HC upholds the TN’s move to enhance the property tax

CHENNAI: Observing that a welfare state has to balance augmenting its revenues so as to provide sources of funds for welfare measures, the Madras High Court upheld the decision of the state government to enhance the property tax in the Greater Chennai Corporation (GCC) and Coimbatore Municipal Corporation (CMC).

Justice Anita Sumanth passed the orders on disposing of hundreds of writ petitions filed by several people from the GCC and Coimbatore corporation limit.

The petitioners sought direction to quash the Government Order passed by Municipal Administration and Water Supply department dated March 30 and the corporation resolutions passed by the GCC and Coimbatore corporation on May 5 and May 26 respectively to revise the property tax.

According to the petitioners, the property tax has been revised solely on the basis of the recommendation of the 15th Central Finance Commission and it is against the federal structure.

The petitioners also raised a ground that the state has not followed proper methods to calculate the property tax.

The state government countered the argument saying that the government has revised the property after 24 years.

"It was in 1998, the property tax was revised. The tax was revised as per the recommendation of the finance secretary following the principles set in the year 1977," the state submitted.

The government also made a presentation before the court to appraise the judge about the need for revising the tax.

Recording the submissions, the judge held that, "the presentation essentially emphasized the necessity for the impugned enhancement based on economic compulsions, inflation over the years and rising needs of the population that needs to be met by the State."

The judge also upheld the calculation of the property tax as per the new GO.

"..the adoption of Base Street Rate (BSR) methodology to calculate the tax is acceptable, from a common sense approach as well. With the large-scale expansion of corporation limits as well as the manifold explosion in the number of properties, assessment on a property-to-property basis is, in my considered view, not practicable, " the court ruled.

The judge also expressed her dissatisfaction for not properly conducting the public hearing, pointing out that only 30 responses have been coming from 13 Lakhs assesses in Chennai city.

Justice Anita Sumanth pointed out, "Had the state been effective and prompt in enhancing the rate of property taxes in regular general revisions over the years, the tax paying public would hardly have felt the pinch of such phased and staggered enhancement."

Though the court upheld the revision of the property tax, it set aside the council resolution to implement the same for the first half of 2022-2023.

"I may state that reference to the first half of 2022-23 is not merely erroneous but absurd, seeing as the remittance of property tax for every half year is the 15th of the first month comprised in that half-year, i.e., by 15th of April and by 15th of October, of the year concerned, " the judge held.

In the conclusion, the judge made it clear that the corporations should ensure that the websites are kept robust and grievance mechanisms are put in place to enable all property tax assesses to seek clarifications in regard to any aspect of property tax assessments.