Mumbai: The Bombay High Court has recently quashed a resolution issued by the Pune Municipal Corporation (PMC), by which it was charging citizens ‘exorbitantly’ for making mutation entries or changes in its official records.
The HC quashed the resolution while noting that the civic authority was charging ‘tax’ under the guise of ‘fees’.
A bench of Justices Akhil Kureshi and Burgess Colabawalla was dealing with a plea filed by a man, who received certain immovable properties by virtue of succession.
He accordingly applied for making necessary changes in the civic body’s official records, for which he was expected to pay some ‘fixed amount’ as a fee.
However, he was shocked to notice the exorbitant rates, which were calculated as per the market value of the property. He then petitioned the bench arguing that the PMC should be authorised to collect reasonable fees for the services rendered.
“The PMC, under the guise of collecting fees, cannot extract tax which is computed on the basis of the rateable value of the property in question. In other words, the charges levied by the PMC for the said purpose, being in the nature of fees, the same should be commensurate to the services rendered,” the man argued.
On the other hand, the PMC justified that it acted within its powers and only attempted to collect appropriate fees for maintaining the property records and for making necessary changes whenever the application for such purpose is made.
Having considered both the sides, the bench noted that a similar issue was raised before the Supreme Court wherein the Calcutta Municipal Corporation had issued a similar notification to levy extra charges. The apex court had quashed the said notification by drawing a distinction between the fees and tax.
The apex court had held that if the primary purpose in imposing the charge is to regulate, then the said charge is not a tax even if it produces revenue for the government.
While referring to the SC ruling, the HC bench led by Justice Kureshi noted, “Whatever may be the cause of mutation, whether it is a case of transfer or devolution, the activity of mutation remains constant in all the cases. The expenses incurred in all the cases also cannot vary, whatever be the value of the property.”
“In the circumstances, there is no reason given for charging different rates depending on the value of the property and the cause of transfer. By doing so, the incidence of the levy falls differently on persons similarly situated resulting in violation of Article 14 of the Constitution,” the judges said while quashing the notification.
