GST Not Applicable on Solatium in Land Acquisition | HC

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  • Last Updated on 6 May, 2025

GST on solatium

Case Details: Smt. Asha R vs. Assistant Commissioner of Commercial Taxes - [2025] 173 taxmann.com 863 (Karnataka)

Judiciary and Counsel Details

  • S.R. Krishna Kumar, J.
  • V. Raghuraman, Senior Counsel, C. R. RaghavendraBhanu KumarRaghavendra C. R.Bhanumurthy J.S.Cherian PunnooseAnil Kumar B.Kum. Krishika VaishnavA. Mahesh ChowdharyKumari. Krishika Vaishnav, Advs. for the Petitioner.
  • K. Hema Kumar, AGA for the Respondent.

Facts of the Case

The petitioners, owners of immovable properties, had their land acquired by the state for a metro rail project. As part of the land acquisition process, the petitioners were offered a compensation package, which included a solatium component. This solatium was paid as additional compensation for the land acquisition. Subsequently, the respondents issued show-cause notices to the petitioners, demanding the payment of Goods and Services Tax (GST) on the solatium component of the compensation received.

The petitioners, in response, contested the levy of GST, arguing that the compensation for land acquisition, specifically the solatium component, should not attract GST, as the sale of land—whether as is or after development—falls under the exemption provided in Entry No. 5 of Schedule III of the CGST and Kerala GST (KGST) Acts. The petitioners further referred to Circular No. 177/09/2022-TRU, dated 03-08-2022, which clarified that land transactions are not subject to GST. Despite these arguments, the impugned orders were passed, confirming the GST demand, prompting the petitioners to file the petition challenging the same.

High Court Held

The Hon’ble High Court held that the sale or acquisition of land is constitutionally within the State List and is expressly excluded from GST under Entry No. 5 of Schedule III. It affirmed that there was no legislative intent to tax such transactions and endorsed the clarification issued under Circular No. 177/09/2022-TRU, 03-08-2022. Accordingly, the Court declared that the solatium component received by the petitioners was not exigible to GST.

The impugned show-cause notices and orders were quashed, and the matter was decided in favour of the petitioners.

List of Cases Referred to

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Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied