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2022 (12) TMI 1327 - HC - Indian LawsEnhancement to property tax in terms of the Chennai City Municipal Corporation Act,1919 and the Coimbatore City Municipal Corporation Act, 1981 - HELD THAT:- The efforts to rationalize property tax assessment continued and G.O.Ms.No.11 dated 04.01.1983 considered a situation that ‘rent’ may be removed from the ambit of the enactment and that the mode of assessment may be shifted wholesale to a new basis, such as value of land, plinth area, location and usage after dividing the area into various zones and sub-zones. Following this methodology will obviate the necessity for arriving at a annual rental value or fair rent method. After examining the proposal from the Vice Chairman, Madras Metropolitan Development Authority under cover of his letter dated 30.03.1982, the Commissioner, Corporation of Madras was directed to undertake studies in this regard to be carried out by the Operations Research Group (ORG) of the Madras Metropolitan Development Authority under World Bank Systems for rationalization of property tax assessment. The records reveal notes written in hand, calling for the report of the ORG and Annexure VIII of compilation filed by the Greater Chennai Corporation on 21.09.2022 contains a report of the study submitted during September, 1985. Property taxes are a major source of revenue to the State and the report of the Committee as well as the analysis of data supplied by the respondents reveal more than adequately, that this source of revenue was not being deployed effectively. Non-deployment of revenue sources only leads to the denial of proper infrastructure and facilities to the citizens and the enhancement in property tax rates is only a move forward in that direction - the present impugned enhancement is not vitiated simply by virtue of the recommendations made by the Finance Commission. At best, it is an exercise in collaboration by the Union and State in the best interests of the Country. This argument is answered accordingly. The impugned G.O. cannot be considered as a diktat. It does precede the CRs and is couched in affirmative terms, indicating that changes are strongly urged in the property tax regime. However in conclusion, it advises, rather urges, that the Corporations take note of, and address the issues raised effectively, in the best interests of the State/District. The impugned GO, CR and Notification do make reference to the recommendations of the Central Finance Commission. However, such references do not, in my considered view, dilute the proposal for enhancement as the need for such enhancement has been made out by the State, de hors the recommendations of the Central Finance Commission. The admitted position that there has been no enhancement of property tax for the last nearly three decades would itself suffice to justify a proposal for enhancement now - the challenge to the impugned G.O. and CR on these grounds, stands rejected. Arbitrary and illegal procedure followed in enhancement - violation of principles of natural justice - HELD THAT:- In the present case, public notice has admittedly been issued and objections have, admittedly, been called for from the taxpayers falling within the jurisdiction of both the Chennai and Coimbatore Corporations. In the former, there are 13 lakhs/approx. assessees. The information relating to the number of assessees in Coimbatore has not been supplied by the Coimbatore Corporation. From among approximately 13 lakhs, 30 objections have been received. The disposal of the objections is merely by way of reiteration of the Council Resolution and Notification - the objections been dealt with in a serious manner as would behove the respondents, there would have been no necessity for the present Writ Petitions, since complete clarity could be provided by the Corporations even at that stage. The State would be well advised to put in place proper machinery in this regard and to ensure that future modifications, including enhancements, are made in accordance with fairness, transparency and following a fair and transparent procedure for dealing with tax payer queries, grievances and objections - Though an infirmity, it has been cured by virtue of the efforts taken by the City Corporation pendente lite, where efforts do appear to have been taken to enable the infrastructure, both physical as well as by use of technology, to provide services in method of computation, provision of grievance resolution centres, facilitation counters and an easy-to-use website, to ease the burden upon the taxpayers. Basis of enhancement is arbitrary and contrary to the provisions of the Act or not - HELD THAT:- In the present case, there is no doubt that the respondents have complied with the procedure for enhancement, though as noted in the paragraphs above, the entirety of the procedure followed appears to be rather farcical. However, there is no dispute on the position that the impugned/offending orders have been placed in public domain and objections called for and disposed - In PATEL GORDHANDAS HARGOVINDAS VERSUS MUNICIPAL COMMISSIONER, AHMEDABAD [1963 (3) TMI 53 - SUPREME COURT], a Constitutional Bench of the Hon’ble Supreme Court considered an appeal on certificate granted by the Bombay High Court challenging imposition of a rate by the Municipal Commissioner, Ahmedabad, on vacant lands. The levy of rate was under Section 73 of the Bombay Municipal Boroughs Act, 1925. The provisions of the Hyderabad Municipal Corporations Act, 1955 and the relevant rules in the Hyderabad Municipal Corporations (Assessment of Property Tax) Rules, 1990 provided that tax shall be levied at such percentages of rateable value as may be fixed by the Commissioner. It also provided for the method and manner of determination of such rateable value which is the annual rental value of the property - there was a complete scheme of assessment of tax that is inbuilt in that Statute and in the Rules. Neither the Act nor the Rules provide for a fair rent under the Rent Control Act to be binding upon the Commissioner and the Court lauded this discretion, since they noted that determination of annual rental value depended on several criteria that may expand beyond the criteria set out under the Rent Control Act. Admittedly, there is no restriction on the methodology as to how ALV is to be determined and thus there is substantial play in the joints that has been afforded to the respondents in this regard - This issue is thus held in favour of the respondents. Whether the slab rate provided within the BSR is permissible? - HELD THAT:- Evidently, and as the respondents have also pointed out, the fixation of slabs is intended as a benefit extended to owners of properties graded on the basis of size. The factorial for properties admeasuring less than 600 sq. ft., has been enhanced from 1.25 to 1.50, for properties between 601 to 1200 from 1.50 to 1.75, for properties between 1201 to 1800 the factorial stands enhanced from 1.75 to 2.00. In all situations, there is an enhancement of .5 percentage of the rate previously applicable. Properties admeasuring above 1801 sq. ft. stands enhanced to 2.00 from 1.50 as it was previously - The respondents project as though the slab system existed even earlier and the tabulation extracted above reveals the slabs fixed in 2011. However, no document has been produced by the Corporation/State in support of the existence of slab rates prior to the present impugned proceedings. This point has not been argued by the petitioners. Petition dismissed.
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