MUNICIPAL CORPORATION OF GREATER MUMBAI & ORS v. PROPERTY OWNERS’ ASSOCIATION & ORS.

Citation: [2022] 14 S.C.R. 679; 2022 INSC 1181

Court: Supreme Court of India

Bench: UDAY UMESH LALIT , AJAY RASTOGI

Judgment date: 2022-11-07

Case summary

2022 INSC 1181. Supreme Court of India judgment dated 2022-11-07. MUNICIPAL CORPORATION OF GREATER MUMBAI & ORS v. PROPERTY OWNERS’ ASSOCIATION & ORS. Read...

Judgment text

[2022] 14 S. C. R. 679 679 MUNICIPAL CORPORATION OF GREATER MUMBAI & ORS. A v. PROPERTY OWNERS’ ASSOCIATION & ORS. (Civil Appeal No 8239 of 2022) B (SLP (C) No. 17009 of 2019) NOVEMBER 07, 2022 [UDAY UMESH LALIT, CJI AND AJAY RASTOGI, J. ] Mumbai Municipal Corporation Act, 1888 – s. 154(1A)(a)- (e), (1B) – Factors and Categories of Users of Buildings or Lands C (Assignment of Weightages by Multiplication) Fixation of Capital Value Rules, 2010 – Factors and Categories of Users of Buildings or Lands (Assignment of Weightage by Multiplication) Fixation of Capital Value Rules, 2015 – High Court rejected the challenge as to the validity of various provisions of the MMC Act however, held D rr.

20, 21 and 22 of the Capital Value Rules 2010 and 2015 to be ultra vires the provisions of the MMC Act – On appeal, held:Width of clauses (a) to (e) read with sub-Section (1B) do not by any stretch of imagination contemplate taking into account the future prospects of the land in question – The empowerment in terms of clauses (a) to (e) r/w with sub-Section (1B) or the conferral of rule-making E power would not permit the Corporation to determine the capital value beyond the scope of said clauses (a) to (e) – Thus, for the purpose of determining capital value, only the present physical attributes and status of the land and building can be considered and not the future prospects of the land – Conclusion arrived at by F the High Court are correct – Also, the High Court was right in concluding that r. 20 of the Capital Value Rules of 2010 and the Capital Value Rules of 2015 would be ultra vires the provisions of sub-Sections (1A) and (1B) of s.

154 of the MMC Act – Further, the Rules having come into force on 20. 3. 2012, the levy and computation of property tax on capital value would be available G and possible on and with effect from 20. 3. 2012 and not with any retrospective operation – Challenge raised by the Corporation fails – Challenges raised by the original writ petitioners on various grounds including the grounds of legislative competence; validity of certain provisions and basis of alleged violation of Article 14 of H 679 680 SUPREME COURT REPORTS [2022] 14 S. C. R. A the Constitution, were considered by the High Court in extenso – No reason to take a different view – Therefore, the said view is affirmed.

Constitution of India – Article 243Y, 243X – Mumbai Municipal Corporation Act, 1888 – Plea that any proposal for change or modification in the methodology adopted for levy of B property tax ought to have been initiated through the Finance Commission alone – Held: It is the Legislature of the State which will ultimately take an appropriate action with respect to the recommendations made by the Finance Commission and the papers placed before it – If the Legislature itself has taken into account certain prevailing situation, which according to the Legislature is C causing some prejudice to the financial health and condition of the municipalities and, therefore, the method of imposition of property tax ought to be changed, then it cannot be said that the matter must necessarily and ought to have emanated from the Finance Commission or that in the absence of such recommendations by the D Finance Commission, no steps could have been taken by the Legislature – In the instant case, the exercise undertaken by the Legislature is completely consistent with the empowerment relatable to Article 243X and does not in any way go counter to said empowerment.

E Dismissing the appeals, the Court HELD: 1. 1 Article 243Y of the Constitution deals with constitution of Finance Commission whose principal duty is to review the financial position of the municipalities and to make recommendations to the Governor as to the relevant principles which should govern distribution of the net proceeds of the taxes F and the measures needed to improve the financial position of the municipalities. It is true that certain functions are entrusted to the Finance Commission and the recommendations made by the Finance Commission must carry great weightage. However, the matter has to be seen from the perspective: whether any G “measures needed to improve the financial position of the municipalities” must necessarily emanate from the recommendations of the Finance Commission.

Sub-Article (2) contemplates that the recommendations made by the Finance Commission along with the explanatory memorandum as to the action taken thereon must be laid before the Legislature of the H MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 681 OWNERS’ ASSOCIATION State. Thus, it is the Legislature of the State which will ultimately A take an appropriate action with respect to the recommendations made by the Finance Commission and the papers placed before it. If the Legislature itself has taken into account certain prevailing situation, which according to the Legislature is causing some prejudice to the financial health and condition of the municipalities B and, therefore, the method of imposition of property tax ought to be changed, it cannot then be said that the matter must necessarily and ought to have emanated from the Finance Commission or that in the absence of such recommendations by the Finance Commission, no steps could have been taken by the Legislature.

Article 243X of the Constitution states that the Legislature of a C State may by law authorize a municipality to levy, collect and appropriate such taxes etc. in accordance with such procedure and subject to such limits as may be specified in law. The exercise undertaken by the Legislature in the instant case is completely consistent with the empowerment relatable to Article 243X of D the Constitution and does not in any way go counter to said empowerment. [Paras 25-27][738-H; 739-A-B, E-H; 740-A-B] 1. 2 Coming to the effect and scope of the statutory provisions, it must be stated that Sections 123 to 128 of the MMC Act deal with accounts and annual budget estimates. With the E fixed parameters and scope of taxation, as well as, the elements that can be covered by levy of such taxes, depending upon the annual budget estimates, the rates of municipal taxes, fares and charges can certainly be fixed in terms of Section 128 of the MMC Act.

