Requisitioning and Acquisition of
Immovable Property Act, 1952 (30 of 1952).
10. The Resettlement of Displaced Persons
(Land Acquisition) Act, 1948 (60 of 1948).
11. The Coal Bearing Areas Acquisition and
Development Act, 1957 (20 of 1957).
12. The Electricity Act, 2003 (36 of 2003). 13.
The Railways Act, 1989 (24 of 1989).
7.3 Section 3G of the National Highways Act,
1956, reads as under:-
3G. Determination of amount payable as
compensation.–(1) Where any land is acquired
under this Act, there shall be paid an amount which
shall be determined by an order of the competent
authority.
(2) Where the right of user or any right in the
nature of an easement on, any land is acquired under
this Act, there shall be paid an amount to the owner
and any other person whose right of enjoyment in
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that land has been affected in any manner
whatsoever by reason of such acquisition an amount
calculated at ten per cent, of the amount determined
under sub-section (1), for that land.
(3) Before proceeding to determine the amount
under sub-section (1) or sub-section (2), the
competent authority shall give a public notice
published in two local newspapers, one of which will
be in a vernacular language inviting claims from all
persons interested in the land to be acquired.
(4) Such notice shall state the particulars of
the land and shall require all persons interested in
such land to appear in person or by an agent or by a
legal practitioner referred to in sub-section (2) of
section 3C, before the competent authority, at a time
and place and to state the nature of their respective
interest in such land.
(5) If the amount determined by the competent
authority under sub-section (1) or sub-section (2) is
not acceptable to either of the parties, the amount
shall, on an application by either of the parties, be
determined by the arbitrator to be appointed by the
Central Government–
(6) Subject to the provisions of this Act, the
provisions of the Arbitration and Conciliation Act,
1996 (26 of 1996) shall apply to every arbitration
under this Act.
(7) The competent authority or the arbitrator
while determining the amount under sub-section (1)
or sub-section (5), as the case may be, shall take into
consideration–
(a)the market value of the land on the date of
publication of the notification under section 3A;
(b) the damage, if any, sustained by the
person interested at the time of taking possession of
the land, by reason of the severing of such land from
other land;
(c) the damage, if any, sustained by the
person interested at the time of taking possession of
the land, by reason of the acquisition injuriously
affecting his other immovable property in any
manner, or his earnings;
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(d) if, in consequences of the acquisition of the
land, the person interested is compelled to change his
residence or place of business, the reasonable
expenses, if any, incidental to such change.
7.4 The RFCTLARR Act came into force on
01.01.2014 and it is an undisputed fact and the matter
of record that subject compensation amount was paid
in favour of the petitioner’s husband in the year 2021-
22 after deducting income tax / TDS on the
compensation amount.
7.5 Section 105(1) of the RFCTLARR Act
provides that the provisions of the RFCTLARR Act
shall not apply to the various enactments relating to
land acquisition specified in the Fourth Schedule to the
Act. In this context, a perusal of the Fourth Schedule
will indicate that the National Highways Act, 1956, is
enumerated at Sl.No.7 of the Fourth Schedule and
consequently, the RFCTLARR Act would not be
applicable to the acquisition of land under the N.H.Act.
However, Section 105(3) empowers the Central
Government to issue a Notification in relation to
applicability of the RFCTLARR Act to include the
enactments enumerated in the Fourth Schedule; in
fact, a careful reading of Section 105(3) will indicate
that the object / intent of the said provision was to
ensure that the inclusion / applicability of the
RFCTLARR Act to acquisition of land under any one of
the enactments in the Fourth Schedule including the
N.H.Act was to ensure that there was no reduction of
compensation payable in favour of the land losers nor
dilute the provisions of the RFCTLARR Act in relation
to depriving the benefits thereunder to the land losers
and affected families.
7.6 On 31.12.2014, the Hon’ble President of India
promulgated an Ordinance known as ” Right to Fair
Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement (Amendment)
Ordinance 2014″. Clause 10 of the said Ordinance
substituted Section 105(3) as hereunder:-
“10. In the principal Act, in Section 105-–
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(i) for sub-section (3), the following sub-section shall
be substituted, namely–
‘(3) The provisions of this Act relating to the
determination of compensation in accordance with
the First Schedule, rehabilitation and resettlement
in accordance with the Second Schedule and
infrastructure amenities in accordance with the
Third Schedule shall apply to the enactments
relating to land acquisition specified in the Fourth
Schedule with effect from 1-1-2015;’
(ii) sub-section (4) shall be omitted.”
7.7 Subsequently, on 03.04.2015, one more
Ordinance known as “RFCTLARR (Amendment)
Ordinance, 2015” was promulgated, in which, clause
12 substituted Section 105(3) as hereunder:-
“12. In the principal Act, in Section 105-–
(i) for sub-section (3), the following sub-section shall
be substituted, namely–
‘(3) The provisions of this Act relating to the
determination of compensation in accordance with
the First Schedule, rehabilitation and resettlement
in accordance with the Second Schedule and
infrastructure amenities in accordance with the
Third Schedule shall apply to the enactments
relating to land acquisition specified in the Fourth
Schedule with effect from 1-1-2015;’
(ii) sub-section (4) shall be omitted.”
7.8 Thereafter, the Hon’ble President
promulgated one more Ordinance known as
“RFCTLARR(Amendment) Second Ordinance, 2015”
dated 30.05.2015, in which, clause No.12 substituted
Section 105(3) as under:-
“12. In the principal Act, in Section 105-–
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(i) for sub-section (3), the following sub-section shall
be substituted, namely–
‘(3) The provisions of this Act relating to the
determination of compensation in accordance with
the First Schedule, rehabilitation and resettlement
in accordance with the Second Schedule and
infrastructure amenities in accordance with the
Third Schedule shall apply to the enactments
relating to land acquisition specified in the Fourth
Schedule with effect from 1-1-2015;’
(ii) sub-section (4) shall be omitted.”
7.9 Subsequent to promulgation of the aforesaid
Three Ordinances, having regard to the fact that the
Second Ordinance would also stand lapsed on
31.08.2015, thereby placing land losers at a
disadvantageous position, resulting in denial of
benefits of enhanced compensation etc., to the cases
of land acquisition under the enactments specified in
the Fourth Schedule to the RFCTLARR Act, the
Central Government invoked Section 113(1) of the
RFCTLARR Act and issued a Notification dated
28.08.2015 interalia stating that the provisions of the
RFCTLARR Act shall apply in relation to
compensation to all cases of land acquisition under
the enactments specified in the Fourth Schedule to
the RFCTLARR Act including the N.H.Act. The said
Notification dated 28.08.2015 is extracted hereunder –
“MINISTRY OF RURAL DEVELOPMENT
ORDER
New Delhi, 28-8-2015
S.O. 2368(E).–Whereas, the Right to Fair
Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement
Act, 2013 (30 of 2013) (hereinafter referred to
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as “the RFCTLARR Act“) came into effect from
1-1-2014;
And whereas, sub-section (3) of Section 105
of the RFCTLARR Act provided for issuing of
notification to make the provisions of the Act
relating to the determination of the
compensation, rehabilitation and resettlement
applicable to cases of land acquisition under
the enactments specified in the Fourth
Schedule to the RFCTLARR Act;
And whereas, the notification envisaged under
sub-section (3) of Section 105 of the RFCTLARR
Act was not issued, and the RFCTLARR
(Amendment) Ordinance, 2014 (9 of 2014)
was promulgated on 31-12-2014, thereby,
inter alia, amending Section 105 of the
RFCTLARR Act to extend the provisions of the
Act relating to the determination of the
compensation and rehabilitation and
resettlement to cases of land acquisition under
the enactments specified in the Fourth
Schedule to the RFCTLARR Act;
And whereas, the RFCTLARR (Amendment)
Ordinance, 2015 (4 of 2015) was promulgated
on 3-4-2015 to give continuity to the provisions
of the RFCTLARR (Amendment) Ordinance,
2014;
And whereas, the RFCTLARR (Amendment)
Second Ordinance, 2015 (5 of 2015) was
promulgated on 30-5-2015 to give continuity to
the provisions of the RFCTLARR (Amendment)
Ordinance, 2015 (4 of 2015);
And whereas, the replacement Bill relating to
the RFCTLARR (Amendment) Ordinance, 2015
(4 of 2015) was referred to the Joint
Committee of the Houses for examination and
report and the same is pending with the Joint
Committee;
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And whereas, as per the provisions of Article
123 of the Constitution, the RFCTLARR
(Amendment) Second Ordinance, 2015 (5 of
2015) shall lapse on the 31st day of August,
2015 and thereby placing the landowners at
the disadvantageous position, resulting in
denial of benefits of enhanced compensation
and rehabilitation and resettlement to the
cases of land acquisition under the 13 Acts
specified in the Fourth Schedule to the
RFCTLARR Act as extended to the landowners
under the said Ordinance;
And whereas, the Central Government
considers it necessary to extend the benefits
available to the landowners under the
RFCTLARR Act to similarly placed landowners
whose lands are acquired under the 13
enactments specified in the Fourth Schedule;
and accordingly the Central Government
keeping in view the aforesaid difficulties has
decided to extend the beneficial advantage to
the landowners and uniformly apply the
beneficial provisions of the RFCTLARR Act,
relating to the determination of compensation
and rehabilitation and resettlement as were
made applicable to cases of land acquisition
under the said enactments in the interest of
the landowners;
Now, therefore, in exercise of the powers
conferred by sub-section (1) of Section 113 of
the Right to Fair Compensation and
Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013 (30
of 2013), the Central Government hereby
makes the following Order to remove the
aforesaid difficulties, namely:
1. (1) This Order may be called the Right to Fair
Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement
(Removal of Difficulties) Order, 2015.
