Urban News

According to the MCD, the order is based on the recent relevant High Court and Supreme Court judgments that make DMRC liable to pay for commercial development of Metro properties in the form of property tax or service charge as applicable.

The Corporation says that DMRC is liable to pay tax against commercial development of Metro properties as it uses municipal resources. The MCD further denies the DMRC claim of seeking exemption under the Railways Act, saying that the properties concerned do not fall within the ambit of the definition of “Railway” as occurring in the Railway Act, 1989.

Mayor Prithvi Raj Sawhney said the MCD had recently met Lieutenant Governor Tejendra Khanna over the issue.

Khanna “granted his assent to the order, thus saying that the DMRC will have to pay the due amount within the 30 days once the notice is served”.

The MCD had recently sought a list from DMRC of all such properties developed commercially, the location and use of the same and the details of lease/rent agreements of all such Metro properties to assess the due amount. The list included properties such as the Delhi Information Technology Park, two properties spread over 2,000 sq metres and 7704 sq metres leased to M/s Parsvnath Developers near Pratap Nagar Metro Station and Shahdara Metro Station respectively, among other properties.

The tussle began with MCD’s first demand notice to DMRC in 1999, asking for Rs 66,83,300 as property tax. After this, the Corporation sent another demand note in 2000. The DMRC then filed a case in the High Court, saying it was not liable to pay property tax to the MCD as it is a part of the Indian Railways.

On February 26, 2003, the High Court said that the MCD consider DMRC’s contention on merit on whether it was liable to pay property tax or not.

After this, say MCD officials, DMRC’s case was heard by Assessor and Collector of MCD Sangeeta Kampani. The Corporation contended that DMRC was not part of the Indian Railways, but “an independent corporation with the Centre and the Delhi Government as shareholders”.

The order equates the DMRC with organisations such as Scheduled Banks, Airport Authority of India, LIC and similar government corporations, which pay the respective due “service charge” to municipalities concerned.

The Corporation is now formulating a fresh detailed order to the same effect after assessing the due tax amount on all Metro properties that have been commercially developed.

June 30 is the last day for payment of due property tax in the first quarter of the 2010-11.

Tax collection from commercial units has been one of the concern areas for the Property Tax department this year. The department is battling “short payments” from many quarters, specially guesthouses in Paharganj and Karol Bagh that have refused to pay tax dues in accordance with the new rates imposed by the MCD in the current fiscal.

As per the new rates, rented and self-owned luxury commercial properties are to compute their due tax amounts at the rate of 20 per cent and 15 per cent respectively. In the last fiscal, the rate was 10 per cent. The increase was was introduced in the MCD’s budget estimate in January this year and later approved by the Corporation.

Most of these commercial units, however, continue to pay taxes at the previous rate.

These “luxury commercial properties” include air-conditioned guesthouses, starred hotels, malls, air-conditioned gyms, swimming pools and clubs.

Most guesthouse owners in Karol Bagh and Paharganj contend that the tax rate increase does “not apply” to them as their guesthouses are actually “smaller lodges” as mentioned in their operation licences. This has been negated by the MCD, which says that the DMC Act has no provision for licences for lodges and these units are classified as “guesthouses or hotels”, hence, liable to pay the tax at the increased rate. 

The civic body is also facing problems such as general laxity on part of the taxpayers, limited manpower for conducting a door-to-door survey to identify eligible payers and realisation of tax, poor enforcement, lack of a ready database of all properties and for rejecting the report of the second Municipal Valuation Committee (MVC) in 2007.

The second MVC report said the civic agency’s revenue can be increased either by enhancing the annual valuation of properties through a raise in tax rates in any or all categories, or increasing the coverage of the tax net. The MVC has highlighted the recommendation again in its third report submitted to the MoUD and the MCD last week.

On Tuesday, Special High-Powered Property Tax Committee Chairman Ved Parkash Gupta also directed all tax payers pay their property tax and avail the benefit of rebates as applicable. He further warned that the Corporation will take stringent action against defaulters, including attachment of immovable properties.