HC affirms the State decision to raise the Property Tax in the Municipal Areas of Chennai and Coimbatore with no retrospective application

 

Recently, the Madras High Court confirmed the validity of the Government order issued by Tamil Nadu's Municipal Administration and Water supply department and the resolutions of Great Chennai Corporation and Coimbatore Corporation that amended and increased property taxes in Chennai and Coimbatore. However, the court noted that the revision of tax rates could not be enforced retrospectively and denied a notice of revision to that effect.

Brief Facts:

The petition challenged the Govt. order revising the property tax in Chennai and Coimbatore. A further challenge was made to the property tax General Revision Notices for 2022-2023 which led to making 1^st April 2022 as the effective date for implementing the new rates of tax. The aforementioned Government order was based on the recommendations of a committee setup by the Tamil Nadu government for assessing the current property tax rates vis-à-vis the needs of the state. The committee had proposed a Basic Street Rates (BSR) system and the augmentation of the tax rate along with adoption of a slab system.

Challenge/Contentions of the Petitioners:

The petitioners contended that the state lacks power to issue such orders and it amounted to an unlawful intervention since the property taxes are levied by specific enactments in which the state lacks the power to issue such orders. Further challenge was made to the methodology used by the state to determine the property tax. As per the petitioners, the slab system was discriminatory to the owners of larger properties. 

Observations of the Court:

The court highlighted that the state had the right to impose property taxes in this case. A welfare state has necessarily to balance augmenting of its revenues so as to provide for sources of funds for welfare measures and other expenses of the State on the one hand, and mitigating the hardship of taxes as far as possible to its citizens, on the others. Further, the government order in the present case was advisory in nature, not amount to a direction. The final decision was perhaps taken by the Corporation authorities and no irregularities were found.

Nonetheless, the court rejected the revision notices which fixed April 1^st as the effective date for the implementation of new property taxes. The amendment in the first half year could not be implemented as the last date for payment would have elapsed by then. With this, the court observed that an increase in property tax could not be implemented retrospectively as it would adversely affect the substantive civil rights of the parties.

 

Case Title: K. Balasubramaniam vs. The Commissioner, Greater Chennai Corporation and 2 others

Coram: Justice Anita Sumanth

Citation/Case no.:  WP No. 18534 of 2022 etc. and batch 

 

Advocate for the Petitioner: N.A.

Advocate for the Respondent: N.A.

Read Judgment ;
 

 

 

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