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(2) It shall come into force with effect from the 1st
day of September, 2015.
2. The provisions of the Right to Fair
Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement
Act, 2013, relating to the determination of
compensation in accordance with the First
Schedule, rehabilitation and resettlement in
accordance with the Second Schedule and
infrastructure amenities in accordance with
the Third Schedule shall apply to allcases of
land acquisition under the enactments
specified in the Fourth Schedule to the said
Act.
[F. No. 13011/01/2014-LRD]
K.P. Krishnan, Addl. Secy.”
7.10 In pursuance of the aforesaid Ordinances,
Notifications, Orders etc., the Ministry of Road
Transport and Highways, Government of India,
addressed a communication dated 28.12.2017
clarifying that in respect of awards passed and
compensation paid under Section 3G of the N.H.Act
after 31.12.2014, the compensation would be payable
in accordance with the provisions of the RFCTLARR
Act. The relevant portion of the communication dated
28.12.2017, reads as under –
4.6 Date of determination of market value
of land
(i) Another related but important question is
regarding the date on which the market value of
land is to be determined in cases where land
acquisition proceedings had been initiated under the
NH Act, 1956 and were at different stages as on
31.12.2014. While there is no ambiguity regarding
land acquisition proceedings initiated on or after
01.01.2015, this question assumes significance in
view of the financial implications in respect of cases
where the process of acquisition was at different
stages as on 01.01.2015,.
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(ii) Section 26 of the RFCTLARR Act
stipulates that “the date for determination of market
value shall be the date on which the notification has
been issued under Section 11 (corresponding to
Section 3 A of the NH Act)”. Same was the position
under the 1894 Act. This is further fortified from the
provisions contained in Section 69(2) of the
RFCTLARR Act. As such, it is clarified that the
relevant date of determination of market value of
land is the date on which notification under Section
3 A of the National Highways Act, 1956 is published.
(iii) By now, it is also a settled proposition
that the First, Second and Third Schedule of the
RFCTLARR Act, 2013 shall be applicable to the
NH Act , 1956 with effect from 01.01.2015. As
such, the following is clarified:
(a) All cases of Land acquisition where the
Awards had not been announced under
Section 3G of the NH Act till 31.12.2014 or
where such awards had been announced but
compensation had not been paid in respect of
majority of the land holdings under acquisition
as on 31.12.2014, the compensation would be
payable in accordance with the First Schedule
of the RFCTLARR Act, 2013.
(b) In cases, where the land acquisition
process was initiated and award of
compensation under Section 3G had also been
announced before 01.01.2015 but the full
amount of Award had not been deposited by
the acquiring agency with the CALA, the
compensation amount would be liable to be
determined in accordance with the First
Schedule w.e.f. 01.01.2015;
(c) In cases, where the process of
acquisition of land stood completed (i.e. Award
under Section 3G announced by CALA,
amount deposited by the acquiring agency
with the CALA, and compensation paid to the
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landowners in respect of majority of the land
under acquisition) as on or before 31.12.2014,
the process would be deemed to have been
completed and settled. Such cases would not
be re-opened.
7.11 The aforesaid facts and circumstances
including the Ordinances, Notifications, Clarifications,
Communications etc., of the Central Government
itself, clearly establish that the provisions of the
RFCTLARR Act are clearly applicable to acquisition
of land and payment of compensation under Section
3G of the N.H.Act, which is one of the enactment at
Sl.No.7 of the Fourth Schedule to the RFCTLARR
Act. It follows therefrom as a natural corollary that
acquisition of land, payment of compensation and all
acts, deeds, things, matters etc., which are
incidental, ancillary and connected to / in relation to
payment of compensation would become applicable
under the RFCTLARR Act; as a consequence of the
same, Section 96 of the RFCTLARR Act, which
provides for exemption from payment of income tax /
TDS would also be applicable to payment of
compensation for acquisition of land under the
N.H.Act, which is one of the enactments specified in
the Fourth Schedule, to which, the RFCTLARR Act
has been made applicable by virtue of the aforesaid
Ordinances, Notifications, Orders, Communications
etc., referred to supra.
7.12 Under these circumstances, I am of the
considered opinion that the respondent clearly fell in
error in coming to the conclusion that Section 96 of
the RFCTLARR Act, which provides for exemption
from payment of income tax was not applicable to the
subject compensation paid to the husband of the
petitioner for acquisition of his land under the
N.H.Act.
7.13 It is well settled that insofar as payment of
compensation is concerned under different
enactments, the discrimination is impermissible and
there has to be parity between land losers in relation
to compensation payable to different land losers
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whose lands have been acquired under different
enactments as held by the Apex Court in the case of
Nagpur Improvement Trust&Anr. vs. Vittal Rao&
others – (1973)1 SCC 500, wherein the Constitution
Bench held as under:-
27. What can be reasonable classification for
the purpose of determining compensation if the
object of the legislation is to compulsorily acquire
land for public purposes?
28. It would not be disputed that different
principles of compensation cannot be formulated for
lands acquired on the basis that the owner is old or
young, healthy or ill, tall or short, or whether the
owner has inherited the property or built it with his
own efforts, or whether the owner is politician or an
advocate. Why is this sort of classification not
sustainable? Because the object being to
compulsorily acquire for a public purpose, the object
is equally achieved whether the land belongs to one
type of owner or another type.
29. Can classification be made on the basis of
the public purpose for the purpose of compensation
for which land is acquired? In other words can the
Legislature lay down different principles of
compensation for lands acquired say for a hospital or
a school or a Government building? Can the
Legislature say that for a hospital land will be
acquired at 50% of the market value, for a school at
60% of the value and for a Government building at
70% of the market value? All three objects are public
purposes and as far as the owner is concerned it
does not matter to him whether it is one public
purpose or the other. Article 14 confers an individual
right and in order to justify a classification there
should be something which justifies a different
treatment to this individual right. It seems to us that
ordinarily a classification based on the public purpose
is not permissible under Article 14 for the purpose of
determining compensation. The position is different
when the owner of the land himself is the recipient of
benefits from an improvement scheme, and the
benefit to him is taken into consideration in fixing
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compensation. Can classification be made on the
basis of the authority acquiring the land? In other
words can different principles of compensation be
laid if the land is acquired for or by an Improvement
Trust or Municipal Corporation or the Government? It
seems to us that the answer is in the negative
because as far as the owner is concerned it does not
matter to him whether the land is acquired by one
authority or the other.
30. It is equally immaterial whether it is one
Acquisition Act or another Acquisition Act under
which the land is acquired. If the existence of two
Acts could enable the State to give one owner
different treatment from another equally situated the
owner who is discriminated against, can claim the
protection of Article 14.
31. It was said that if this is the true position the
State would find it impossible to clear slums, to do
various other laudable things. If this argument were
to be accepted it would be totally destructive of the
protection given by Article 14. It would enable the
State to have one law for acquiring lands for hospital,
one law for acquiring lands for schools, one law
acquiring lands for clearing slums, another for
acquiring lands for Government buildings; one for
acquiring lands in New Delhi and another for
acquiring lands in Old Delhi. It was said that in many
cases, the value of the land has increased not
because of any effort by the owner but because of
the general development of the city in which the land
is situated. There is no doubt that this is so, but
Article 14 prohibits the expropriation of the unearned
increment of one owner while leaving his neighbour
untouched. The neighbour could sell his land and
reap the unearned increment. If the object of the
legislation is to tax unearned increment it should be
done throughout the State. The State cannot achieve
this object piece meal by compulsory acquisition of
land of some owners leaving others alone. If the
object is to clear slums it cannot be done at the
expense of the owners whose lands are acquired,
unless as we have said the owners are directly
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benefited by the scheme. If the object is to build
hospitals it cannot be done at the expense of the
owners of the land which is acquired. The hospital,
schools etc. must be built at the expense of the
whole community.
7.14 The aforesaid judgment was followed by
the Apex Court in the case of Union of India & Anr.
vs. Tarsem Singh& others – (2019) 9 SCC 304, in
which the question with regard to applicability of the
provisions of the said Act of 2013 relating to
compensation to acquisition of land under the N.H.Act
came up for consideration before the Apex Court and
Apex court held as under:-
27. A challenge made to the said Amendment
Act on the ground that it is hit by Article 14
succeeded, the Court holding : (P. Vajravelu Mudaliar
case [P. Vajravelu Mudaliar v. LAO, (1965) 1 SCR
614 : AIR 1965 SC 1017] , SCR pp. 634-35 : AIR pp.
1027-28, para 20)
“20. Now what are the differences between
persons owning lands in the Madras City or
between the lands acquired which have a
reasonable relation to the said object. It is
suggested that the differences between people
owning lands rested on the extent, quality and
the suitability of the lands acquired for the said
object. The differences based upon the said
criteria have no relevance to the object of the
amending Act. To illustrate : the extent of the
land depends upon the magnitude of the
scheme undertaken by the State. A large
extent of land may be acquired for a university
or for a network of hospitals under the
provisions of the principal Act and also for a
housing scheme under the amending Act. So
too, if the housing scheme is a limited one, the
land acquired may not be as big as that
required for a big university. If waste land is
good for a housing scheme under the
amending Act, it will equally be suitable for a
hospital or a school for which the said land may
be acquired under the principal Act. Nor the
financial position or the number of persons
owning the land has any relevance, for in both
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the cases land can be acquired from rich or
poor, from one individual or from a number of
persons. Out of adjacent lands of the same
quality and value, one may be acquired for a
housing scheme under the amending Act and
the other for a hospital under the principal Act;
out of two adjacent plots belonging to the same
individual and of the same quality and value,
one may be acquired under the principal Act
and the other under the amending Act. From
whatever aspect the matter is looked at, the
alleged differences have no reasonable relation
to the object sought to be achieved. It is said
that the object of the amending Act in itself may
project the differences in the lands sought to be
acquired under the two Acts. This argument
puts the cart before the horse. It is one thing to
say that the existing differences between
persons and properties have a reasonable
relation to the object sought to be achieved and
it is totally a different thing to say that the
object of the Act itself created the differences.
