Municipal Corporation or Nagar Panchayat not empowered to increase Terminal Tax on Coal Transportation: Chhattisgarh HC

Municipal Corporation -Terminal Tax - coal transportation - Taxscan

The Chhattisgarh High Court, while quashing the impugned orders/resolutions held that the Municipal Corporation or Nagar Panchayat is not empowered to increase Terminal Tax on coal transportation.

The petitioners in all 5 petitions are a company registered under the Companies Act and which is a subsidiary company of Coal India Limited of which 100% shares vests with the Government of India.

The State Government empowered the concerned Municipal Corporation and the local body for collecting tax called the Terminal Tax upon the goods which are exported from within the municipal limits or within the limits of the local body.

The rate of tax, the limitations, and the conditions prescribed were those which were enacted by the State Government from time to time.

The respondents-Municipal Corporation and Nagar Panchayat have purportedly enhanced the terminal tax exercising the powers under Section 133 of the Municipal Corporation Act of 1956 or Section 355 read with Clause XVI of Sub-section (1) of Sections 127 & 129 of the Municipal Act of 1961. It is this enhancement of tax which has been challenged by the petitioners.

Primarily the challenge is on the competency of the authorities in issuing the order of enhanced rate of tax.

According to the petitioners, the authorities, who have issued the orders have not been empowered for issuing such orders in the teeth of the Rules framed by the State Government in 1996, under which there is already a schedule prescribed with the maximum rate also prescribed.

The State counsels emphasized on the ground that the enhancement of terminal tax is well within the authority of the Municipal Corporation, Municipality or the Nagar Panchayat as the case may be and that there was no illegality in it.

The Single Judge bench of Justice P. Sam Koshy held that the resolutions and the impugned orders under challenge in a bunch of writ petitions are contrary to law and also have been issued by the authorities who have not been conferred with the power to prescribe the rates at which the terminal tax should be collected.

“In the light of the authoritative pronouncements on the subject matter by the Madhya Pradesh High Court and also which stand affirmed by the Hon’ble Supreme Court, the grounds raised by the learned State counsel to the extent of the non-applicability of the Rules of 1996 or the Rules of 1996 having lost its efficacy in the light of the subsequent orders being passed by the authorities Incharge of the local body does not have any leg to stand and the same stands negated,” the bench said.

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