Gujarat HC upholds Constitutional Validity of Imposing Property Tax on IBS/Boosters of Mobile Telecom Companies [Read Judgment]

Mobile Towers - GST -

While dismissing a petition filed by Vodafone Mobile Services Limited, the division bench of Gujarat High Court held that, the petitioners liable to pay Property Tax on IBS/Boosters under Section 141B of the Gujarat Provincial Municipal Corporations Act, 1949.

The petitioner challenged the constitutional validity of Section 141B of the Gujarat Provincial Municipal Corporations Act, 1949 as ultra vires to Article 243X of the Constitution of India. The petitioner also challenged Rule 8B of the Taxation Rules (Amendment), 2001 under Chapter VIII of Schedule A to the GPMC Act as arbitrary to the extent the same provide for computation of levy of Tax on Mobile / Microwave Towers.

In a recent decision dated 07.03.2017 in the case of ATC Telecom Tower Corporation Private Limited & Anr. vs. State of Gujarat and Others rendered in Special Civil Application Nos.2693/2017 and other allied matters and by detailed judgment and order and for the reasons stated in the said judgment and order, the Division Bench has negatived the similar challenge to levy of property Tax on Mobile Towers.

While relying the above decision, the Court observed that, definition of “building” contained in section 2(5) of the GPMC Act, the Mobile Towers can be said to be “building”. Considering the definition of “building” contained in section 2(5) of the GPMC Act, even the structure of IBS / Booster fall within the definition of “building” as contained in section 2(5) of the GPMC Act. Considering the definition of “building” as contained in section 2(5) of the GPMC Act, it is very wide. As per sub-section (5) of section 2 of the GPMC Act, “building” includes house, outhouse, stable, shed, hut and other enclosure or structure whether of masonry, bricks, wood, mud, metal or any other material whatever, whether used as a human dwelling or otherwise, and also includes verandahs, fixed platforms, plinths, doorsteps, walls including compound walls and fencing and the like. Therefore also, even the IBS / Booster will fall within the definition of “building”. In any case as observed hereinabove IBS / Booster towers can be said to be Mobile Tower as defined in section 2(34AA) of the GPMC Act and therefore, “building” as held by the Hon’ble Supreme Court in the case of ATC Telecom Tower Corporation Private Limited & Anr. (Supra) and therefore, on such IBS / Booster sites the General Property Tax is leviable under the provisions of the GPMC Act and the relevant Taxation Rules which are framed in exercise of powers under Section 454 of the GPMC Act. Under the circumstances, the levy of General Property Tax on such IBS / Booster sites which is a part of the telecommunication services cannot be said to be illegal and/or without authority under the law and/or in violation of Article 243X of the Constitution of India.

The division bench comprising of Justice M.R Shah and Justice B.N Karia also observed that, “it cannot be said that section 141B(4) of the GPMC Act which permits / authorizes the Corporation to increase or decrease the property Tax as per the Taxation Rules cannot be said to be ultra vires to Article 243X of the Constitution of India. As observed hereinabove, section 141B(4) of the GPMC Act is part of the Statute which permits and/or authorizes the Corporation to increase or decrease the property Tax as per the Rules. Section 454 of the GPMC Act permits and/or authorizes to frame the Rules and in exercise of powers under Section 454 of the GPMC Act, Taxation Rules are framed”.

Read the full text of the Judgment below.

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