BENGALURU: The High Court has annulled a circular issued by the Real Estate Regulatory Authority (RERA) of Karnataka on September 3, 2020, due to lack of legislative authority. The circular aimed to retrospectively impose a “delay fee” for late submissions of quarterly updates and annual audit statements.
This circular required builders, developers, and promoters to submit quarterly updates and annual audit statements as per Section 7 of the Real Estate (Regulation and Development) Act, 2016.
The petitioners contended that while the Act mandates obligations for promoters, it does not empower the authority to enforce delay fees. They argued that delays were attributable to the Covid-19 pandemic, affecting project timelines significantly.
On the other hand, the government advocate pointed out that the Act requires developers to provide quarterly updates on the K-RERA portal related to project specifics. According to the advocate, those failing to submit updates are liable for fee collection.
Justice M. Nagaprasanna stated that no tax or fee can be levied on citizens unless authorized by law. “Law, in this context, should refer not to executive directives or departmental circulars, but to legislative enactments as mandated by the Constitution. Article 265 declares that taxes can only be imposed by law, which encompasses all compulsory charges.” The court’s decision was made following multiple petitions.
Justice Nagaprasanna emphasized that any authority to impose burdens on citizens must come directly from legislation. If legislative power is delegated, it must be clear and within the scope of legislative intent. In examining these principles, the court concluded that the questioned circular lacked the necessary statutory basis to impose delay fees on developers and promoters.
