SC Confirms Levy of Property Tax on Mobile Towers [Read Judgment]

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While upholding the validity of s. 145A of Gujarat Provincial Municipal Corporations Act, 1949, the Supreme Court confirmed the levy of property tax on Mobile towers.

Earlier, the Gujarat High court had struck down the provision by holding that the state government has no power to legislate such a provision.

The Court emphasized that the levy is reasonable since  the mobile towers come within the ambit of Land and Building“.

In the instant case, the Court was considering a catena of petitions wherein the levy of property tax on Mobile towers was the subject matter. In the first group of petitions, the petitioners challenged the decision of the Gujarat High Court in which it was held that Section 145A of the Gujarat Provincial Municipal Corporations Act, 1949 is ultra vires to the Constitution. The Court further noted that the Cabin in a mobile tower in which BTS system, is located, would be a building and therefore, exigible to tax under the Gujarat Act. In another category of petitions, the petitioners impugned the decision of the Bombay High court which directed the petitioners to avail alternative remedy in order to challenge the levy of property tax. The Court was of the opinion that there were no charging section which specifically impose tax on mobile towers under the provisions of the Bombay Provincial Municipal Corporations Act, 1949.

Upholding the constitutionality of the impugned section in the Gujarat Act, the two judge bench comprising of Justice Ranjan Gogoi and Justice P.C Pant observed that “Under both the Acts read with the relevant Rules, tax on Mobile Towers is levied on the yield from the land and building calculated in terms of the rateable value of the land and building. Also the incidence of the tax is not on the use of the plant and machinery in the Mobile Tower; rather it is on the use of the land or building, as may be, for purpose of the mobile tower. That the tax is imposed on the “person engaged in providing telecommunication services through such mobile towers” (Section 145A of the Gujarat Act) merely indicates that it is the occupier and not the owner of the land and building who is liable to pay the tax.Such a liability to pay the tax by the occupier instead of the owner is an accepted facet of the tax payable on land and building under Entry 49 List II of the Seventh Schedule.”

“Viewed in the light of the above discussion, if the definition of “land” and “building” contained in the Gujarat Act is to be understood, we do not find any reason as to why, though in common parlance and in everyday life, a mobile tower is certainly not a building, it would also cease to be a building for the purposes of Entry 49 List II so as to deny the State Legislature the power to levy a tax thereon. Such a law can trace its source to the provisions Entry 49 List II of the Seventh Schedule to the Constitution.”

Read the full text of the Judgment below.

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