Municipal Corporation of Greater Mumbai v. Property Owners’ Association

Case snapshot

Sections / provisions: The Mumbai Municipal Corporation Act 1888 and its rules

Questions before the Court / Tribunal

• Municipal Corporation of Greater Mumbai & Ors Vs Property Owners’ Association & Ors(Supreme Court) Date-7th November,2022 Sub-When the property tax is levied on the basis of capital value system as against rateable value system, whether capital value can be fixed on the basis of future intended use or has to be fixed on the basis of the present position of the property and connected issues. 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 rateable value to capital value system by virtue of amendments made to the Municipal…
• What factual, statutory and procedural conditions control the relief?
• How does the operative order apply to the parties and the challenged proceeding?

Material facts and procedural background

MUNICIPAL CORPORATION OF GREATER MUMBAI & ORS. ...APPELLANT(S)

leviable and payable in respect of such buildings and lands shall provisionally be equal to the amount of tax leviable and payable in the preceding year, that is to say, for the year commencing on the first day of April 2009 and ending on the thirty­first day of March 2010 and such provisional tax shall be leviable and payable for each of the years 2010­2011, 2011­2012 and 2012­2013, according to the provisional bills which may be issued separately for each such year; so, however, that on fixation of capital value of the respective buildings and lands, final bill of assessment of property taxes on the basis of capital value may then be issued for each such year as aforesaid. After such final assessment, if it is found that the assessee has paid excess amount, such excess shall, notwithstanding anything contained in section 179, be refunded within three months from the date of issuing the final bill, along with interest from such date as provided in the first proviso to sub­section (5) of section 217, or after obtaining the consent of the assessee, shall be adjusted towards payment of property tax due, if any, for the subsequent years; and if the amount of taxes on final assessment…

“5. In the meantime the petitioners shall pay municipal taxes at the pre­amended rates and also the additional tax at the rate of 50% of the differential tax between the tax payable under the old regime and now payable on the basis of capital value of the property. The petitioners will pay such amounts and the Municipal Corporation shall accept the amounts within prejudice to rights and contentions of parties.”

and that the burden on the petitioners challenging the validity

“162. In none of the Petitions in this group, it is demonstrated that a demand is made from the petitioners for payment Betterment Charge. Elaborate

Appellant / assessee submissions

the complaint is disposed of in such a fashion, a final bill can be served. (iv) As the Municipal Commissioner will require a reasonable time to do the tasks as aforesaid, the interim orders which are operating in these petitions will have to be continued till the service of final bills. We also make it clear that though we are setting aside the final bills issued, no party will be entitled to claim refund of the amounts paid under the interim orders and till the final bills are served, the petitioners will have to pay the amounts as per the interim orders. (v) This judgment will apply only to the properties subject matter of the petitions in this group except Writ Petition No. 2592 of 2013 and PIL 46 OF 2014. We make it clear that only those special assessment notices and final bills which are specifically challenged will stand set aside. In Writ Petition No. 2592 of 2013, the fresh exercise will have to be undertaken only in relation to the properties in respect of which there is a specific prayer for quashing the notices and bills based on final assessment. The details of properties held by 610 members in the lead petition are not set out. Hence, no relief can be extended to…

the years 2012­13, as was done for the period 2010­11 and 2011­12. (Statement of object and reasons on Pg 155 and 156 in Compilation of Corporation – Vol 4). The said ordinance culminated into Act No. VI of 2012 (Pg 157 to 162 in Compilation of Corporation – Vol 4). 14. It is submitted that, in present case there is no retrospective levy of tax. The section for imposition of tax on capital value was already in force from 01.04.2010. Draft rules were already published in October, 2010. The levy is broadly speaking on assesses who were paying tax under earlier regime also. 15. The statute provided for transitionary arrangement pursuant to which provisional bills were issued as per Section 140A(2) read with Section 154A of the MMC Act from official year 2010­2011 (under the capital value system), 2011­2012 and till 2012­2013. Refunds are granted, or shortfall recovered after the capital values are fixed. 16. It is submitted that, time taken in assessment can never make the levy retrospective when the section imposing a tax is already in force. In case contention raised by assesses is accepted, it would amount to imposition of tax on rateable value even when the statute provides for…

No.2568 of 2019 submitted that the property tax as a

submitted that the impugned provisions suffered from

Revenue / respondent submissions

The packaged judgment does not separately label the respondent's submissions in an independently extractable passage. No contention is inferred; read the full order.

