Sri M R Kodandaram v. State of Karnataka

What happened

The appellant owns the Gokula Grand Hotel and Spa, a five-star hotel in Bengaluru. In W.P. No. 6466/2015 he challenged Circular No. UA(Com)PR:208:2012-13 of 7 March 2013, a notice of 8 August 2014, Rule 3(v) and entry 14A of Form V of the Bruhat Bengaluru Mahanagara Palike Property Tax Rules, 2009 as ultra vires the Karnataka Municipal Corporations Act, 1976 and unconstitutional. The Single Judge dismissed the writ petition on 26 March 2026 and the intra-court appeal followed.

Questions before the court

• Can a uniform property tax slab be imposed on five-star hotels irrespective of their location?

Why the court ruled this way

The petitioner argued that even for five-star hotels, tax must reflect location. The Single Judge had rejected this relying on Seetha Kalyana Mandiram v. State of Karnataka, V. Venugopala Ravi Varma Rajah v. Union of India, Federation of Hotels and Restaurants Association of India v. Union of India and Kerala Hotel and Restaurant Association v. State of Kerala (paragraph 5). The Bench held that classification of persons for taxation can be tested under Article 14 and fails only where no intelligible differentia exists, but five-star hotels form a distinct and uniform class, so a uniform slab irrespective of location is not discriminatory (paragraphs 6 and 7). On penalty, sections 112A(5), (6) and (7) of the Karnataka Municipal Corporations Act, 1976 allow a representation to the Commissioner within 30 days, and because the petitioner had been enjoying an interim order, the period was extended by three weeks (paragraph 8).

Controlling point

A uniform property tax slab for five-star hotels, irrespective of their location, does not violate Article 14.

Order and next steps

The appeal was dismissed with directions. No coercive step was to be taken to recover the penalty until the Commissioner decides the representation, which the petitioner may make within three weeks. The petitioner must deposit the tax and interest within three weeks, the BBMP must give an opportunity to reconcile the demand and then issue a fresh demand for tax, interest and penalty, and the tax and interest must be deposited within three weeks of the fresh demand notice, with the penalty dealt with by representation under section 112A(5).

Practical implications

A hotel or other commercial owner challenging a uniform slab should expect the classification argument to be tested under Article 14, and should use the reconciliation opportunity and the section 112A representation for penalty before any recovery.

Limits of this ruling

• The ruling applies to uniform slabs for five-star hotels as a class and does not decide how the tax is computed for individual properties, or the amount of the demand, which is to be reconciled by the BBMP.