Assuming that the said proposition is sound,
we cannot discover any differences in the
people owning lands or in the lands on the
basis of the object. The object is to acquire
lands for housing schemes at a low price. For
achieving that object, any land falling in any of
the said categories can be acquired under the
amending Act. So too, for a public purpose any
such land can be acquired under the principal
Act. We, therefore, hold that discrimination is
writ large on the amending Act and it cannot be
sustained on the principle of reasonable
classification. We, therefore, hold that the
amending Act clearly infringes Article 14 of the
Constitution and is void.”
(emphasis supplied)
28. In Nagpur Improvement Trust [Nagpur
Improvement Trust v. Vithal Rao, (1973) 1 SCC 500] ,
this Court referred to the Nagpur Improvement Trust
Act, under which lands were to be acquired with
reference to the Land Acquisition Act, as modified. We
are concerned in this case with the modification that
has to do with acquisition for the purposes of the
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Improvement Act, which did not provide for solatium of
15% that would have been obtained under the Land
Acquisition Act. A seven-Judge Bench of this Court
examined the matter in some detail, and followed P.
Vajravelu Mudaliar [P. Vajravelu Mudaliar v. LAO,
(1965) 1 SCR 614 : AIR 1965 SC 1017] together with
another judgment, Balammal v. State of
Madras [Balammal v. State of Madras, (1969) 1 SCR
90 : AIR 1968 SC 1425] . The Court held : (Nagpur
Improvement Trust case [Nagpur Improvement
Trust v. Vithal Rao, (1973) 1 SCC 500] , SCC pp. 506-
07, paras 27-30)
“27. What can be reasonable classification for the
purpose of determining compensation if the object of
the legislation is to compulsorily acquire land for public
purposes?
28. It would not be disputed that different
principles of compensation cannot be formulated
for lands acquired on the basis that the owner is
old or young, healthy or ill, tall or short, or whether
the owner has inherited the property or built it with
his own efforts, or whether the owner is politician
or an advocate. Why is this sort of classification
not sustainable? Because the object being to
compulsorily acquire for a public purpose, the
object is equally achieved whether the land
belongs to one type of owner or another type.
29. Can classification be made on the basis of
the public purpose for the purpose of
compensation for which land is acquired? In other
words, can the legislature lay down different
principles of compensation for lands acquired say
for a hospital or a school or a government
building? Can the legislature say that for a
hospital land will be acquired at 50% of the
market value, for a school at 60% of the value
and for a government building at 70% of the
market value? All three objects are public
purposes and as far as the owner is concerned it
does not matter to him whether it is one public
purpose or the other. Article 14 confers an
individual right and in order to justify a
classification there should be something which
justifies a different treatment to this individual
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right. It seems to us that ordinarily a classification
based on the public purpose is not permissible
under Article 14 for the purpose of determining
compensation. The position is different when the
owner of the land himself is the recipient of
benefits from an improvement scheme, and the
benefit to him is taken into consideration in fixing
compensation. Can classification be made on the
basis of the authority acquiring the land? In other
words, can different principles of compensation
be laid if the land is acquired for or by an
Improvement Trust or Municipal Corporation or
the Government? It seems to us that the answer
is in the negative because as far as the owner is
concerned it does not matter to him whether the
land is acquired by one authority or the other.
30. It is equally immaterial whether it is one
Acquisition Act or another Acquisition Act under
which the land is acquired. If the existence of two
Acts could enable the State to give one owner
different treatment from another equally situated
the owner who is discriminated against, can claim
the protection of Article 14.”
(emphasis supplied)
29. Both, P. Vajravelu Mudaliar [P. Vajravelu
Mudaliar v. LAO, (1965) 1 SCR 614 : AIR 1965 SC
1017] and Nagpur Improvement Trust [Nagpur
Improvement Trust v. Vithal Rao, (1973) 1 SCC 500]
clinch the issue in favour of the respondents, as has
been correctly held by the Punjab and Haryana High
Court in Golden Iron and Steel Forging [Golden Iron
and Steel Forging v. Union of India, 2008 SCC
OnLine P&H 498 : (2011) 4 RCR (Civil) 375] . First
and foremost, it is important to note that, as has been
seen hereinabove, the object of the 1997
Amendment was to speed up the process of
acquiring lands for National Highways. This object
has been achieved in the manner set out
hereinabove. It will be noticed that the awarding of
solatium and interest has nothing to do with
achieving this object, as it is nobody’s case that land
acquisition for the purpose of National Highways
slows down as a result of award of solatium and
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interest. Thus, a classification made between
different sets of landowners whose lands happen to
be acquired for the purpose of National Highways
and landowners whose lands are acquired for other
public purposes has no rational relation to the object
sought to be achieved by the Amendment Act i.e.
speedy acquisition of lands for the purpose of
National Highways. On this ground alone, the
Amendment Act falls foul of Article 14.
31.Nagpur Improvement Trust [Nagpur
Improvement Trust v. Vithal Rao, (1973) 1 SCC 500]
has clearly held that ordinarily a classification based
on public purpose is not permissible under Article 14
for the purpose of determining compensation. Also, in
para 30, the seven-Judge Bench unequivocally
states that it is immaterial whether it is one
Acquisition Act or another Acquisition Act under
which the land is acquired, as, if the existence of
these two Acts would enable the State to give one
owner different treatment from another who is
similarly situated, Article 14 would be infracted. In the
facts of these cases, it is clear that from the point of
view of the landowner it is immaterial that his land is
acquired under the National Highways Act and not
the Land Acquisition Act, as solatium cannot be
denied on account of this fact alone.
45. Insofar as easementary rights under the
Land Acquisition Act are concerned, three sections
are relevant and need to be quoted:
“3. Definitions.–In this Act, unless there is
something repugnant in the subject or context–
***
(b) the expression “person interested” includes all
persons claiming an interest in compensation to be made
on account of the acquisition of land under this Act; and a
person shall be deemed to be interested in land if he is
interested in an easement affecting the land;
***
9. Notice to persons interested.–(1) The Collector
shall then cause public notice to be given at convenient
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places on or near the land to be taken, stating that the
Government intends to take possession of the land, and
that claims to compensation for all interests in such land
may be made to him.
(2) Such notice shall state the particulars of the land
so needed, and shall require all persons interested in the
land to appear personally or by agent before the
Collector at a time and place therein mentioned (such
time not being earlier than fifteen days after the date of
publication of the notice), and to state the nature of their
respective interests in the land and the amount and
particulars of their claims to compensation for such
interests, and their objections (if any) to the
measurements made under Section 8. The Collector may
in any case require such statement to be made in writing
and signed by the party or his agent.
(3) The Collector shall also serve notice to the same
effect on the occupier (if any) of such land and on all
such persons known or believed to be interested therein,
or to be entitled to act for persons so interested, as
reside or have agents authorised to receive service on
their behalf, within the revenue district in which the land
is situate.
(4) In case any person so interested resides
elsewhere, and has no such agent the notice shall be
sent to him by post in a letter addressed to him at his last
known residence, address or place of business and
registered under Sections 28 and 29 of the Indian Post
Office Act, 1898 (6 of 1898).
***
31. Payment of compensation or deposit of same
in Court.–(1) On making an award under Section 11,
the Collector shall tender payment of the compensation
awarded by him to the persons interested entitled thereto
according to the award, and shall pay it to them unless
prevented by some one or more of the contingencies
mentioned in the next sub-section.”
A reading of these sections shows that a person
who is interested in an easement affecting land can
claim compensation therefor under the aforesaid
provisions of the Land Acquisition Act. Under both
the Land Acquisition Act and the National Highways
Act, such claims have to be proved in accordance
with law, the difference being that under the Land
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Acquisition Act actuals are payable, whereas under
the National Highways Act, a fixed amount of 10% of
the amount determined by the competent authority
is payable. It is, therefore, wholly incorrect to state
that extra amounts are payable to the owner under
the National Highways Act, which are not so payable
under the Land Acquisition Act. Also, both Acts
contemplate payment of compensation to persons
whose easementary rights have been affected by
the acquisition. In any event, this contention cannot
possibly answer non-payment of solatium and
interest under the National Highways Act, which has
been dealt with in extenso in this judgment.
46. It is worthy of note that even in acquisitions
that take place under the National Highways Act and
the 1952 Act, the notification of 2015 under the new
Acquisition Act of 2013 makes solatium and interest
payable in cases covered by both Acts. In fact, with
effect from 1-1-2015, Amendment Ordinance 9 of
2014 was promulgated amending the 2013 Act.
Section 10 of the said Amendment Ordinance states
as follows:
“10. In the principal Act, in Section 105-–
(i) for sub-section (3), the following sub-section shall
be substituted, namely–
‘(3) The provisions of this Act relating to the
determination of compensation in accordance with the
First Schedule, rehabilitation and resettlement in
accordance with the Second Schedule and infrastructure
amenities in accordance with the Third Schedule shall
apply to the enactments relating to land acquisition
specified in the Fourth Schedule with effect from 1-1-
2015;’
(ii) sub-section (4) shall be omitted.”
