Karnataka High Court Quashes Compounding Fee Demand Under Section 96(4) of Karnataka Land Revenue Act, 1964 for Want of Prior Conversion of Patta Land. Quarrying Activity Commenced When Law Did Not Require Conversion as per Shakeel Pasha v. N. Sivasailam, Hence No Violation of Section 95.

Writ petition under Articles 226 and 227 of the Constitution challenging the demand of compounding fee under Rule 107-A of the Karnataka Land Revenue Rules, 1966 read with Section 96(4) of the Karnataka Land Revenue Act, 1964.

Quashing of the order dated 31/07/2012 passed by the Additional Deputy Commissioner directing payment of compounding fee, and a direction for conversion of the remaining land under the quarrying licences.

The petitioner contended that at the time of quarrying activities on patta lands, no conversion for non-agricultural use was required under the prevailing law as laid down in Shakeel Pasha v. N. Sivasailam, hence there was no violation of Section 95 and no liability to pay compounding fee.

A Division Bench in W.P. No. 7604/2010 dated 08/11/2010 upheld the demand for conversion charges but set aside the compounding fee and penalty, permitting the petitioner to make a representation on the issue of compounding fee.

Whether the Deputy Commissioner was justified in demanding compounding fee under Section 96(4) of the Karnataka Land Revenue Act, 1964 when quarrying activities on patta land commenced at a time when conversion for non-agricultural use was not required as per the law declared in Shakeel Pasha v. N. Sivasailam?

Petitioner: Under Shakeel Pasha, conversion of patta lands for quarrying was not mandated; therefore no offence was committed and compounding fee under Section 96(4) cannot be levied. The later decision in M. Kokila cannot be applied retrospectively. Respondent: Using patta land for non-agricultural activity without conversion violates Section 95, attracting Section 96(1) and justifying compounding fee; the Division Bench upheld conversion charges, so compounding fee is also leviable.

When quarrying activities on patta land commenced at a time when the law, as declared in Shakeel Pasha v. N. Sivasailam, did not require conversion for non-agricultural use under Section 95 of the Karnataka Land Revenue Act, 1964, there was no contravention of the Act, and consequently no compounding fee could be demanded under Section 96(4). A subsequent change in the legal position by M. Kokila v. State of Karnataka operates prospectively and cannot impose a retrospective liability.

having regard to the decision of this Court in Shakeel Pasha V/s. N.Sivasailam and others (1987(2) KLJ 219) conversion of patta lands for non-agricultural purposes is not mandated under Section 95(2) of the Act, when it is to be used for extraction of any mineral at the relevant point of time i.e., when the quarrying licences were issued and till the decision in M.Kokila, was entitled to carry on quarrying activities without keeping the patta lands converted for non-agricultural purposes

Petitioner was granted three quarrying licences in 2000 and 2002 for pink granite extraction on patta lands. Quarrying commenced without conversion under Section 95. In 2004, petitioner surrendered major portions of the licences. Subsequently, authorities demanded conversion charges, compounding fee and penalty. Show cause notice dated 21/04/2009 and circular dated 28/07/2009 were challenged in W.P. No. 7604/2010. On 08/11/2010, a Division Bench upheld conversion charges but set aside compounding fee and penalty, granting liberty to make a representation. Petitioner's representation dated 11/12/2010 led to an enquiry and the impugned order dated 31/07/2012 demanding compounding fee. The present writ petition was filed assailing that order.

• Karnataka Land Revenue Act, 1964: 95, 95(2), 95(7), 96(1), 96(4)
• Karnataka Land Revenue Rules, 1966: 107-A
• Constitution of India: 226, 227