The division bench of Bombay High Court on 24th April, struck down the rules enacted by the Brihanmumbai Municipal Corporation (BMC) for “assessment of capital value of a property, based on which property tax could be levied”. The bench was hearing a bunch of petitions filed by an association of property owners, builders associations and charitable institutions, including religious bodies, against the BMC and the Maharashtra government, challenging the levy of property tax on the basis of capital value. The high court in its order said all assessments and bills issued under these rules stand quashed. The civic body will have to give a fresh hearing to the complaints filed before it.
The bench comprising of Justice Abhay Oka and justice Riyaz Chagla, " Struck down Rules 20, 21 and 22 of the Capital Value Rules of 2010 and 2015 as they are ultra vires to the Corporation Act”. “There is no provision which enables the civic body commissioner to frame rules for laying down guidelines for determining capital value.
The bench however upheld the constitutional validity of the 2009 amendment to the Maharashtra Municipal Corporation Act that had changed the levying of property tax basis in Mumbai from rateable value on standard rent to capital value. In 2009, the Maharashtra Municipal Corporation Act was amended and the concept of levying property tax on capital value system became applicable.
The order noted that the corporation, while assessing capital value of a property, will have to consider factors like nature of land, type of land or structure, area, user category such as residential or commercial along with its age. The Rateable value of a property which was earlier used is derived from its rent, while the current system of capital value is based on a host of factors such as the property's market value, its location and use, among others. Only the basis of charging the property tax has changed instead of calculating hypothetical rent now the hypothetical market value of the property will have to be worked out, the court said.
The bench also stayed its order till August 31 to enable the BMC to approach the Supreme Court in appeal.
There were a series of constitutional challenges raised by the Property Owners Association and developers, to an amendment to the MMC Act and rules framed in 2010 and 2015, for fixation of capital value of lands and buildings. The rules are void and unconstitutional, the developers had argued in petition.
Courtesy/By: Jayant Upadhyay
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27 Apr 2019
