Karnataka High Court Says Krera Cannot Impose A Fee On The Delayed Submission Of Audit Reports

The Karnataka High Court issued a circular of the KRERA that had the effect of striking a “delay fee”. The fee was applied when there was a belated submission of annual audit statements and quarterly updates by promoters.

M Nagaprasanna held a single judge bench of Justice on September 19 that the delay fee was without distinction to the scale of the project. Many petitions are filed against the circular. The bench noted that the issue was whether the action was within the ambit of the parent law, the Real Estate Regulation and Development Act 2016 and its applicable rules.

The court found that none of the requirements enabled KRERA to levy the fee in question. It also explained that none of the supplies quoted imposed a fee. A checking at the circular does not show any source of power to impose a fee. It does not have a way to calculation a fee as well. So, it does not find its power in the Act.

The bench added that it was clear from the last precedent that no tax or fee can be levied but by authority. It explains that it must either be mentioned in a law. The bench stated that, tested on the incus of these above principles, the questioned circular, whereby a delay fee has been told to be imposed on developers, stands exposed as failing of statutory parentage.

It also finds no fuel in the Act, and it locates no other foundation in the rules. It will not come in the way of legislation of the subject fee in a manner that is known to the law, the court said.

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