Cuttack, May 18: People who have decided to sell off plots leased out to them at the Bidanasi project area will not have to pay any differential cost (50 per cent of difference between premium paid and market value of the plot on date of sale) to the Cuttack Development Authority (CDA).

Orissa High Court has invalidated the imposition of the differential cost, which the CDA had been collecting for more than a decade. The ruling assumes significance as the CDA had increased the value of land by nearly 300 per cent in the last 10 years.

The high court has ruled that “levy and collection of 50 per cent of differential value between premium paid and market value of land at the time of sale/ transfer/ assigning by CDA from transferor is nothing but a levy on his income on sale of his asset. In other words, it is a tax on the income”.

“Mere giving the nomenclature like, ‘Administration & Processing Fees’ cannot change the characteristics of the levy. Any charge/ levy on such income is nothing but a tax on income. Thus, imposition of the levy is beyond the legislative competence of the State or it’s instrumentalities as levy on income is a Union subject,” the court ruled.

The court gave the ruling on a petition challenging collection of differential cost by the CDA without any statutory provision, but by stipulating it in the brochure during leasing out of plots.

“Any condition put in the allotment brochure/ letter or lease deed by the Authority, which is not provided in the Statute, cannot have the legal sanction behind it and therefore, the same is not valid,” the division bench of Chief Justice V. Gopalagowda and Justice B.N. Mohapatra said.

“We are of the considered view that the CDA has no power or authority to charge and recover 50 per cent of the differential amount between the premium paid and market value of the plot at the time of sale/ transfer/ assigning, etc of an allotted plot by an allottee to a third party in terms of the provisional allotment brochure,” the bench ruled.

Taking note of the fact that the Bhubaneswar Development Authority (BDA) is charging 10 per cent unearned increase towards administration and processing fees during transfer of land, the high court said: “There is no reason as to why CDA is charging 50 per cent of unearned increase.”

“Thus, there should be one set of rate in both the cities. Disparity in charging the administration and processing fees with reference unearned increase is hit by Article 14 of the Constitution (equality before law). The CDA should not be allowed to have unbridled power with regard to third party transfer”, the court ruled.