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The Brihanmumbai Municipal Corporation (BMC) has been directed by the Supreme Court to re-evaluate the capital value of all properties in Mumbai and refund citizens who have paid property tax between 2010 and 2012 according to the Capital Valuation System (CVS). This comes after the Supreme Court rejected the BMC's review petition challenging the Bombay High Court's 2019 ruling that certain rules framed by the BMC for retrospective tax assessment be set aside. The court has asked the BMC to frame new rules and issue fresh bills.
The case began in 2013 when the Property Owners' Association and others approached the Bombay High Court to challenge the constitutional validity of an amendment to the Mumbai Municipal Corporation Act, 1888 concerning the levy of property tax. In its order, the high court directed that assessment as per the Capital Value System (CVS) should only be done prospectively from 2012 when the rules came into effect and not with retrospective effect. It quashed the special assessment order and bills raised under the CVS from 2010 onwards.
The corporation was ordered to re-determine the capital value of properties for the assessment of taxes and follow the process provided in the Act. It further stated that the assessment of vacant land and open land should be based on a floor space index (FSI) of 1 and not potential FSI.
B R Bhattad, president of the Property Owners' Association, expressed relief for property owners, saying that the judgement has brought them relief. He added that the BMC will have to frame new rules in accordance with the ruling and raise fresh property tax bills. He also stated that any excess amount collected by the BMC would have to be refunded or adjusted in future bills.
Asif Zakaria, former Congress corporator and Standing Committee member who had repeatedly raised the issue of faulty implementation of property tax assessment, said that the ruling will have significant implications since property tax is the second-largest source of revenue for the corporation. Zakaria suggested that the BMC should give a refund and rework the capital value, stating that citizens must rightfully receive the refund. He further added that the BMC should not exponentially hike the property tax to justify the losses incurred due to the refund.
P Velarasu, additional municipal commissioner in charge of property tax assessment, said that the BMC is in legal consultations and will take necessary steps to protect the financial interests of BMC.
In conclusion, the Supreme Court's ruling mandates the BMC to re-evaluate the capital value of all properties in Mumbai and refund citizens who paid property tax from 2010 to 2012 according to the Capital Valuation System. The BMC must now frame new rules and issue fresh bills in accordance with the court's directive. This decision has significant implications as property tax is the second-largest source of revenue for the corporation. Therefore, the BMC must ensure that citizens rightfully receive the refund without exponentially hiking the property tax to offset losses incurred due to the refund.
This story was first published in ET Realty
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