47. It is only when this Ordinance lapsed that
the Notification dated 28-8-2015 was then made
under Section 113 of the 2013 Act. This notification is
important and states as follows:
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“MINISTRY OF RURAL DEVELOPMENT
ORDER
New Delhi, 28-8-2015
S.O. 2368(E).–Whereas, the Right to Fair
Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act,
2013 (30 of 2013) (hereinafter referred to as
“the RFCTLARR Act“) came into effect from 1-1-2014;
And whereas, sub-section (3) of Section 105 of
the RFCTLARR Act provided for issuing of notification
to make the provisions of the Act relating to the
determination of the compensation, rehabilitation
and resettlement applicable to cases of land
acquisition under the enactments specified in the
Fourth Schedule to the RFCTLARR Act;
And whereas, the notification envisaged under
sub-section (3) of Section 105 of the RFCTLARR Act
was not issued, and the RFCTLARR (Amendment)
Ordinance, 2014 (9 of 2014) was promulgated on
31-12-2014, thereby, inter alia, amending Section
105 of the RFCTLARR Act to extend the provisions of
the Act relating to the determination of the
compensation and rehabilitation and resettlement to
cases of land acquisition under the enactments
specified in the Fourth Schedule to
the RFCTLARR Act;
And whereas, the RFCTLARR (Amendment)
Ordinance, 2015 (4 of 2015) was promulgated on 3-
4-2015 to give continuity to the provisions of
the RFCTLARR (Amendment) Ordinance, 2014;
And whereas, the RFCTLARR (Amendment)
Second Ordinance, 2015 (5 of 2015) was
promulgated on 30-5-2015 to give continuity to the
provisions of the RFCTLARR (Amendment)
Ordinance, 2015 (4 of 2015);
And whereas, the replacement Bill relating to
the RFCTLARR (Amendment) Ordinance, 2015 (4 of
2015) was referred to the Joint Committee of the
Houses for examination and report and the same is
pending with the Joint Committee;
And whereas, as per the provisions of Article
123 of the Constitution,
the RFCTLARR (Amendment) Second Ordinance,
2015 (5 of 2015) shall lapse on the 31st day of
August, 2015 and thereby placing the landowners
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at the disadvantageous position, resulting in denial
of benefits of enhanced compensation and
rehabilitation and resettlement to the cases of land
acquisition under the 13 Acts specified in the Fourth
Schedule to the RFCTLARR Act as extended to the
landowners under the said Ordinance;
And whereas, the Central Government
considers it necessary to extend the benefits
available to the landowners under theRFCTLARRAct
to similarly placed landowners whose lands are
acquired under the 13 enactments specified in the
Fourth Schedule; and accordingly the Central
Government keeping in view the aforesaid
difficulties has decided to extend the beneficial
advantage to the landowners and uniformly apply
the beneficial provisions of the RFCTLARR Act,
relating to the determination of compensation and
rehabilitation and resettlement as were made
applicable to cases of land acquisition under the
said enactments in the interest of the landowners;
Now, therefore, in exercise of the powers
conferred by sub-section (1) of Section 113 of the
Right to Fair Compensation and Transparency in
Land Acquisition, Rehabilitation and Resettlement
Act, 2013 (30 of 2013), the Central Government
hereby makes the following Order to remove the
aforesaid difficulties, namely:
1. (1) This Order may be called the Right to Fair
Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement
(Removal of Difficulties) Order, 2015.
(2) It shall come into force with effect from the
1st day of September, 2015.
2. The provisions of the Right to Fair
Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act,
2013, relating to the determination of compensation
in accordance with the First Schedule, rehabilitation
and resettlement in accordance with the Second
Schedule and infrastructure amenities in
accordance with the Third Schedule shall apply to
all cases of land acquisition under the enactments
specified in the Fourth Schedule to the said Act.
[F. No. 13011/01/2014-LRD]
K.P. Krishnan, Addl. Secy.”
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48. It is thus clear that the Ordinance as well as
the notification have applied the principle contained
in Nagpur Improvement Trust [Nagpur Improvement
Trust v. Vithal Rao, (1973) 1 SCC 500] , as the
Central Government has considered it necessary to
extend the benefits available to landowners generally
under the 2013 Act to similarly placed landowners
whose lands are acquired under the 13 enactments
specified in the Fourth Schedule, the National
Highways Act being one of the aforesaid enactments.
This being the case, it is clear that the Government
has itself accepted that the principle of Nagpur
Improvement Trust [Nagpur Improvement
Trust v. Vithal Rao, (1973) 1 SCC 500] would apply to
acquisitions which take place under the National
Highways Act, and that solatium and interest would be
payable under the 2013 Act to persons whose lands
are acquired for the purpose of National Highways as
they are similarly placed to those landowners whose
lands have been acquired for other public purposes
under the 2013 Act. This being the case, it is clear that
even the Government is of the view that it is not
possible to discriminate between landowners covered
by the 2013 Act and landowners covered by the
National Highways Act, when it comes to
compensation to be paid for lands acquired under
either of the enactments. The judgments delivered
under the 1952 Act as well as the Defence of India
Act, 1971, may, therefore, require a re-look in the light
of this development. [ The Defence of India Act, 1971,
was a temporary statute which remained in force only
during the period of operation of a proclamation of
emergency and for a period of six months thereafter
— vide Section 1(3) of the Act. As this Act has since
expired, it is not included in the Fourth Schedule of the
2013 Act.] In any case, as has been pointed out
hereinabove, Chajju Ram [Union of India v. Chajju
Ram, (2003) 5 SCC 568] , has been referred to a
larger Bench. In this view of the matter, we are of the
view that the view of the Punjab and Haryana High
Court [Union of India v. Tarsem Singh, 2018 SCC
OnLine P&H 6036] , [Jang Bahadur v. Union of India,
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2018 SCC OnLine P&H 6034] , [Union of
India v. Abhinav Cotspin Ltd., 2016 SCC OnLine P&H
19319] is correct, whereas the view of the Rajasthan
High Court [Banshilal Samariya v. Union of India,
2005 SCC OnLine Raj 572 : 2005-06 Supp RLW 559]
is not correct.
51. We were also referred to an order in Sunita
Mehra v. Union of India [Sunita Mehra v. Union of
India, (2019) 17 SCC 672 : 2016 SCC OnLine SC
1128] , in which this Court held : (SCC paras 5-7)
“5. The only point agitated before us by
the learned Solicitor General is that in para 23
of the impugned judgment [RLF Industries
Ltd. v. NHAI, 2011 SCC OnLine P&H 1687 :
(2011) 1 ICC 854] of the High Court, it has
been held that landowners would “henceforth”
be entitled to solatium and interest as
envisaged by the provisions of Sections 23
and 28 of the Land Acquisition Act, 1894. In
the ultimate paragraph of the impugned
judgment it has, however, been mentioned that
in respect of all acquisitions made under the
National Highways Act, 1956, solatium and
interest in terms similar to those contained in
Sections 23(2) and 28 of the Land Acquisition
Act, 1894 will have to be paid.
6. The learned Solicitor General has
pointed out that there is an apparent
inconsistency in the judgment, which needs to
be clarified. It has also been submitted by the
learned Solicitor General that the order of the
High Court should be clarified to mean that the
issue of grant of interest and solatium should
not be allowed to be reopened without any
restriction or reference to time. The learned
Solicitor General has particularly submitted
that to understand the order of the High Court
in any other manner would not only seriously
burden the public exchequer but would also
amount to overlooking the delay that may have
occurred on the part of the landowner(s) in
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approaching the Court and may open
floodgates for en masse litigation on the issue.
7. We have considered the submissions
advanced. In Gurpreet Singh v. Union of
India [Gurpreet Singh v. Union of India, (2006)
8 SCC 457] , this Court, though in a different
context, had restricted the operation of the
judgment of this Court in Sunder v. Union of
India [Sunder v. Union of India, (2001) 7 SCC
211] and had granted the benefit of interest on
solatium only in respect of pending
proceedings. We are of the view that a similar
course should be adopted in the present case
also. Accordingly, it is directed that the award
of solatium and interest on solatium should be
made effective only to proceedings pending on
the date of the High Court order in Golden Iron
and Steel Forging v. Union of India [Golden
Iron and Steel Forging v. Union of India, 2008
SCC OnLine P&H 498 : (2011) 4 RCR (Civil)
375] i.e. 28-3-2008. Concluded cases should
not be opened. As for future proceedings, the
position would be covered by the provisions of
the Right to Fair Compensation and
Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013
(came into force on 1-1-2014), which Act has
been made applicable to acquisitions under
the National Highways Act, 1956 by virtue of
notification/order issued under the provisions
of the 2013 Act.”
52. There is no doubt that the learned Solicitor
General, in the aforesaid two orders, has conceded
the issue raised in these cases. This assumes
importance in view of the plea of Shri Divan that the
impugned judgments should be set aside on the
ground that when the arbitral awards did not provide
for solatium or interest, no Section 34 petition having
been filed by the landowners on this score, the
Division Bench judgments that are impugned before
us ought not to have allowed solatium and/or interest.
Ordinarily, we would have acceded to this plea, but
given the fact that the Government itself is of the view
that solatium and interest should be granted even in
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cases that arise between 1997 and 2015, in the
interest of justice we decline to interfere with such
orders, given our discretionary jurisdiction under
Article 136 of the Constitution of India. We therefore
declare that the provisions of the Land Acquisition Act
relating to solatium and interest contained in Sections
23(1-A) and (2) and interest payable in terms of
Section 28 proviso will apply to acquisitions made
under the National Highways Act. Consequently, the
provision of Section 3-J is, to this extent, violative of
Article 14 of the Constitution of India and, therefore,
declared to be unconstitutional. Accordingly, appeal
arising out of SLP (C) No. 9599 of 2019 is dismissed.
