A bench of Justices S Muralidhar and Prathibha M Singh, while allowing a bunch of petitions, had invalidated the New Delhi Municipal Council (Determination of Annual Rent) Bye-laws, 2009 and asked the authorities to refund the excess property tax collected form the tax payers.
The impugned Bye-laws had introduced a new method of arriving at the rateable value for the purposes of property tax, i.e., Unit Area Method (‘UAM’)., as per which, per sq. Ft./meter of a property is fixed with reference to the characteristics of the property such as location, occupancy, age, structure. The UAV is then multiplied by the area of the vacant land or covered space to arrive at its annual value.
It replaced the existing system of determining the rateable value on the basis of the annual rent, at which the land or buildings may reasonably be expected to be let from year to year, to a unit area method (UAM).
28 petitions were filed before the Court challenging the constitutional validity of the New Delhi Municipal Council (Determination of Annual Rent) Bye-laws, 2009 wherein the petitioners challenged the action of the authorities charging property tax on vacant land under the amended bye-laws, even when construction is not allowed on most of the vacant land, as the same falls in Lutyens’ zone or is covered under the the Archaeological Survey of India regulations.
The bench noted that “it is not as if the NDMC was unaware that this could be done only by amending the NDMC Act. Yet only because this might be a time consuming process, it chose the short cut of making the new impugned Bye-laws without amending the NDMC Act. Section 388 (1) of the NDMC Act begins with the expression “Subject to the provisions of this Act”. Clearly, therefore, the legislative intent was to confer upon the NDMC the power to make Bye-laws which were subject to and consistent with the provisions of this Act”.
The bench further invalidated all actions taken by the NDMC under the new impugned Bye-laws in terms of levy, assessment, collection and enforcement of demand of property tax and therefore, declared all property demands made under the new impugned Bye-laws as invalidated and unenforceable.
“In terms of the interim order passed by the Court, referred to hereinbefore, the excess of the tax deposited has to be refunded but the determination of such excess will have to await the making of the assessments in accordance with the extant provisions of the NDMC Act. Such refund of excess tax deposited would be in accordance with the law and together with the interest payable thereon in terms of the NDMC Act. It will be open to the individual tax payers to seek appropriate remedies in regard to refund together with interest at the appropriate stage after completion of the assessment in terms of the extant provisions of the NDMC Act,” the bench added.
Read the full text of the Judgment below.
