A.S. Oka, J. - (1.) By an administrative order dated 31st May 2018 passed by the Hon'ble the Acting Chief Justice, this group of writ petitions has been assigned to this Bench. OVERVIEW
(2.) In the State of Maharashtra, there are three main legislations concerning municipalities. The first is the Mumbai Municipal Corporation Act, 1888 (for short "the BMC Act"), the second is the Maharashtra Municipal Corporations Act, 1949 and third is the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965. These laws governing the municipalities provide for imposition of various taxes including the property tax on buildings and lands which include general tax, water tax, water benefit tax, sewerage tax, sewerage benefit tax, street tax etc. These enactments earlier provided for levy of property tax on the basis of certain percentage of rateable value of the buildings or lands. The basis for determination of rateable value as provided in the aforesaid enactments was the annual rent for which such buildings or lands might reasonably be expected to let from year to year. The rateable value was arrived by deducting 10% from annual rent. This deduction is on account of allowances for repairs or on any other account whatsoever. In the State, there were always various Rent Control Legislations right from the year 1939. Different legislations were applicable to different areas. There are decisions of the Apex Court holding that the annual rent calculated for the purpose of arriving at rateable value cannot exceed the standard rent as determined in terms of the Rent Control Legislations wherever it was applicable. With effect from 31st March 2000, all Rent Control Acts applicable to the State have been repealed and the Maharashtra Rent Control Act, 1999 has been brought into force which is applicable throughout the State. Perhaps, the restriction imposed in the form of upper limit on the annual rent for the purpose of determination of rateable value created certain difficulties in municipal administration. The standard rent was pegged down to a particular date under the Rent Control Legislations and, in the meanwhile, the municipal expenditure went on increasing.
(3.) It appears that the Municipal Corporation of Brihan Mumbai (for short "BMC") which was established under the BMC Act appointed Tata Institute of Social Sciences (for short "TISS") to study the system of levy of property tax and to suggest alternative system for such levy. TISS submitted a detailed report recommending that capital value based system of assessment be adopted in place of annual rental system. TISS studied the practice followed in developing countries. Based on the recommendations of TISS, the BMC Act was amended by the Maharashtra Act No.XI of 2009. The amendment incorporated an option to levy property tax on the basis of capital value as an alternative to the earlier method of levying property tax on the basis of rateable value. Corresponding amendments were made to various provisions of the BMC Act. We have adverted to the said provisions in subsequent paragraphs of the judgment. The bill of Maharashtra Act No.XI of 2009 was introduced in the State Legislature in the year 2006. A part of the said Act No.XI of 2009 came into force with effect from 1st April 2010 and remaining part came into force on 26th August 2010. The objects and reasons appended to the said bill are relevant which read thus: "4. With a view to exploring the possibility of reforming the property tax system, so as to augment the revenue of the Corporation, the Tata Institute of Social Sciences (TISS), Mumbai were entrusted by the Corporation with the job to study the present system of levy of property taxes and to suggest any alternative system for such levy. After studying various systems available for assessment of property taxes within and without India, they have recommended that the Capital Value Based System of assessment in place of the Annual Rental System may be adopted, as according to them the trend in property tax practices in developing countries is to move away from the Annual Rental Value base to Capital Value base. The capital value based system of assessment has the following merits:-(1) Formula based assessment is possible with simplicity,(2) Self-assessment is possible,(3) Greater flexibility in tax administration which provides control over revenue,(4) Subjectivity is eliminated to the extent possible,(5) There is transparency and easy to understand,(6) Tax revenue can keep pace with inflation and cost of living.5. The highlights of the system recommended by the Tata Institute of Social Sciences is the shift from Annual Rental Value to Capital Value as the base for the purpose of levy of property taxes at a certain rate which may be determined by the Corporation and at a certain rate which may be determined by the Corporation and such value is proposed to be adopted as the value of any buildings or lands as is indicated in the Stamp Duty Ready Reckoner for the time being in force as prepared under the Bombay Stamp (Determination of True Market Value of Property) Rules, 1995 and the capital value of the property could then be computed by applying thereto factors such as location, carpet area, type of construction, age of property and the user thereof. In this system, properties which are old, or of semipermanent structures including chawls, will be given due consideration and concession. Care is also taken to provide for an appropriate cap on the increase of property tax on account of switching over to the capital value base of levy.6. It is modest attempt to enable the Corporation to augment its revenue so as to meet the ever-rising expenditure in providing appropriate and adequate infrastructure for rendering civic services in the City like Mumbai and its suburbs. Having regard to the status thereof as a financial capital of India, the Mumbai City requires a special attention.7. The amendments to the Mumbai Municipal Corporation Act (Bom. III of 1888) proposed in this Bill are intended to achieve the above-mentioned objectives."(emphasis added);