CHANDIGARH: If you are happy with the nominal property tax of Re 1 per square yard imposed by the MC on residential areas, be prepared for a jolt. You may have to shell out more with the local bodies department forming a committee to study slabs passed by the MC.

HYDERABAD: While the controversy over land acquisition and payment of compensation over railway properties from Sangeet junction to Tarnaka stretch is yet to be resolved, the Greater Hyderabad Municipal Corporation (GHMC) and South Central Railway (SCR) are at loggerheads over the payment of service charges.

While the municipal corporation has been demanding that the SCR pay Rs 7.77 crore per annum towards service charges (a form of property tax) for 88.22 lakh square feet area of railway property, the SCR has been seeking exemption from such charges and claiming that it need not pay any tax to the civic body.

"We have slapped notices on the Railways for payment of service charges for the past two years, which comes to be about Rs 16 crore. But till date, SCR has paid Rs 3.33 crore as a part payment for the last year and has proceeded to dispute the charge being levied by GHMC," a senior official of the finance wing said.

However, the GHMC has given SCR one week's time to make part payment of the demand or face action. The corporation decided to collect service charges from SCR from 2011 after the Supreme Court gave a ruling in a case pertaining to the payment of service charges by the central government departments to urban local bodies in November 2009. Based on the SC order, the Centre issued a circular asking all central government offices to pay service taxes to the respective urban local body since no property tax was being collected from them.

Official sources said that the civic bodies could collect service charges equivalent to 75% of property tax paid by private persons if all services, being provided by the civic bodies, were availed by the central government departments. In case of internal colonies, which do not directly avail civic services within the area and are self-sufficient, the charges are restricted to 33% (one-third) of normal property tax. If only partial services are availed, they have to pay 50% of property tax applicable to private properties.

Since many offices like Rail Nilayam, railway stations such as Secunderabad railway station, Nampally station and MMTS stations are located on major roads, the civic infrastructure is being used by the Railways. The GHMC is asking them to pay 75% of general property tax rates in the respective areas. But, corporation officials claim that the Railways initially agreed to pay only 33% of the property tax and are now seeking complete exemption from the charges.

As there is a disagreement on the payment of service charges, last year a three-member mediation committee was constituted by the state government to settle the issue. But on that too, there was no consensus as the civic body wanted SCR to pay up a certain sum before the meeting which the latter refused to pay.

"SCR has been given one week's time to make part payment of the demand or face action. The civic body can initiate action against central government departments defaulting service charges if the mediation fails," GHMC commissioner MT Krishna Babu told TOI.

For box:

Since many offices like Rail Nilayam, railway stations such as Secunderabad, Nampally, and MMTS stations are located on major roads, GHMC has been demanding SCR to pay service tax for using civic infrastructure

SCR was told to pay Rs 7.77 crore per annum towards service charges (a form of property tax) for 88.22 lakh square feet area of railway property in the GHMC limits, but SCR sought exemption from such charges

GHMC has been demanding service charges from SCR based on ruling by Supreme Court in a case pertaining to the payment of service charges by the central government departments to urban local bodies in November 2009

As there is a disagreement on the payment of service charges between GHMC and SCR, a three-member mediation committee was constituted by the state government to settle the issue last year.