Govt Deliberately Omitted To Revise Property Tax Rates For Their Political Interests: Madras HC Pulls Up Chennai Corporation [Read Order]

The division bench comprising Justice N Kirubakaran and Justice P Velmurugan observed that successive governments had "deliberately omitted to revise the property tax for their political interest." It observed that certain "corrupt officials" had been levying lesser taxes on commercial establishments for personal gain.

"It is a known fact that last revision of property tax in Chennai was only during 1998. Though, every five years, the property tax has to be revised, the successive Governments deliberately omitted to revise the property tax for their political interest. They are afraid that due to revision of property tax, their electoral fortunes will be affected," the bench remarked.

It added,

"Corporation officials are not following uniform yardstick in levying the property tax for various extraneous reasons and they are levying higher tax for residential properties and lesser tax for commercial buildings which results in loss of income to the Corporation. Therefore, steps should be taken to find out the corrupt officials who involve in such practices and action should be initiated against them."

The observations were made in a PIL filed by lawyer VBR Menon, seeking formulation of transparent and uniform rules, procedures and applicable rates for determining property taxes by the Assessment authorities in respect of all categories of buildings throughout Greater Chennai Corporation areas.

Notably, the state authorities had last revised the property tax rates in the year 1998. In this backdrop the court said that revisions during 2003, 2008, 2013 & 2018 could have augmented the income of the Corporation manifold.

Pertinently, this is not the first time that court has taken cognizance of state's inaction on the issue of revision of property tax rates. In July 2018, a division bench led by Justice Kirubakaran had in a case titled Shyam Shekhar v. KB Edison, WP 2730/2018, ordered the state government to revisit the property tax rates, for both residential as well non-residential properties, by not more than 50% and 100% respectively.

Nevertheless, the state government rolled back on the increased tax rates within a year, citing representations from various quarters that the revised rates were unreasonably 'hefty'. It also constituted a three-member committee to look into the issues relating to revision of property tax.

The division bench has ordered this committee to give recommendations, at the earliest, to improve the state of the Corporation in terms of availability of funds and appointment of adequate staff.

"The local body as well as Government should have enough funds for the purpose of providing all the amenities to the citizens. In the absence of sufficient funds, the Corporation is unable to pay the compensation for loss of properties caused due to 2015 deluge. There is a shortage of staff also, since the Corporation is not in a position to pay for their salary and therefore, recruitment could not be made. The revision which has been made after 20 years at the instance of this Court is also suspended. The sufferer is only the common man. Hence, steps should be taken by the committee to give the recommendations at the earliest," the order read.

The court has also ordered the Commissioner of the Greater Chennai Corporation and the Secretary of the Municipal Administration to remain present in the court on February 18, to answer certain queries viz.,

• Yearly property tax collected pursuant to the revision made in 1998 and 2018;
• Reasons for suspension of 2018 revision of property tax rates;
• When the recommendations of the committee will be submitted;
• Number of Malls and IT corridors, Commercial complexes situated in Chennai and the amount levied on those buildings;
• Estimate property tax collection in case rates were revised in 2003, 2008 and 2013;
• Number of cases detected for levy of lesser tax for commercial buildings.

Case Details:
Case Title: VBR Menon v. State
Case No.: WP No. 3265/2020
Quorum: Justice N Kirubakaran and Justice P Velmurugan
Appearance: Special Government Pleader K. Makesh and Standing Counsel  Karthikaa Ashok (for Respondents)

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