The Times of India              28.06.2013

NMC categorizes 5-star hotel as residential property

NAGPUR: Some call it callousness, while others call it favouritism. Nagpur Municipal Corporation (NMC) has categorized the five-star Hotel Radisson Blu located on Wardha Road as a residential property instead of as a commercial one and is charging it property tax calculated on that basis. This goof up has resulted in huge financial loss to NMC.

In reply to a query sought under RTI Act by Sanjay Agrawal, president of People Against Corruption (an NGO), NMC's Dhantoli zone office has admitted to have issued a demand note of Rs 1.33 lakh to the hotel, which is spread over area of 1.28 lakh sqft, as per its categorization as a residential property.

The tax receipts (a copy of which is in possession of TOI) clearly show that the hotel which is being run by Besteck Hospitality Pvt. Ltd. has been categorized as a property for residential use.

Agrawal has approached the municipal commissioner Shyam Wardhane demanding strict action against the erring officials in this regard.

Standing committee chairman Avinash Thakre admitted that residential property tax has been imposed on the five-star hotel instead of commercial one. "Already directives have been issued to NMC's tax assessor S Hastak in this regard," he said.

A senior NMC tax department official admitted that preliminary inquiry points towards a deliberate attempt by Dhantoli zone officials to impose residential property tax on the hotel. However, he quickly added that a fresh demand note will be issued to the hotel and according to the new assessment it will come to be around Rs 6 lakh per annum. He also pointed out that the hotel will have to pay the tax from the time it opened for business.

Earlier, the hotel came under the jurisdiction of Laxmi Nagar zone. However, after the 2012 civic elections the jurisdiction changed and it comes now under Dhantoli zone. It is suspected that tax inspector at Dhantoli zone must have assessed the demand notes issued by Laxmi Nagar zone before the hotel was built. So the amount on the demand note was less, said the officer.

Agrawal told TOI that the issue is very serious since NMC is reeling under severe financial crunch owing to the implementation of Local Body Tax. The corporation is running short of funds to pay its employees' salary. In most of the cases the tax being collected from commercial establishments has been found to be far below than that being recovered from residential properties.

Recently, Wardhane had made surprise visits to Dhantoli and Dharampeth zones and found out that many commercial buildings were paying less property tax as the assessors had calculated tax as per the residential rates for commercial users.