Tue Jul 08 19:57:05 UTC 2025: **Summary:**
The Karnataka High Court has ruled that gram panchayats (village councils) lack the legal authority to levy or collect taxes from industrial establishments located within industrial areas that have been notified and developed by the Karnataka Industrial Areas Development Board (KIADB). The court emphasized that KIADB has exclusive power over development activities, including taxation, in these areas until the government officially transfers control to local authorities via notification under Section 37 of the KIAD Act. The ruling came in response to petitions from industrial establishments challenging tax notices issued by a gram panchayat.
**News Article:**
**Karnataka High Court Limits Gram Panchayat Taxing Power Over Industrial Areas**
*Bengaluru, July 9, 2025* – The Karnataka High Court has issued a significant ruling clarifying the taxing powers of gram panchayats (village councils) within industrial areas. In a judgment delivered this week, the court stated that gram panchayats do not have the legal right to levy or collect taxes from industrial establishments located within industrial areas developed and managed by the Karnataka Industrial Areas Development Board (KIADB).
The ruling, presided over by Justice Sachin Shankar Magadum, stems from petitions filed by several industrial establishments, including Kalpatharu Breweries and Distilleries Pvt. Ltd., challenging tax notices issued by the Sompura Grama Panchayat in the Nelamangala area near Bengaluru.
The court emphasized that the KIADB has exclusive authority over development activities, including the power to levy and collect taxes within these industrial zones. This authority remains intact until the government issues a formal notification under Section 37 of the Karnataka Industrial Areas Development (KIAD) Act, 1966, transferring control of the industrial area to the local authorities.
The court further cited Section 47 of the KIAD Act, which grants overriding effect to the Act’s provisions over any other inconsistent law. This, the court stated, leaves no room for gram panchayats to assume taxing jurisdiction over KIADB-controlled areas. The court then set aside the notices issued by the Sompura Grama Panchayat.
The decision is expected to have a significant impact on the relationship between industrial establishments and local governance in Karnataka, especially concerning taxation and revenue collection.
First Piper 