Lawfully yours: By Retired Justice K Chandru | Elected civic bodies have constitutional backing to levy and revise property tax

The government recently introduced an automatic annual property tax hike of 6% for municipal corporations in Tamil Nadu. Under what specific provisions of law is this automatic annual increase implemented, and is the state government legally bound to issue a fresh notification every year?

Secondly, given that Urban Local Bodies fall strictly under the State List of the Constitution, can the Central Finance Commission legally mandate property tax revisions as a pre-condition for releasing central financial assistance to states?

Finally, what is the precise legal distinction between the terms 'Increase Factor' and 'Floor Rates' specified in the tax revision guidelines, and to whom do these floor rates apply?

- P Viswanathan, Tirumurugan Salai, Chitlapakkam

Urban local bodies form an integral part of local self-governance and enjoy explicit constitutional backing. To deliver essential public services effectively, these bodies require sustained financial resources, which is why they are legally empowered to levy and periodically revise property taxes. However, elected representatives frequently shy away from initiating routine tax revisions for fear of public backlash during elections. This reluctance is precisely why the mechanism of automatic annual tax revision was introduced.

From a legal standpoint, an individual ratepayer can always prefer an appeal against an erroneous or wrongful assessment in their specific case. However, a collective policy decision on automatic property tax enhancement cannot be challenged in the same manner.

Toll fee hikes cannot be challenged in court except for deficiency in service

The entry fees at toll plazas across Tamil Nadu — such as those at Paranur, Athur, and Nallur — have been sharply increased, placing a heavy burden on motorists and freight operators. Despite regular rate revisions, the service rendered remains dismal, with poorly maintained stretches, inadequate lighting, and long traffic bottlenecks. Can a Public Interest Litigation (PIL) be filed before the High Court to challenge these arbitrary toll hikes and hold concessionaires accountable for failing to fulfil basic statutory obligations?

- Tamil Rajendiran

The collection of toll fees on National Highways across India by private operators is authorised directly by the Government of India. These operators derive their authority through Build-Operate-Transfer (BOT) agreements. Under this framework, the private concessionaire builds the highway, maintains it, carries out necessary repairs, and collects the toll fee. Although an initial concession period is fixed under the contract, extensions are frequently granted, and the operator pays a designated share of the revenue to the National Highways Authority.

The underlying objective of adopting the BOT model and involving private entities is to bridge the government's fund crunch, thereby ensuring that road infrastructure is improved while generating revenue for the state.

Legally, this collection falls under the category of a 'fee', which means those paying it can legitimately expect return services. At the same time, state governments also collect Motor Vehicles Tax from vehicle owners for using public roads. The fundamental legal distinction between a 'Tax' and a 'Fee' is that a tax does not involve an element of quid pro quo, whereas a fee guarantees return services. Consequently, except on the specific ground of deficiency in service, a toll fee hike cannot be routinely questioned in courts of law.