Bombay High Court rejects BMC capital value rules as basis for property tax

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Bombay: The Bombay High Court on Wednesday overturned some 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 said all appraisals and invoices issued under those rules were canceled.

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

“Rules 20, 21 and 22 of the 2010 and 2015 capital value rules are canceled because they are ultra vires the Companies Act. All assessments and invoices issued under these rules are canceled and set aside, ”the judiciary said in its order. The court said the civic body will have to rehear the complaints. The bench suspended its order until August 31 to allow the BMC to appeal to the Supreme Court.

The judiciary heard a slew of petitions filed by an association of landowners, builders’ associations and charities, including religious bodies, against the BMC and the Maharashtra government, challenging the levy of the property tax. on the basis of capital value. In 2009, the Maharashtra Municipal Corporation Law was amended and a concept of levying property tax on the capital value system came 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 assessed value based on standard rents, as well as the validity of the higher tax on land under construction.

The association of landowners and developers have raised a series of constitutional challenges regarding an amendment to the MMC law and the rules developed in 2010 and 2015 for setting the capital value of land and buildings. The rules are null and unconstitutional, the developers argued. The capital value of land as a basis for property taxes had seen a sharp increase, with some homeowners being served with a bill in the tens of crore, the petitioners said.

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Posted on: Thursday April 25th, 2019 07:15 IST


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