Case Law Details
Municipal Corporation of Greater Mumbai & Ors. Vs Property Owners’ Association & Ors. (Supreme Court of India)
The CJI bench of Supreme Court in this case was dealing with the levy of property tax in Greater Mumbai which had been changed from ratable value to capital value system by virtue of amendments made to the Municipal Corporation Act. The capital value system effected several property owners particularly Indian Hotels Co Ltd whose tax for a property went up from Rs 6.29 crores to Rs17.78 crores. Multiple challenges were made including on account of the law being ultra vires. In a cross appeal arising out of decision of Bombay High Court, the Supreme Court while dismissing the SLP of the Municipal Corporation regarding the levy of tax based on the future or intended use of land held that the tax can be levied only on the basis of present position and until an occupancy certificate is issued, the tax can be collected only as land and not as a building.
So long as a building is not completed or constructed to such an extent that at least a partial completion notice can be given so that the completed portion can be occupied and let, the land can, for purposes of rating, be equated with or treated as vacant land.
The SLP of the property owners interlaid challenging the vires of the act was also dismissed.
Since the statutory provisions do not contemplate any likelihood of exploitation of capacity in future, the capital value of the land and building must be based on situation “in present”. It must be clarified here that in projects which are in progress, the value addition to the property would be ongoing feature. However, considering clauses (a) to (d), it would mean that the governing principle must be the actual use and not the intended use in future.
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