7.15 The aforesaid judgment in Tarsem
Singh‘s case supra was followed by the Apex Court
in the case of National Highways Authorities of
India vs. P.Nagaraju alias Cheluvaiah & Anr. –
(2022) 15 SCC 1, wherein it was held as under:-
24. On this aspect, it would be appropriate to
take note of the decision rendered by this Court
in Union of India v. Tarsem Singh [Union of
India v. Tarsem Singh, (2019) 9 SCC 304 : (2019) 4
SCC (Civ) 364] relied on by both sides, wherein it
has been held as hereunder : (SCC pp. 345-46,
paras 51-52)
“51. We were also referred to an order
in Sunita Mehra v. Union of India [Sunita
Mehra v. Union of India, (2019) 17 SCC 672 :
(2020) 3 SCC (Civ) 537] , in which this Court
held : (SCC p. 674, paras 5-7)
‘5. The only point agitated before us by
the learned Solicitor General is that in para 23
of the impugned judgment [RLF Industries
Ltd. v. NHAI, 2011 SCC OnLine P&H 1687] of
the High Court, it has been held that
landowners would “henceforth” be entitled to
solatium and interest as envisaged by the
provisions of Sections 23 and 28 of the Land
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Acquisition Act, 1894. In the ultimate paragraph
of the impugned judgment it has, however,
been mentioned that in respect of all
acquisitions made under the National Highways
Act, 1956, solatium and interest in terms similar
to those contained in Sections 23(2) and 28 of
the Land Acquisition Act, 1894 will have to be
paid.
6. The learned Solicitor General has
pointed out that there is an apparent
inconsistency in the judgment, which needs to
be clarified. It has also been submitted by the
learned Solicitor General that the order of the
High Court should be clarified to mean that the
issue of grant of interest and solatium should
not be allowed to be reopened without any
restriction or reference to time. The learned
Solicitor General has particularly submitted that
to understand the order of the High Court in any
other manner would not only seriously burden
the public exchequer but would also amount to
overlooking the delay that may have occurred
on the part of the landowner(s) in approaching
the Court and may open floodgates for en
masse litigation on the issue.
7. We have considered the submissions
advanced. In Gurpreet Singh v. Union of
India [Gurpreet Singh v. Union of India, (2006)
8 SCC 457] , this Court, though in a different
context, had restricted the operation of the
judgment of this Court in Sunder v. Union of
India [Sunder v. Union of India, (2001) 7 SCC
211] and had granted the benefit of interest on
solatium only in respect of pending
proceedings. We are of the view that a similar
course should be adopted in the present case
also. Accordingly, it is directed that the award of
solatium and interest on solatium should be
made effective only to proceedings pending on
the date of the High Court order in Golden Iron
& Steel Forging v. Union of India [Golden Iron &
Steel Forging v. Union of India, 2008 SCC
OnLine P&H 498] i.e. 28-3-2008. Concluded
cases should not be opened. As for future
proceedings, the position would be covered by
the provisions of the Right to Fair
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Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement
Act, 2013 (came into force on 1-1-2014), which
Act has been made applicable to acquisitions
under the National Highways Act, 1956 by
virtue of notification/order issued under the
provisions of the 2013 Act.’
52. There is no doubt that the learned
Solicitor General, in the aforesaid two orders,
has conceded the issue raised in these cases.
This assumes importance in view of the plea of
Shri Divan that the impugned judgments [Union
of India v. Tarsem Singh, 2018 SCC OnLine
P&H 6036] , [Jang Bahadur v. Union of India,
2018 SCC OnLine P&H 6034] , [Union of
India v. Abhinav Cotspin Ltd., 2016 SCC
OnLine P&H 19319] should be set aside on the
ground that when the arbitral awards did not
provide for solatium or interest, no Section 34
petition having been filed by the landowners on
this score, the Division Bench judgments that
are impugned before us ought not to have
allowed solatium and/or interest. Ordinarily, we
would have acceded to this plea, but given the
fact that the Government itself is of the view
that solatium and interest should be granted
even in cases that arise between 1997 and
2015, in the interest of justice we decline to
interfere with such orders, given our
discretionary jurisdiction under Article 136 of
the Constitution of India. We therefore declare
that the provisions of the Land Acquisition Act
relating to solatium and interest contained in
Sections 23(1-A) and (2) and interest payable in
terms of Section 28 proviso will apply to
acquisitions made under the National Highways
Act. Consequently, the provision of Section 3-J
is, to this extent, violative of Article 14 of the
Constitution of India and, therefore, declared to
be unconstitutional. Accordingly, appeal arising
out of SLP (C) No. 9599 of 2019 is dismissed.”
(emphasis supplied)
25. While arriving at the conclusion that the
Notification bearing S.O. No. 2368(E) dated 28-8-
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2015 whereunder the provisions of the RFCTLARR Act,
2013 are made applicable, it is noted that the NH Act
is also one of the enactments specified in the Fourth
Schedule. The relevant portion of the Notification
dated 28-8-2015 reads as hereunder:
“And whereas, the Central Government
considers it necessary to extend the benefits
available to the landowners under the RFCTLARR Act
to similarly placed landowners whose lands are
acquired under the 13 enactments specified in the
Fourth Schedule; and accordingly the Central
Government keeping in view the aforesaid difficulties
has decided to extend the beneficial advantage to the
landowners and uniformly apply the beneficial
provisions of the RFCTLARRAct, relating to the
determination of compensation and rehabilitation and
resettlement as were made applicable to cases of
land acquisition under the said enactments in the
interest of the landowners;
Now, therefore, in exercise of the powers
conferred by sub-section (1) of Section 113 of the
Right to Fair Compensation and Transparency in
Land Acquisition, Rehabilitation and Resettlement
Act, 2013 (30 of 2013), the Central Government
hereby makes the following Order to remove the
aforesaid difficulties, namely–
1. (1) This Order may be called the Right to
Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement
(Removal of Difficulties) Order, 2015.
(2) It shall come into force with effect from the
1st day of September, 2015.
2. The provisions of the Right to Fair
Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act,
2013, relating to the determination of compensation
in accordance with the First Schedule, rehabilitation
and resettlement in accordance with the Second
Schedule and infrastructure amenities in
accordance with the Third Schedule shall apply to
all cases of land acquisition under the enactments
specified in the Fourth Schedule to the said Act.
[F. No. 13011/01/2014-LRD]
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K.P. Krishnan, Addl. Secy.”
7.16 As held by the Apex Court in Tarsem Singh’s
case and Nagaraju‘s case supra, the provisions of
the RFCTLARR Act have been made applicable to
acquisition under the N.H.Act, 1956. It is therefore
clear that Section 96 of the RFCTLARR Act exempting
levy / payment of income tax on compensation would
also be applicable to acquisition of land and
compensation paid / payable under the N.H.Act and
consequently, the impugned order passed by the
respondent deserves to be set aside on this ground
also.
7.17 The Central Board of Direct Taxes (CBDT)
issued a Circular bearing No.36/2016 dated
25.10.2016 clarifying that compensation received in
respect of award or agreement which has been
exempted from levy of income tax under Section 96 of
the RFCTLARR Act shall also not be taxable under
the provisions of the Income Tax Act, 1961, even if
there is no specific provision for exemption for such
compensation in the Income Tax Act, 1961. The said
Circular reads as under:-
Circular No.36/2016
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
ITA.II Division, North Block,New Delhi, the 25* of October, 2016
Sub : Taxability of the compensation received
bythe land owners for the land acquired under
the Right of Fair Compensation &
Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013
(RFCTLAAR Act) Reg.
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Under the existing provisions of the Income-tax
Act, 1961 (‘the Act’) an agricultural land which is
not situated in specified urban area, is not
regarded as a capital asset. Hence, capital gains
arising from the transfer. (including compulsory
acquisition) of such agricultural land is not taxable.
Finance (No.2) Act, 2004 inserted Sec.10(37) in
the Act from 01.04.2005 to provide specific
exemption to the capital gains arising to an
Individual or a HUF from compulsory acquisition of
an agricultural land situated in specified urban-
limit subject to fulfillment of certain conditions for
specified urban land)
2. The RFCTLARR Act which came into effect
from 1st January, 2014. in section 96, inter-alia
provides that income-tax shall not be levied on
any Award or agreement made (except those
made under section 46) under the RFCTLARR
Act. Therefore, compensation received for
compulsory acquisition of land under the
RFCTLARR Act (except those made under
section 46 of RFCTLARR Act), is exempted from
the levy of Income tax.
3. As no distinction has been made between
compensation received for compulsory acquisition
of agricultural land and non-agricultural land in the
matter of providing exemption from income-tax
under the RFCTLARR Act the exemption provided
under Sec.96 of the RFCTLARR Act is wider in
scope than the tax exemption provided under the
existing provisions of Income-tax Act. 1961. This
has created uncertainty in the matter of taxability
of compensation received on compulsory
acquisition of land, especially those relating to
acquisition of non-agricultural land. The matter
has been examined by the board and it is hereby
clarified that compensation received in respect of
award or agreement which has been exempted
from levy of income-tax vide Sec.96 of
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RECTLARR Act shall also not be taxable under
the provisions of Income Tax Act, 1961 even if
there is no specific provision of exemption for
such compensation in the Income Tax Act, 1961.
4. The above may be brought to the notice of
all concerned.
5. Hindi version of the Order shall follow.
Sd/-
(Rohit Garg)
7.18 The said issue came up for consideration
before this Court in the case of M/s.Sri. Balaji
Corporation Solutions & others vs. Union of India
and others – W.P.No.43206/2018 & connected
matters dated 21.04.2022. In the said judgment, this
Court framed the following points for consideration;
(i) Whether the writ petitions are maintainable
in view of the remedy of seeking enhancement of
compensation before the reference court being
available to the petitioners, who have already sought
for such reference?
(ii) Whether the petitioners are entitled to
compensation under the Land Acquisition Act, 1894
OR under the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013, in respect of their lands
acquired pursuant to preliminary notification issued
after 01.01.2014 under Section 28(1) of the
Karnataka Industrial Areas Development Act, 1966?
