Mumbai: The Brihanmumbai Municipal Corporation (BMC) has been directed by the Supreme Court to rework the capital value of all properties in Mumbai and refund citizens who have paid property tax for the years 2010 to 2012 as per the Capital Valuation System (CVS).
This comes after the Supreme Court rejected a review petition filed by the BMC challenging a Bombay High Court order from 2019, stated a Times of India report.
The high court had set aside certain rules framed by the BMC for retrospective tax assessment, and directed them to frame new rules and issue fresh bills.
Case dates back to 2013
The genesis of the case dates back to 2013 when the Property Owners' Association and others had approached the Bombay High Court challenging the constitutional validity of an amendment to the Mumbai Municipal Corporation Act, 1888 regarding the levy of property tax.
Asif Zakaria, former Congress corporator, as a Standing Committee member had repeatedly raised the issue of faulty implementation of tax assessment. He said the order will have major implications as property tax is the second largest source of revenue for the civic agency.
Supreme Court's decision and BMC's obligation
The Supreme Court's rejection of the BMC's review petition means that the BMC will have to rework the capital value of all properties in Mumbai for the years 2010 to 2012 as per the CVS. This will involve reassessing the properties and determining their capital value for the purpose of property tax assessment.
The BMC is also obligated to refund citizens who have paid property tax for these years based on the previous rules that have now been set aside. The court has directed the BMC to frame new rules and issue fresh bills for property tax assessment.
High Court's order and direction
The Bombay High Court, in its order from 2019, had directed that the assessment as per the CVS must be done prospectively from 2012 when the rules came into being, and not with retrospective effect. The high court had quashed the special assessment order and bills raised under the CVS from 2010 onwards, the report stated.
It further directed the corporation to re-determine the capital value of properties for assessment of taxes and follow the process as provided in the Act. This means that the BMC cannot levy property tax based on the CVS for the years prior to 2012 and must rework the assessments accordingly.
Impact and implications
The Supreme Court's decision and the high court's order have significant implications for the BMC and the citizens of Mumbai. The refund of property tax for the years 2010 to 2012 will likely result in a substantial financial burden on the BMC, as they will have to reimburse the taxpayers who have already paid property tax based on the now set-aside rules.
The requirement to rework the capital value of properties and issue fresh bills will also involve administrative and logistical challenges for the BMC. Additionally, this case highlights the importance of following due process and complying with the rules and regulations while levying and assessing property taxes.
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