AAR Rules Property Survey & Tax Assessment Services Not Covered as Municipal Functions Under Article 243W Twelfth Schedule [Read Order]
AAR held that property survey and tax assessment services provided to municipal councils are not municipal functions under Article 243W, Twelfth Schedule and hence fall outside the constitutional exemption.
AAR - property - Taxscan
AAR - property - Taxscan
The Maharashtra bench of the Authority for Advance Ruling (AAR) ruled that property survey and tax assessment services provided by M/s. Sthapatya Consultants (India) Private Limited, to municipal corporations and councils, do not qualify as municipal functions under Clauses 1 & 2 of the Twelfth Schedule of Article 243W of the Constitution of India
The assessee, Sthapatya Consultants (India) Private Limited, applied to the AAR seeking clarification on whether their services of assisting the municipal corporations and municipal councils for providing property survey, numbering of properties, measurements and data collection to evaluate property taxation are covered under Clause 1 & 2 of the Twelfth Schedule of Article 243W of the Indian Constitution.
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The applicant explained that the Municipal Corporation and municipal councils must levy, assess, and impose property and allied taxes as a mandatory function under the Maharashtra Municipal Corporation Act and the Maharashtra Municipal Councils, Nagar Panchayat, and Industrial Township Act, 1965. The assessee assists these authorities in assessing, measuring, and capturing property details, including assistance for the evaluation of property taxes, under the supervision and control of the Government Authority.
According to the applicant, their work is a primary responsibility of urban local bodies, performed for the Government Authority, and aligns with the functions listed in the Twelfth Schedule under Article 243W, "urban planning including town planning" and "regulation of land-use and construction of buildings".The applicant contended that these services form part of the mandatory functions.
The Authority reviewed the Twelfth Schedule to Article 243W, which states the functions such as “urban planning including town planning” and “regulation of land-use and construction of buildings.” While the applicant claimed their services facilitate these functions, the Authority found that the intent and scope of the work specifically relate to the facilitation and assessment of property tax.
The Authority stated that the work undertaken by the applicant is in relation to the assessment of property tax by the municipal councils. The entire work intends to facilitate the assessment and collection of property taxes.
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The bench comprising D.P. Gojamgunde (State Member) and Priya Jadhav (Central Member) observed that the levy of property tax is a mandatory function for municipal councils as per the Maharashtra Municipal Act. However, it is not listed as one of the functions in the Twelfth Schedule of Article 243W of the Constitution.
The Authority clarified that all services rendered by the applicant are towards the facilitation of property tax assessment and do not constitute “urban planning including town planning” or “planning of land-use and construction of buildings” as described in the Twelfth Schedule.
The Authority concluded that the said function does not fall under Article 243G or 243W of the Constitution.
Thus, the services supplied by Sthapatya Consultants are not covered under Clauses 1 & 2 of the Twelfth Schedule of Article 243W and are therefore not municipal functions as per the Constitution.
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