Page 115 - GSTL_3rd September 2020_Vol 40_Part 1

2020 ] KARNATAKA INDUSTRIAL AREAS DEV. BOARD v. COMMR. OF CENTRAL TAX 49
High Court has been stayed by the Apex Court as cited supra, the decision of the
Allahabad High Court is not a binding precedent to decide the present case.
7.6 Learned Special Counsel placed reliance on the cases of N. Nagendra
Rao & Co. v. State of AP [AIR 1994 SC 2663 (23 & 24) and Agricultural Produce
Market Committee v. Ashok Hari Kuni [AIR 2000 SC 3116] (paras 22, 31-33)] to
submit that activities carried out by KIADB are not sovereign functions. After
going through the said judgments, we are of the view that these judgments are
not applicable in the facts and circumstances of the present case as the said
judgments were rendered in the context of immunity of the State from being
sued for a tort claim. It was held that the state cannot take the defence of carrying
out sovereign functions to claim immunity from an action in tort. These cases do
not speak of the power of ‘eminent domain’ being a sovereign power. The sub-
missions of the Learned Counsel for the appellant that KIADB is a creature of the
statute to exercise the power of ‘eminent domain’ and the eminent domain is a
sovereign function has been contested by the Learned Special Counsel for the
Revenue. As per the Learned Special Counsel, the eminent domain so far as the
land to be acquired for KIADB purposes remains only with the State Govern-
ment. We do not agree with the submission of the Learned Special Counsel. It is
not correct to say that only State Government has the power of acquisition under
KIAD Act. In the case of Peerappa Hanmantha Harijan and Others v. State of Karna-
taka and Anr. [(2015) 10 SCC 469], it was categorically observed that State Gov-
ernment acquires land only at the instance of KIADB for the purpose of for-
mation of industrial estate in industrial area. Moreover, Section 28(8) of the
KIAD Act, in express terms, states that where the land has been acquired by the
State Government for KIADB, the State Government after it has taken possession
of the land from either owner or interested person may transfer the land to
KIADB for the purpose for which the land has been acquired by it. Therefore, it
is not correct to say that KIADB has no power of eminent domain. The ratio of
the following decisions of the Apex Court clearly considering the scope of ‘emi-
nent domain’ and sovereign function are applicable to the facts of the present
case :-
(i) Balmer Lawrie & Co. Ltd. v. Partha Sarathi Sen Roy [2013 (8) SCC 345]
(ii) MD, HSIDC v. Hari Om Enterprises [AIR 2009 SC 218]
(iii) Jilubhainanbhai Khachar v. State of Gujarat [1995 Supp (1) SCC 596]
7.7 The Learned Counsel for the appellant relied upon the decision in
the case of Employee Provident Fund Organisation v. CST [2017 (4) G.S.T.L. 294 (Tri.
- Del.)] to submit that the statutory authorities performing statutory functions as
per the statute are not liable to pay service tax. He also submitted that the Reve-
nue’s appeal against the above decision was dismissed by the Hon’ble Supreme
Court on grounds of delay as well as on merits. We have gone through the
judgment of the Tribunal. The Tribunal in that case, after considering the judg-
ment of the Supreme Court as well as Kerala High Court, has held that appel-
lants are not liable to pay service tax on their statutory activities performed un-
der the act. In this case, the Tribunal has also considered the argument of the
Revenue that the appellant is providing taxable services as a corporate
body/trust by managing funds and the activities carried out are not in the statu-
tory functions but are in the nature of services of social nature as per the di-
rective principles of the State Government policy. Here it is pertinent to repro-
duce the observation of the Tribunal in paras 7, 11, 12, 13, 15, 16, 17, 20 :-

GST LAW TIMES  3rd September 2020  131