(iii) Whether the compensation payable in
favour of the petitioners is exempt from payment
of tax deduction at source(TDS) and also from
payment of income tax in view of Section 96 of
the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation
and Resettlement Act, 2013 and Section 194-LA
of the Income Tax Act amended vide Finance Act
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67 of 2017 w.e.f 01.04.2017 as well as the CBDT
Circular dated 25.10.2016?
7.19 Point No.3 formulated above dealt with
exemption from payment of income tax / TDS in view
of Section 96 of the RTCPLARR Act and Section 194-
LA of I.T. Act (Amended w.e.f. 01.04.2017) as well as
CBDT Circular dated 25.10.2016. The said issue was
answered by holding that compensation would not be
exigible to payment of income tax / TDS by holding as
under:-
” Re. Point No.3:-
11. The next question that arises for
consideration is, whether the compensation payable in
favour of the petitioners is exempt from payment of tax
deduction at source(TDS) and also from payment of
income tax. In this context, it is relevant to extract
Section 96 of the said Act of 2013, which reads as
under:-
“96. Exemption from income-tax, stamp duty and
fees.-No income tax or stamp duty shall be levied on any
award or agreement made under this Act, except under
section 46 and no person claiming under any such award
or agreement shall be liable to pay any fee for a copy of
the same.”
11.1 On 25.10.2016, the Central Board of
Direct Taxes issued the following Circular clarifying
and confirming that though there was no specific
provision under the I.T.Act, Section 96 of the said Act
of 2013 provides exemption from payment of taxes
and deduction of TDS in respect of compensation
paid under the said Act of 2013. The said CBDT
Circular reads as under:-
Circular No.36/2016
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
ITA.II Division, North Block,
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New Delhi, the 25* of October, 2016
Sub : Taxability of the compensation
received bythe land owners for the land
acquired under the Right of Fair
Compensation & Transparency in Land
Acquisition, Rehabilitation and
Resettlement Act, 2013 (RFCTLAAR Act)
Reg.
Under the existing provisions of the Income-
tax Act, 1961 (‘the Act’) an agricultural land
which is not situated in specified urban area, is
not regarded as a capital asset. Hence,
capital gains arising from the transfer.
(including compulsory acquisition) of such
agricultural land is not taxable. Finance (No.2)
Act, 2004 inserted Sec.10(37) in the Act from
01.04.2005 to provide specific exemption to
the capital gains arising to an Individual or a
HUF from compulsory acquisition of an
agricultural land situated in specified urban-
limit subject to fulfillment of certain conditions
for specified urban land)
2. The RFCTLARR Act which came into
effect from 1st January, 2014. in section 96,
inter-alia provides that income-tax shall not be
levied on any Award or agreement made
(except those made under section 46) under
the RFCTLARR Act. Therefore, compensation
received for compulsory acquisition of land
under the RFCTLARR Act (except those made
under section 46 of RFCTLARR Act), is
exempted from the levy of Income tax.
3. As no distinction has been made between
compensation received for compulsory
acquisition of agricultural land and non-
agricultural land in the matter of providing
exemption from income-tax under the
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RFCTLARR Act the exemption provided under
Sec.96 of the RFCTLARR Act is wider in
scope than the tax exemption provided under
the existing provisions of Income-tax Act.
1961. This has created uncertainty in the
matter of taxability of compensation received
on compulsory acquisition of land, especially
those relating to acquisition of non-agricultural
land. The matter has been examined by the
board and it is hereby clarified that
compensation received in respect of award or
agreement which has been exempted from
levy of income-tax vide Sec.96 of RECTLARR
Act shall also not be taxable under the
provisions of Income Tax Act, 1961 even if
there is no specific provision of exemption for
such compensation in the Income Tax Act,
1961.
4. The above may be brought to the notice of
all concerned.
5. Hindi version of the Order shall follow.
Sd/-
(Rohit Garg)
11.2 Subsequently, Section 194-LA of the I.T.
Act was amended vide Finance Act 67 of 2017 w.e.f
01.04.2017 by inserting a second proviso. After the
amendment, the section reads as under:-
“194LA. Any person responsible for paying
to a resident any sum, being in the nature of
compensation or the enhanced compensation or
the consideration or the enhanced consideration
on account of compulsory acquisition, under any
law for the time being in force, of any immovable
property (other than agricultural land), shall, at the
time of payment of such sum in cash or by issue
of a cheque or draft or by any other mode,
whichever is earlier, deduct an amount equal to
ten per cent of such sum as income-tax thereon:
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Provided that no deduction shall be made under
this section where the amount of such payment or,
as the case may be, the aggregate amount of
such payments to a resident during the financial
year does not exceed two lakh and fifty thousand
rupees:
Provided further that no deduction shall be made
under this section where such payment is made in
respect of any award or agreement which has
been exempted from levy of income-tax under
section 96 of the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation
and Resettlement Act, 2013 (30 of 2013).
(emphasis added)Explanation. — For the purposes of this Section,
—
(i) “agricultural land” means agricultural land in
India including land situate in any area referred to
in items (a) and (b) of sub- clause (iii) of clause
(14) of section 2;
(ii) “immovable property” means any land (other
than agricultural land) or any building or part of a
building.
It is profitable to extract Section 10(37)
of the I.T.Act, which reads as follows:-
10. Income not included in total income:
In computing the total income of a previous year
of any person, any income falling within any of
the following clauses shall not be included-
(37) in the case of an assessee, being an
individual or a Hindu undivided family, any income
chargeable under the head “Capital gains” arising
from the transfer of agricultural land, where-
(i) such land is situate in any area referred
to in item (a) or item (b) of sub-clause (iii) of
clause (14) of section 2;
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(ii) such land, during the period of two
years immediately preceding, the date of transfer,
was being used for agricultural purposes by such
Hindu undivided family or individual or a parent of
his;
(iii) such transfer is by way of compulsory
acquisition under any law, or a transfer the
consideration for which is determined or approved
by the Central Government or the Reserve Bank
of India;
(iv) such income has arisen from the
compensation or consideration for such transfer
received by such assessee on or a after the 1st
day of April, 2004.
Explanation – For the purposes of this
clause, the expression “compensation or
consideration” includes the compensation or
consideration enhanced or further enhanced by
any court, Tribunal or other authority;
11.3 A conjoint reading and the cumulative
effect of Section 96 of the said Act of 2013, the
CBDT Circular dated 25.10.2016, Section 194-LA
and Section 10(37) of the I.T.Act make it abundantly
clear that compensation payable in respect of the
awards passed subsequent to 01.01.2014 when the
said Act of 2013 came into force would be exempt
from payment of income tax as well from deduction of
tax deduction at source(TDS). In the instant case, the
subject lands were acquired pursuant to preliminary
notifications issued under Section 28(1) of the KIAD
Act subsequent to 01.01.2014 which were followed
by the impugned awards as well as the impugned
endorsements, official memorandums,
communications, orders, actions, etc., also
undisputedly issued after 01.01.2014.
11.4 Under these circumstances, having
regard to Article 265 of the Constitution of India, I am
of the considered opinion that compensation payable
in favour of the petitioners, whose lands were notified
for acquisition subsequent to 01.01.2014 would be
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exempt from payment of income tax as well as
exempt from deduction of tax deduction at
source(TDS) and the impugned endorsements,
communications, orders, actions, etc., issued/passed
by the revenue are illegal, arbitrary and without
jurisdiction or authority of law and liable to be
quashed.
11.5 Under similar circumstances in relation to
lands acquired for Metro Railways, a Learned Single
Judge of the Kerala High Court in the case of
Viswanathan M vs. The Chief Commissioner and
others -2020 (2) KLJ 309 and a Division Bench of
the Andhra Pradesh High Court in the case of
C.Nanda Kumar v. Union of India and others –
2017 SCC Online Hyd 55 have held that
compensation payable to land losers would be
exempt from payment of income tax.
11.6 It is sought to be contended by the
learned counsel for the revenue that Section 96 of
the said Act of 2013, CBDT Circular dated
25.10.2016, Section 194-LA and Section 10(37) of
the I.T. Act are applicable only to the lands acquired
under the said Act of 2013 and not to the lands
acquired under the KIAD Act. It is pointed out that
Section 96 of the said Act of 2013 Act employs the
language “award or agreement made under this Act”
and not “award or agreement made as per this Act”
and therefore, in view of the express language
employed by the legislature, the benefit of exemption
from payment of income tax or tax deduction at
source (TDS) cannot be claimed by the petitioners.
The said contentions urged by the revenue cannot be
accepted for more than one reason:-
(i) Firstly, while dealing with Point No.2with
regard to the question as to whether the
compensation was payable to the petitioners
under the said Act of 2013 or under the said
Act of 1894, I have already come to the
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conclusion that the petitioners are entitled to
compensation under the said Act of 2013.
(ii) Secondly, having regard to the aims and
objects of the said Act of 2013 which is a
beneficial piece of legislation, so long as
compensation itself is made payable under the
said Act of 2013, it makes no difference
whether award or agreement is made “under
the Act” or “as per the Act”.
(iii) Thirdly, the material on record discloses
that undisputedly, all awards made and
compensation paid by the respondents in
relation to KIADB acquisitions after 01.01.2014
are under the said Act of 2013 by
granting/giving complete exemption from
payment of income tax and from tax deduction
at source(TDS) as can be seen from the
awards vide Annexure-AL dated 14.06.2019
and Annexure-AN dated 30.01.2020 passed in
Jalaja’s case and connected matters (supra).
