Court directs refund of Rs. 21 lakh with 6% interest, affirming Supreme Court's stance that such levies are beyond statutory authority under U.P. Urban Planning and Development Act, 1973
In a landmark judgment delivered on October 1, 2026, the Allahabad High Court (Division Bench comprising Justices J.J. Munir and Indrajeet Shukla) ruled in favour of Kapil Dev Vyas Filling Station, Allahabad, striking down the demand for impact charges and open area penalty raised by the Prayagraj Development Authority (PDA), formerly Allahabad Development Authority. The court held that these levies are not contemplated under Section 15(2-A) of the Uttar Pradesh Urban Planning and Development Act, 1973 and therefore cannot be lawfully imposed.
The petition was filed by the dealer of Indian Oil Corporation Limited, challenging a demand notice dated May 22, 2007, which called for payment of Rs. 15,04,238 as impact charges and Rs. 6,01,695 as open area penalty for sanctioning a site plan of a petrol pump at Thornhill Road, Prayagraj. The petitioner contended that these charges were excessive, based on a circle rate applicable from June 24, 2006, whereas the application was made on September 27, 2004, and also that such charges were beyond the legal powers of the PDA.
The court noted that while the petitioner initially challenged the quantum of these charges, subsequent authoritative pronouncements by the Supreme Court in Mathura Vrindavan Development Authority v. Rajesh Sharma (2025) and this Court's own decision in Smt. Rekha Rani v. State of U.P. (2013) have declared impact fees and similar charges as ultra vires and beyond the competence of Development Authorities. These rulings clarified that under Section 15(2-A), only certain specified fees such as development fees, mutation charges, stacking fees, and water fees can be levied.
Highlighting the declaratory nature of constitutional judgments, the Bench observed that the law as declared by the Supreme Court applies retrospectively, invalidating the impact fee and open area penalty imposed on the petitioner. The PDA's failure to file any counter affidavit despite repeated opportunities was also noted critically.
Significantly, the court directed the PDA to refund the amount of Rs. 21,05,933 (impact charges plus open area penalty) already deposited by the petitioner, after adjusting any lawful charges, within one month. The refund is to be made with a simple interest of 6% per annum from June 12, 2007 until the date of actual payment.
This judgment reinforces the supremacy of statutory provisions and constitutional mandates over arbitrary levies by development authorities and offers relief to many similarly affected entities in Uttar Pradesh. It also sends a clear message that delays or inaction by authorities cannot be used as a basis to impose retrospective or unauthorized charges on applicants.
Bottom Line:
Uttar Pradesh Urban Planning and Development Act, 1973 - Development Authority cannot levy impact charges or open area penalty, as such levies are not contemplated by Section 15(2-A) - Demand notice to that extent quashed - Amount deposited under those heads directed to be refunded with 6% simple interest after adjustment of other lawful charges.
Statutory provision(s): Uttar Pradesh Urban Planning and Development Act, 1973 Section 15(2-A), Constitution of India Article 265
Kapil Dev Vyas Filling Station Allahabad v. State of U.P., (All)(DB) : Law Finder Doc Id # 2991793
