MRTP Act | Property Tax Exemption Applies To All MIDC Units Till Transfer Of Services To Navi Mumbai Municipal Corp.: Supreme Court

The Supreme Court has held that industries situated within the Trans Thane Creek (TTC) Industrial Area, which is vested in the Maharashtra Industrial Development Corporation (MIDC), are exempt from paying property tax to the Navi Mumbai Municipal Corporation (NMMC) under the Maharashtra Regional and Town Planning Act, 1966. The Court clarified that such exemption would apply for the period during which the industries availed essential civic amenities, including roads, drainage, water supply, street lighting, and sewerage services, provided by the MIDC.

A bench of Justice Pankaj Mithal and Justice Prasanna B. Varale clarified that the benefit of the property tax exemption to the TTC Industries would cease to operate once the MIDC stopped providing the facilities to the industries, and the same was taken over by the NMMC. Thereafter, the TTC Industries are liable to pay property taxes to the NMMC.

“The moment the relevant authority (MIDC) stops providing those facilities and the responsibilities of the same are taken by the NMMC the benefit of the aforesaid exemption would cease to exist.”, the court observed.

“…the appellants or its members as also the MIDC stood exempted from payment of property tax to NMMC but only till the execution of the aforesaid agreement dated 01.12.2005. The benefit of said exemption would not be available to the MIDC or its unit/plot holders after the aforesaid date. It will be the jurisdiction of the NMMC to realise property tax after the aforesaid date in respect of the areas or the properties handed over or transferred to it.”, the court clarified.

The Case

The controversy arose after the establishment of the Navi Mumbai Municipal Corporation in 1991. The State Government had earlier acquired land from several villages in Thane district and vested it in MIDC for creation of the TTC Industrial Area.

Industrial units functioning in the TTC MIDC area challenged NMMC's authority to levy property tax, contending that MIDC itself was providing all essential amenities such as roads, drainage, water supply, street lighting and sewerage services.

The appellants argued that once MIDC was functioning as a Special Planning Authority and collecting service charges from industrial units, NMMC could not impose property tax over the same area. They also relied upon Clause 7(1) of the First Schedule to the MRTP Act, which exempts a “relevant authority” from payment of taxes where it itself provides civic amenities otherwise provided by a municipal authority.

NMMC and the State Government, on the other hand, argued that the TTC MIDC area formed part of the territorial jurisdiction of NMMC and that the municipal corporation was statutorily empowered to levy property tax under the Mumbai Municipal Corporation Act.

Aggrieved by the Bombay High Court's decision granting property tax exemption only to the MIDC and not to the industrial units situated within the TTC Industrial Area, as well as its refusal to exempt the units from paying property tax to the NMMC after the civic body assumed responsibility for providing municipal facilities, the industrial units approached the Supreme Court.

Decision

Partly allowing the appeal, the judgment authored by Justice Mithal agreed with the High Court's decision that the moment the facilities supplied by the MIDC was stopped and taken over by the NMMC, the benefit of property tax exemption to the TTC industries ceases, however, it disagreed with the narrow interpretation of the High Court, which held that such an exemption is permissible only to the relevant authority (MIDC in the present case) and not to the unit/plot holders situate within its jurisdiction.

“All lands and buildings in the industrial area vest in the MIDC and, therefore, the exemption permitted under the aforesaid clause refers to the entire land and buildings in the area including those occupied by each unit/plot holder. Any other meaning, if given to the aforesaid clause, would render the exemption otiose and will lead to an absurd situation”, the court observed.

“Therefore, in the overall facts and circumstances of the case, the benefit of exemption provided under Clause 7(1) of First Schedule of the MRTP Act goes not only in favour of the MIDC but also to everyone holding land within its jurisdiction. However, there is a caveat to it. The exemption available under Clause 7(1) of First Schedule of the MRTP Act would be only so long till the facilities and amenities supposed to be provided by the local authority are being provided by the relevant authority (MIDC). The moment the relevant authority (MIDC) stops providing those facilities and the responsibilities of the same are taken by the NMMC the benefit of the aforesaid exemption would cease to exist.”, the court held.

“In the present case, ever since the establishment of MIDC in 1962 all such facilities and amenities in the industrial area of TTC MIDC were being provided by the MIDC. However, with effect from 16.12.2004, MIDC handed over the management of the industrial areas under its jurisdiction to NMMC with the clear understanding that it will not levy any service charge with effect from January, 2005 onwards.”, the court added.

In terms of the aforesaid, the appeal was partly allowed.

Cause Title: SMALL SCALE ENTERPRENEURS ASSOCIATION & ORS. VERSUS THE STATE OF MAHARASHTRA & ORS. (with connected case)

Citation : 2026 LiveLaw (SC) 569

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Appearance:

For Appellant(s) Mr. Arvind Datar, Sr. Adv. (argued by) Mr. Gopal Shankarnarayanan, Sr. Adv.(argued by) Mr. Sanjeev Kumar Kapoor, Adv. Mr. Aakash Bajaj, Adv. Mr. Avirat Kumar, Adv. Ms. Sania Abbasi, Adv. Mr. Pradyut Kashyap, Adv. M/s Khaitan & Co., AOR Mr. Amol Chitale, Adv.(argued by) Mr. Sarthak Sharma, Adv. Mrs. Pragya Baghel, AOR

For Respondent(s) Mr. C U Singh, Sr. Adv. (argued by) Mr. Vinay Navare, Sr. Adv.(argued by) Mr. Gopal Sankaranarayanan, Sr. Adv.(argued by) Mr. Deepak Nargolkar, Sr. Adv. Mr. Shrirang B. Varma, Adv. Mr. Siddharth Dharmadhikari, Adv. Mr. Aaditya Aniruddha Pande, AOR Mr. Suhaskumar Kadam, Adv. M/S. Black & White Solicitors, AOR Mr. Soumik Ghosal, AOR Mr. G Pal, Adv. Ms. Shyamali Gadre, Adv. Mr. Gaurav Singh, Adv. Mr. Ashutosh Chaturvedi, Adv. M/S. Karanjawala & Co., AOR Mr. Kunal Mimani, AOR Mr. Kartikey Bhatt, Adv. Mr. Mandeep Singh, Adv.