(iv) Fourthly, the KIAD Act does not have any
specific provision enabling passing of an award
and Section 30 (prior to amendment) envisaged
passing of an award under the said Act of
1894; however, as held by me while answering
question No.2, the said Act of 1894 was not
applicable to awards and compensation in
respect of KIAD acquisitions subsequent to
01.01.2014, to which the said Act of 2013 was
applicable; it follows there from that awards and
compensation cannot be passed and made
under the said Act of 1894 in respect of KIAD
acquisitions after 01.01.2014 and the same can
be passed and made only under the said Act of
2013. Consequently, since all awards and
compensation subsequent to 01.01.2014 would
be under the said Act of 2013 which would be
applicable to the same, the aforesaid
provisions, viz., Section 96 of the said Act of
2013, the CBDT Circular dated 25.10.2016,
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Section 194-LA and Section 10(37) of the
I.T.Act would also be applicable to all awards
and compensation subsequent to 01.01.2014,
all of which, would be entitled to the benefit of
exemption from payment of income tax and
from tax deduction at source(TDS).
(v) Lastly, I have already come to the
conclusion that the impugned awards,
endorsements, orders, communications, official
memorandums, actions etc., of the respondents
directing payment of income tax and tax
deduction at source (TDS) on the subject
compensation amounts are illegal, arbitrary and
without jurisdiction or authority of law and that
the same deserve to be quashed and the
respondents are to be directed to pass fresh /
modified awards and do all such necessary
acts, deeds and things etc., in favour of the
petitioners under the said Act of 2013. As noted
supra, Karnataka Industrial Areas Development
(Amendment) Act, 2022 (Karnataka Act No. 20
of 2022) amended Section 30 of the KIAD Act
w.e.f 05.04.2022, whereby the provisions
relating to compensation under the said Act of
2013 have been made applicable to KIAD
acquisitions. Consequent upon the passing of
the present order, the respondents would
necessarily have to pass fresh/modified awards
and do all such necessary acts, deeds and
things etc., in favour of the petitioners under the
said Act of 2013 which has been made
applicable to KIADB acquisitions in view of the
amendment to Section 30 of the KIAD Act w.e.f
05.04.2022.
11.7 Viewed from this angle also, though the
question as to whether the said amendment to
Section 30 is prospective or retrospective has not
been gone into in the present order and the same is
left open to be decided in an appropriate case, in the
light of the undisputed fact that the respondents
would necessarily have to pass fresh/modified
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awards and do all such necessary acts, deeds and
things etc., in favour of the petitioners under the said
Act of 2013, Section 96 of the said Act of 2013,
CBDT Circular dated 25.10.2016, Section 194-LA
and Section 10(37) of the I.T.Act would become
applicable to the petitioners who would be entitled to
the benefit of exemption from payment of income tax
and from tax deduction at source(TDS) in respect of
the awards and compensation in their favour.
11.8 In view of the aforesaid facts and
circumstances, the contentions urged on behalf of
the revenue cannot be accepted. I am therefore of
the considered view that all awards and
compensation payable / paid subsequent to
01.01.2014 when the said Act of 2013 came into
force would be exempt from payment of income tax
and also exempt from tax deduction at source (TDS)
and the land losers would not be liable to pay income
tax in respect of the said awards and compensation.
Point No.3 is also answered in favour of the
petitioners by holding that the impugned awards,
endorsements, orders, communications, actions etc.,
of the respondents directing payment of income tax
and tax deduction at source(TDS) on the subject
compensation amounts are illegal, arbitrary and
without jurisdiction or authority of law and that the
same deserve to be quashed and the respondents
are to be directed to pass fresh/modified awards and
do all such necessary acts, deeds and things etc., in
favour of the petitioners under the said Act of 2013
by exempting the petitioners from payment of income
tax and tax deduction at source(TDS) on the
compensation amounts paid/payable in their favour”.
7.20 The aforesaid view taken by this Court was
confirmed by the Hon’ble Division Bench in
Bangalore Metro Rail Corporation Ltd. v. Sri
Balaji Corporate Services – ILR 2023 KAR
4947. The Hon’ble Division Bench held as under
:-
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38. As regards the relief sought for by the
appellant for exemption of Tax and exemption of
payment of deduction of tax at source, Section 96 of
the Act, 2013 reads as under;
“96. Exemption from income tax,
stamp duty and fee. -No Income Tax or
stamp duty can be levied on any award or
agreement under Section 46 and no person
claiming under any such award or agreement
shall be liable to pay any fee for a copy of the
same.”
39. A Circular dated 25.10.2016 came to
be issued by Central Board of Direct Taxes
clarifying that the compensation received in
respect of award or agreement which has been
exempted from levy of income tax, under
Section 96 of the Act, 2013 shall not be taxable
under the provisions of Income Tax Act, 1961
even if there is no provision under the Income
Tax Act. In the light of the above position,
Learned Counsel for the appellant in W. A. No.
1047/2022 submitted that in view of subsequent
amendment to the Income Tax Act, inserting
Section 194-LA into Income Tax Act vide
Finance Act, 2017 with effect from 01.04.2017
and by inserting second proviso after the
amendment, a distinction has been made that
the exemption from payment of income tax and
from deduction of tax at source can be provided
only in respect of acquisition made under Act,
2013 and not under KIADB Act, 1966. Therefore,
he submits the benefit of exemption cannot be
extended. He also refers to provisions of Section
10(37) of the Income Tax Act, 1961.
40. As rightly taken note of by the
Learned Single Judge that in the background of
upholding the contention of the respondents/ writ
petitioners of their entitlement of compensation
under the provisions of Act, 2013, the entire
benefit including the benefit under Section 96 of
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the said Act, 2013 has to be extended in its
entirety. More so, as already noted even
BMRCL, which is the appellant in the connected
matter challenging the relief granted in favour of
respondent/writ petitioners for determination of
their claim for compensation under Act, 2013,
itselfhas issued package compensation as per
Annexure-H and General Compensation has
been awarded as per Annexure-H 1 taking into
consideration the provisions of Act, 2013.
Therefore, contention of appellant cannot be
accepted, to say that since the exemption of
payment of Income Tax Act and deduction of
income tax at source on the compensation
payable against the acquisition of land only if it is
made under Act, 2013 and not under KIADB Act,
1966.
41. Learned Single Judge in his
discussion on point No. 3 has taken into
consideration the provisions of law, the Circular
and also the exemption granted from payment of
income tax and deduction of tax at source in the
awards at Annexure-AL dated 14.06.2019 and
award at Annexure-AN dated 30.01.2020 and
also the precedence in the nature of judgments
passed in the case of Viswanathanm v. The
Chief Commissioner [(2020) 2 KLJ 309.] , by the
High Court of Kerala and Division Bench of
Andhra Pradesh High Court in the case C.
Nanda Kumar v. Union of India [2017 SCC
OnLineHyd 55.] , wherein it has been held that
compensation payable to the land losers would
be exempt from payment of income tax, we do
not see any reasons to deviate and hold contrary
to the said view more particularly, for the reason
of respondent/writ petitioners having held to be
entitled for determination of their claim for
compensation under Act, 2013. Since the only
contention raised by the appellant in W.A. No.
1070/2022 that the exemption is provided under
the new Act, 2013 and that having been held in
favour of the respondents/writ petitioners, no
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grounds are made out warranting interference
with the impugned order.
7.21 Viewed from this angle also, I
am of the considered opinion that Section
96 of the RFCTLARR Act is applicable to
compensation for land acquired under the
N.H.Act and the said compensation is
exempted from TDS / payment of income
tax under the I.T.Act and the impugned
order deserves to be set aside on this score
also.
7.22 A perusal of the impugned order
will indicate that the respondent has come
to the conclusion that in view of Section
105(1) of the RFCTLARR Act is not
applicable to acquisition of land under the
N.H.Act, which is excluded in the Fourth
Schedule, since the land of the petitioner
was acquired under the N.H.Act and not
under the RFCTLARR Act.
7.23 As stated hereinbefore, I have
already come to the conclusion that by
virtue of the Three Ordinances, Removal of
difficulties order, Notification,
Correspondence etc., Section 96 of the
RFCTLARR Act is applicable to
compensation paid / payable for acquisition
of land under the N.H.Act, as a result of
which, the compensation would not be
exigible to income tax and therefore, the
obligation to comply with tax deduction at
source would not arise and as such, the
said findings recorded by the respondent
deserves to be set aside.
7.24 Insofar as the findings recorded
by the respondent in relation to the CBDT
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Circular No.36/2016 dated 25.10.2016 and
applicability of Section 96 of the
RFCTLARR Act is concerned, for the
reason mentioned above, even the said
finding recorded by the respondent in the
impugned order deserves to be set aside.
7.25 A perusal of the impugned order
will indicate that the respondent has
misconstrued and misinterpreted the
various statutory provisions, Ordinances,
Orders, Notifications, Circulars etc., as well
as the judgment of the Apex Court and this
Court relied upon by the petitioner and has
rejected the application by assigning wholly
untenable reasons warranting interference
by this Court in the present petition.
7.26. Points 1 and 2 are accordingly
answered in favour of the petitioner and
against the respondent-revenue by holding
that Section 96 of the Right to Fair
Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement
Act, 2013, is applicable to compensation
payable for land acquired under the
National Highways Act, 1956 and
consequently, compensation payable for
acquisition of land under the National
Highways Act, 1956 is exempt from
payment of income tax / TDS under the
Income Tax Act, 1961.
8. As held by this Court in Uma’s case supra,
Section 96 of the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013, would be applicable to
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compensation awarded towards land acquired under
the National Highways Act and that such compensation
would be exempt from payment of income tax / TDS
under the I.T.Act, 1961. Under these circumstances, I
am of the considered opinion that the present petition
deserves to be allowed and disposed of by issuing
certain directions.
9. In the result, I pass the following:-
ORDER
(i) Petition is hereby allowed.
