Bombay HC drops BMC capital value rules as basis for property tax

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The Bombay High Court on Wednesday struck down certain rules issued by the Brihanmumbai Municipal Corporation (BMC) for assessing the capital value of a property, on the basis of which property tax could be levied.

The high court declared that all assessments and invoices issued under these rules were void.



A division bench of Justices Abhay Oka and Riyaz Chagla, however, upheld the constitutional validity of the 2009 amendment to the Maharashtra Municipal Corporation Act which had changed the perception of the property tax base in Mumbai. from the taxable value on the standard rent to the capital value.

“Rules 20, 21 and 22 of the Capital Value Rules 2010 and 2015 are set aside as they are ultra vires the Companies Act. All valuations and invoices issued under these rules are set aside and void “, said the bench in its order. .

The court said the civic body will have to give the complaints a new hearing.

The panel suspended its order until August 31 to allow the BMC to appeal to the Supreme Court.

The bench was hearing a slew of petitions filed by a landowners association, builders associations and charities including religious bodies against the BMC and the government of Maharashtra challenging the levy of land tax on the basis of of the capital value.

In 2009, the Municipal Corporation Act of Maharashtra was amended and a concept of levying property tax on the capital value system was put into effect.

The petitioners challenged the constitutional validity of the amended property tax based on the capital value of the land as opposed to the previous taxable value based on standard rents, as well as the validity of the higher tax on land under construction.

There have been a series of constitutional challenges raised by the homeowners association and developers to an amendment to the MMC Act and rules drawn up in 2010 and 2015 for setting the capital value of land and buildings.

The rules are void and unconstitutional, the developers had argued.

The capital value of land as a basis for property taxes had led to a sharp increase, with some landowners being hit with a bill of tens of crores, the petitioners had claimed.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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