NMC lacks powers to collect old property tax dues

Source: The Hitavada      Date: 08 Sep 2017 09:54:27


Special Correspondent,

Property Tax department circular admitting this fact welcomed by activists

Can Nagpur Municipal Corporation (NMC) levy property tax with retrospective effect and collect tax dues which are more than six years old ?
Going by a circular issued by Property Tax Department and uploaded on its website, the civic body is not empowered to levy and collect property tax with retrospective effect.

This disclosure by NMC’s property tax department has created a storm within civic body and citizens. Municipal Commissioner and Assistant Commissioner of property tax department received several complaints regarding collection of property tax with retrospective effect. Section 140 and section 150 of Maharashtra Municipal Corporation Act, enforced in the year 2012, clearly states that the civic body cannot recover tax dues beyond six years.

It may be mentioned that the local body recovered tax dues pending since year 1970 or even since 1980 in several cases of undeveloped layouts. As per the rule, the civic body can enforce tax, when a person purchases a plot or a flat. The basic responsibility to pay the old tax to the local body lies with the developer or builder.

Section 140 (1) of the act says, “if the sum due on account of any property tax remains unpaid after a bill for the same has been duly served under the rules upon the person primarily liable for the payment and the said person be not the occupier for the time being of the premises in respect of which the tax is due, the commissioner may serve a bill for the amount upon the occupier of the said premises, if there are two or more occupiers thereof, may serve a bill upon each of them for such portion of the sum due as bears to the whole amount due the same ration which the rent paid by such occupier bears to the aggregate amount of rent paid by them both or all in respect of the said premises.”

Bombay High Court has already passed an order in The Sholapur Municipal Corporation vs Ramchandra Ramappa Mudgundi’s case on November 11, 1977 regarding retrospective effect of property tax. The Supreme Court also passed a judgment in Kalyan Municipal Council vs Usha Papers Products Private Limited in May 3, 1988, regarding alteration in assessment list- assessment made in the previous official year cannot be alterated in the subsequent official year. Surprisingly, the local body did not follow the directions passed by the Apex court and High Court and levied tax with retrospective effect.

If the tax inspector finds any changes in the property and has already served the demand notice for the payment of the tax, then, the tax will be calculated from that date only. However, it has been noticed that the tax inspectors often levy tax from old date. Shankar Gulani, President of Nagpur Municipal Corporation Housing Tax Grievances Redresseal Society demanded that NMC should be fair while levying the property tax on the owners. The civic body should return excess amount recovered from the property holders and give them a relief.