Court / Tribunal analysis and reasoning

“155. The legislation providing for the levy of property tax by a municipality on the basis capital value will be covered by Entry 49 of List­II. Now coming to the impugned provisions, we find that capital value of lands and buildings is adopted only as a measure to determine the tax on lands and buildings. There is no attempt to levy a tax on capital value of assets. Therefore, the conclusion which can be drawn is that the State Legislature was competent to enact provisions regarding property tax based on capital value under Entry­49 of List­II of Seventh Schedule. The argument that the impugned amended provisions of the BMC Act impinge upon the powers of the Central Legislature covered by Entry­86 of List­I of Seventh Schedule deserves to be rejected. The adoption of capital value as a basis or measure of tax on land and building will not attract Entry­86 of List­I of Seventh Schedule. ….”

Operative decision and relief

(i) We uphold the constitutional validity of the sprovision of the BMC Act which are under challenge; (ii) The Capital Value Rules of 2010 shall apply prospectively from the date on which the same were made; (iii) We strike down rules 20, 21 and 22 of Capital Value Rules of 2010 and 2015. As far as rules 3 and 17 are concerned, we hold that as rule 21 has been struck down, the capital value of properties covered by the said rules shall not be fixed in accordance with rule 21. As a result of striking down of rules 20, 21 and 22, in those cases where the capital value has been finally fixed either by issuing notice under section 162 of the BMC Act or by issuing final bills, the Commissioner or the officer empowered to exercise delegated powers will have to re­ determine the capital value in accordance with sub­section (1A) of section 154 and serve a fresh special assessment notice. We hold that if a complaint is filed after service of special assessment notice, the same shall be disposed of only after giving an opportunity of being heard to the assessee filing such complaint. Only after

the complaint is disposed of in such a fashion, a final bill can be served. (iv) As the Municipal Commissioner will require a reasonable time to do the tasks as aforesaid, the interim orders which are operating in these petitions will have to be continued till the service of final bills. We also make it clear that though we are setting aside the final bills issued, no party will be entitled to claim refund of the amounts paid under the interim orders and till the final bills are served, the petitioners will have to pay the amounts as per the interim orders. (v) This judgment will apply only to the properties subject matter of the petitions in this group except Writ Petition No. 2592 of 2013 and PIL 46 OF 2014. We make it clear that only those special assessment notices and final bills which are specifically challenged will stand set aside. In Writ Petition No. 2592 of 2013, the fresh exercise will have to be undertaken only in relation to the properties in respect of which there is a specific prayer for quashing the notices and bills based on final assessment. The details of properties held by 610 members in the lead petition are not set out. Hence, no relief can be extended to…

prayed in the writ petition/PIL. We hold that Rules 20, 21 and 22 of the Capital Value Rules of the years 2010 and 2015 are ultra vires the provisions of the Mumbai Municipal Corporation Act, 1888 and, therefore, the same are struck down; (ii) We quash and set aside the special assessment notices and final bills based on final capital value fixed which are specifically the subject matter of challenge in this group of petitions. The demand of provisional taxes is not disturbed. The orders specifically impugned which are passed on the complaints do not survive. We direct the Mumbai Municipal Corporation to re­fix the capital value in respect of the properties subject matter of the notices/final bills which are set aside in the light of the findings recorded earlier. After re­ determination of capital value, special assessment notices be issued to the persons primarily liable to pay property taxes in respect of subject properties. Thereafter, further steps shall be taken by the Municipal Corporation in accordance with law; (iii) We hold that the complaints filed objecting to the special assessment notices issued under sub­ section (2) of section 162 shall be disposed of only after…

43. These appeals are disposed of in aforesaid terms without

Ratio and legal principle

• The packaged judgment addresses Municipal Corporation of Greater Mumbai & Ors Vs Property Owners’ Association & Ors(Supreme Court) Date-7th November,2022 Sub-When the property tax is levied on the basis of capital value system as against rateable value system, whether capital value can be fixed on the basis of future intended use or has to be fixed on the basis of the present position of the property and connected issues. 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 rateable value to capital value system by virtue of amendments made to the Municipal…. The precise proposition must be read with the Court/Tribunal's reasoning and operative directions.
• Reliance depends on matching the statutory version, jurisdiction, procedural stage and material evidence recorded in the judgment.

Why this judgment matters

This decision is relevant to practitioners and affected parties dealing with municipal corporation of greater mumbai & ors vs property owners’ association & ors(supreme court) date-7th november,2022 sub-when the property tax is levied on the basis of capital value system as against rateable value system, whether capital value can be fixed on the basis of future intended use or has to be fixed on the basis of the present position of the property and connected issues. 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 rateable value to capital value system by virtue of amendments made to the municipal… Its value lies in showing how the adjudicating forum connected the applicable rule to the proved facts and procedural posture.

Practitioner action points

• Match the statutory version, jurisdiction, procedural stage and decisive evidence before relying on the result.
• Verify current appellate, review and SLP history and any later amendment or controlling authority.
• Attach the complete judgment to the working paper or filing and cite the paragraph/page supporting the proposition.

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Section / provision impact

• The Mumbai Municipal Corporation Act 1888 and its rules - apply the exact version considered in the judgment.

Case network

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