While emphasising that the power of the Municipal Authorities in revising the property tax rates with the passage of time shall not be fettered upon by the Writ Courts, the Supreme Court asserted that the cost of the welfare and developmental activities has been constantly increasing with passage of time, and therefore, the property tax, which is the main source of revenue for undertaking these activities, calls for revision.
The Court has strongly deprecated the action of the Bombay High Court in invoking powers of judicial review in a public interest litigation to interfere in the economic policy decision taken by the appellant-Corporation to increase the rates of the property taxes, particularly when such revision was made after a considerable gap of about 16 years.
The Court explained that the tasks assigned to every municipal body include urban planning, public health and sanitation, waste management, provision of essential services, and upkeep of the infrastructure of the cities/towns, which are vital for public welfare and for maintaining the standard of living of citizens. Thus, any lapse in these duties/activities may adversely affect the quality of life of the citizens, for the welfare for whereof the municipal bodies are formed to work.
Without the generation of revenue, the municipal bodies cannot be expected to sustain all these functions and perform their statutory obligations, added the Court while pointing out that “the cost of all these activities/functions rises with passage of time and hence, revision in the tax structure regularly to match the rising costs is unexceptionable”.
A Two-Judge Bench of Justice Vikram Nath and Justice Sandeep Mehta observed that if the taxes are not revised in keeping with the rise in cost of infrastructure, human resources, etc., that would make the municipal bodies defunct and nonfunctional. In essence, their functional efficacy, financial stability and administrative independence are integral to the discharge of these statutory obligations.
The Bench explained that municipal bodies must possess adequate and independent sources of revenue to sustain and strengthen their operational capacities, and a municipal administration that is compelled to depend upon the State for grants, doles, or other forms of financial largesse would be structurally weakened and rendered incapable of performing its statutory duties in a timely and efficient manner.
The Bench cautioned that matters of tax revision fell squarely within the domain of the appellant-Corporation, and the High Court ought not to have reassessed the merits of the policy decision as if it were sitting in appeal over the said decision. Trivial errors in the process of revision would not vitiate the entire regime of tax revision and collection.
The judicial interference by way of public interest litigation is available only if there is an injury to the public because of the dereliction of constitutional obligations on the part of the Government. The writ jurisdiction of the High Court cannot be exercised in the public interest for questioning the economic/fiscal policy or reforms sought to be undertaken by the Government or its functionaries, concluded the Bench.
Briefly, the dispute pertained to the jurisdiction of the appellant-Corporation to levy/revise the rates of property tax. The appellant claimed that the property tax, which is the main source of their revenue to undertake welfare and developmental activities, had not been revised since the year 2001. This was opposed by the respondent, by filing a PIL, who has sought a declaration that the revision of property tax by the Municipal Corporation for the year 2017-18 to 2021-22 was illegal and contrary to law. The Bombay High Court (Nagpur Bench) accepted the contention and declared the revision in municipal tax rates as unjustified.
Appearances:
AOR Black & White Solicitors and Advocate Suhaskumar Kadam, for the Appellant
Senior Advocate AIS Cheema, AORs Kunal Cheema, Aaditya Aniruddha Pande, and Anagha S. Desai, along with Advocates Kirti, Kritika Gakhar, Rushabh Tripathi, Shubham Chandankhede, Siddharth Dharmadhikari, Shrirang B. Varma, Bharat Bagla, Sourav Singh, Chitransha Singh Sikarwar, Satyajit A Desai, Abhinav K. Mutyalwar, Sachin Singh, Pratik Kumar Singh, Sanchit Agrahari, Parth Johri, Madhur Duggal, and Shashank Upadhayay, for the Respondent