(ii) Respondents 2, 3, 4 and 8 are directed to
refund the income tax / TDS deducted from the
compensation as per the award passed by
respondent Nos.5 and 6 back to the petitioner
together with applicable interest within a period
of three months from the date of receipt of a copy
of this order.”
5. So also, in its recent judgment in the case of
K.Shyamala Vs Deputy Commissioner and others in
W.P. No.12641/2024 dated 10.07.2026, this Court has
held as under:
“7. xxxx
8. xxxx
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9. This Court, while considering
whether income tax could be deducted at
source on the interest on compensation paid
to a landloser, held that tax cannot be
deducted at source even on the interest
awarded under Section 28 of the Land
Acquisition Act, 1894, as that forms part of
the compensation and such interest is
intended to factor inflation during the period
between the determination of compensation
and its payment.
10. Therefore, this Court has no
hesitation to hold that the respondents have
acted in excess of their power in deducting
GST from compensation payable to the
petitioner.
11. In that view of the matter, the
award notice bearing
No.LAQ/NHAI/NH-275/AWD/Supplimentary-
AWD/
Basavanahalli/2023-24 dated 06.08.2024
issued by the respondent No.2 in so far as
deducting GST from the compensation
payable to the petitioner to refund the GST
of Rs.18,39,252/- deducted from the
compensation payable to the petitioner
along with interest at the rate of 15% per
annum from the date of the award till the
date of payment. Interest payable on the
deducted GST shall be recovered from the
respondent No.2 personally. The
respondent No.2 shall pay cost of
Rs.50,000/- (Rupees Fifty Thousand only) to
the petitioner within a month, towards the
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WP No. 202666 of 2026CNR: KAHC030073542026
expenses incurred in filing this unwanted
petitionThis petition stands disposed off on
the above terms.”
6. In the instant case, the impugned endorsement
and communication at Annexure D and D1 reads as under:
ANNEXURE-D
ೇಷ ಭೂ ಾ ೕ ಾ ಾ ಗಳ ಾ ಾ ಲಯ ಾರ ೕಯ
ಾ ೕಯ ೆ ಾ ಗಳ ಾ ಾರ – ಾಯಚೂರುOffice of the Special Land Acquisition
Officer National Highways Authority of
India – RaichurOffice: First floor Anusha Complex, Opp
Navodaya Hospital, Mantralaya Road,
Raichur – 584 104Email:[email protected]
ಸಂ.ಭೂ ಾ% ಅ/ ಾಯಚೂರು/ ಾ. ಾ. ೆ. ಾ /
‘ಆ)- /2025-26/79/80
* ಾಂಕ:08.05.2025.
,ಂಬರಹ
«µÀAiÀÄ: , ೇಹಣ0 1ಾ ಮದ ಸ4ೆ ನಂ.37/*/
ಾ ೕಯ ೆ ಾ -748ಎ ರ78 ಭೂ ಾ ೕನ ಸಂಬಂಧದ78
– 55 –
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WP No. 202666 of 2026CNR: KAHC030073542026
:ೕ;ದ ಪ ಾರ ಹಣದ78 ರೂ.3,82,541/- ರ =.ಎ>.?.
ಕ;ತ1ೊA’ದ ಬ1ೆBಉDೆ8ೕಖ: 1) ವGೕಲರ ಮೂಲಕ :ೕವH ಸ78’ದ ಅ=
* ಾಂಕ 04.05.2025
2) Iೕಜ ಾ : ೇ ಶಕರು ಾ. ಾ. ೆ. ಾ . Lಐಯು,
ಾಯಚೂರು ಇ OೕPOೕಲQಂಡ ಷಯ ೆQ ಸಂಬಂ ‘ದಂSೆ Iೕಜ ಾ
: ೇ ಶಕರು ಾರ ೕಯ ಾ ೕಯ ೆ ಾ ಾ ಾರ ರವರು
ಉDೆ8ೕಖ (1) ರ ತಮ% (T ೕ ಸುಂದರ ಾU ೆ;V) ಅ= ಯನುW
ಈ ಕYೇ 1ೆ ಸೂಕZ ಕ ಮ ಾQ0 ಕಳ[,’ರುSಾZ ೆ. ಉDೆ8ೕಖ (1)
ರ ತಮ% ಅ= ಯನುW ಪ Tೕ7ಸDಾ0-, ೇಹಣ0 1ಾ ಮದ
ಸ.ನಂ. 37/*/4 0.5.748 J gÀ C©üªÀÈ¢ÝÃUÁV
2667.200 ZÀ.«ÄÃ. ¨sÀÆ«ÄAiÀÄ£ÀÄß ¨sÀÆ ¸Áé¢Ã£À
ಪ;’ ೊಳ\Dಾ0 ೆ ಅದ ೆQ – ಭೂU ಕಟ^ಡ ಮತುZ 0ಡ, ಮರ,
ೇ ರೂ.29,09,135/- ಗಳ ಅ4ಾ_
ಮಂಜೂ ಾ0ರುತZ ೆ. ಅದರ78 ರೂ.3,82,541/-
=.ಎ>.?. ಕ;ತ1ೊAಸುವHದು Sೆ 1ೆ ಾ` ಕಲಂ 10 37)
ರ ಉಲ8ಂಘ ೆ ಾ0 ೆ ಎಂದು A’ರುSಾZ ೆ.
ಆದ ೆ ಪ ಾರಧನ ಾವ bಾ;ದ ಕಡತವನುW
ಪ Tೕ7ಸDಾ0 ಭೂ ಾ ೕನ ಪ;’ ೊಂಡ ಭೂUಯ78 ಕಟ^ಡ
ಇದು ಅದರ ಪ ಾರ ಹಣದ78 =.ಎ>.? ಯನುW
ಕ;ತ1ೊA’ ೆ. ವರ ಈ ಕಳ0ನಂ ೆ.
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WP No. 202666 of 2026
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ಕಟ^ಡ :ಧ ತ bೌಲd 12,53,885/-
100% Solatium 12,53,885/-
Total 25,07,770/-
gÀÆ. 25,07,770/-gÀ°è 3.82.541/-
(25,07,770/1.18 x 0.18) G.S.T :ೕವH
4ಾ*ಸುವಂSೆ ಾ ೕನಪ;’ ೊಂಡ ಭೂU1ೆ ಾವH ೇ GST
ಹಣ ಕ;ತ1ೊA’ರುವH*ಲ8. ಎನುWವHದನುW ಈ ಮೂಲಕ
ಸೃ ^ಕ ಸDಾ0 ೆ.
ೇಷ ಭೂ ಾ ೕ ಾ ಾ ಗಳ[,
ಾ ೕಯ ೆ ಾ ಾ ಾರ,
ಾಯಚೂರು
UÉ,
²æà ¸ÀÄAzÀgÀ gÁ«ÄgÉrØ
vÀAzÉ PÉÆÃngÉr,Ø
ªÀÄÆ: ¥ÉÆÃvÁ¥ÀÄgÀÄ
vÁ: ¹gÀªÁgÀ f: gÁAiÀÄZÀÆgÀÄ
ANNEXURE-D1
ೇಷ ಭೂ ಾ ೕ ಾ ಾ ಗಳ ಾ ಾ ಲಯ ಾರ ೕಯ
ಾ ೕಯ ೆ ಾ ಗಳ ಾ ಾರ - ಾಯಚೂರು
Office of the Special Land Acquisition
Officer National Highways Authority of
India – Raichur
– 57 –
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WP No. 202666 of 2026
CNR: KAHC030073542026
Office: First floor Anusha Complex, OPP
Navodaya Hospital, Mantralaya Road,
Raichur – 584 104
Email:[email protected]
No: SLAO/NHAI/RCR/CR/2025-26/141
Date: 28.05.2025.
To,
The Project Director,
NHAI PIU -Raichur,
Plot no.37, D-Block,
Krishnadevaraya Nagar,
Bolmandoddi Road,
Raichur-584101.
Subject: Release/pay illegally
deducted of GST @ 18% amounting of
Rs.3,82,541/-Reg.
Reference: 1. Your office letter No.
NHAI/PIU/RCR/2025-26/0235
dated:03.05.2025
2. your office e-mail dated: 05.05.2025.
Respected Sir,
With reference to the letter cited
under reference at SL.No.1 vide which your
good office has forwarded a letter of Sri.
Sundar Ramireddy to this office for
necessary action, wherein applicant is
asking to return GST amount on land
acquired.
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On verification of his payment file it is
made clear that, GST @ 18% is deducted
on structure not on the land acquired.
Accordingly, detail endorsement has
already been given to Shri. Sundar
Ramireddy by this office on
dated:08.05.2025 under intimation to your
office. However, once again one copy of the
same is enclosed to this letter for your kind
information.
Thanking You,
Yours Faithfully,
Sd/-
Special Land Acquisition Officer,
National Highway Authority of India.
Raichur.
7. The aforesaid endorsements are clearly
contrary to the principles laid down by this Court in the
aforesaid judgments and consequently, I am of the
considered opinion that the impugned endorsement and
communication dated 08.05.2025 and 28.05.2025
deserves to be quashed and the respondents be directed
to reimburse/pay the sum of Rs.3,82,541-00 to the
petitioner within a period of eight (8) weeks from the
date of receipt of a copy of this order. It is further directed
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that in the event, if the respondents do not comply with
this order, the aforesaid amount of Rs.3,82,541-00 shall
carry interest at the rate of 9% p.a. after expiry period of
two (2) months from today as stated supra, till date of
payment.
8. Subject to the aforesaid observations, petition
stands disposed of.
Sd/-
(S.R.KRISHNA KUMAR)
JUDGE
MBB
LIST NO.: 1 SL NO.: 12
CT:SI