In such cases, the width of the tax regime is already decided and the rates of taxes would be dependent upon the annual F estimates. What the present amendments seek to achieve is to change the methodology on the basis of which property tax can be levied. Instead of rateable value, the property tax can now be levied going by the capital value. Such exercise could not have been undertaken through the process of annual estimates and in G terms of Sections 120, 123, 125 and 128 of the MMC Act. All that could be done under these provisions would be to vary or change the rates and not the very basis of taxation. The submission in that behalf, therefore, does not merit acceptance. [Para 28][740-C-E] H 682 SUPREME COURT REPORTS [2022] 14 S. C. R. A 1. 3 Section 154(1A) of the MMC Act is the crucial provision for the present discussion.

The opening part of subsection (1A) states that in order to fix the capital value of any building or land assessable to property tax, regard shall be had to the value of any building or land as indicated in the SDRR for the time being in force. The value so indicated in SDRR is to be the base value B to which certain factors delineated in clauses (a) to (e) of subsection (1A) are to be applied while fixing the capital value. Clauses (a) to (d) are physical features or attributes of the land or building which are in existence when the value is to be reckoned. In essence these attributes are situations “in C praesenti”. The buildable potential of the land in future is not an attribute “in praesenti” but is in the nature of likelihood of user or exploitation of the asset “in futuro”.

The crucial question is: whether such potential of the land or the likelihood of exploitation in future can also be taken into consideration while fixing the capital value in terms of sub- Section (1A), especially when none D of the factors delineated in clauses (a), (b), (c) and (d) speaks of future prospects or such likelihood? [Para 30, 31][741-C-F] 1. 4 Both the decisions in Patel Gordhandas and Polychem Ltd. were rendered in the regime when the property tax could be levied on rateable value. In the first decision, it was found that E fixing of the rate at a percentage of the capital value was not a modality permitted by the Act and, therefore, Rules 350-A read with Rule 243, which permitted such exercise, were struck down. Therefore, to the extent the rules went beyond the statutory import and extent, the transgression was not accepted by this F Court.

In the second decision, it was held that so long as the building was not completed and ready for occupation, the land in question for the purposes of rating must be equated with and treated as “vacant land”. In the second decision, the construction was actually going on but the building was not ready. The conclusion from the second decision is quite clear that unless G and until the building was ready to be occupied, the land must be treated as vacant land. Notably, the second decision was premised on the methodology where the rateable value was the determining criteria. Therefore, so long as the building could not be let out in open market, the land would continue to be treated as “vacant H MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 683 OWNERS’ ASSOCIATION land”. However, after the amendments, the emphasis has now A changed and the basis for taxation is now to be capital value of land and building. Capital value again can have two dimensions.

First, the value of land or building as it stands today or secondly, the value as may be in future as per anticipated development. However, the legislative intent, as is clear from clauses (a) to B (d), is about actual status and user as on the date the capital value is to be reckoned or considered. These clauses clearly show that the features contemplated therein must be in existence as on such date and not what would be the projection in future. There are two ways in which sub-clause (e) of sub-Section (1A) of Section 154 can be construed. In the first case, said clause can be read C ejusdem generis along with sub-clauses (a) to (d), in which event the scope of any rules to be made in terms of power granted by sub-clause (e) read with sub-Section (1B), would be relatable to the factors actually in existence and not as something contemplated in future.

On the other hand, if the clause is read D independently, there is nothing in clause (e) or in the language of sub-Section (1B) that the future prospects of the land in question could be reckoned or noted for arriving at the capital value. The conclusion is thus quite clear that the width of clauses (a) to (e) read with sub-Section (1B) do not by any stretch of imagination contemplate taking into account the future prospects of the land E in question. Therefore, the empowerment in terms of clauses (a) to (e) read with subsection (1B) or the conferral of rule making power would not permit the Corporation to determine the capital value beyond the scope of said clauses (a) to (e). Thus, for the purpose of determining capital value, only the present physical F attributes and status of the land and building can be considered and not the future prospects of the land. [Paras 33-36][743-H; 744-A-H; 745-A] Patel Gordhandas Hargovindas & Ors. v. Municipal Commissioner, Ahmedabad & Anr.

AIR 1963 SC 1742 G : [ 1964] 2 SCR 608; The Municipal Corporation of Greater Bombay v. Polychem Ltd. (1974) 2 SCC 198 : [1974] 3 SCR 687 – referred to. 1. 5 To the extent Rule 20 of the Capital Value Rules of 2010 and the Capital Value Rules of 2015 empower the H Commissioner to consider the capability of the open land of 684 SUPREME COURT REPORTS [2022] 14 S. C. R. A utilizing more than 1 floor space index (FSI) or any transfer of development right (TDR), would go well beyond the permissible scope delineated by the provisions of Section 154 of the MMC Act. The High Court, was, therefore, right in concluding that Rule 20 of the Capital Value Rules of 2010 and the Capital Value Rules of 2015 would be ultra vires the provisions of subsections (1A) B and (1B) of Section 154 of the MMC Act. [Para 38][745-D-F] 1. 6 In regard to the issue of retrospectivity of the Capital Value Rules of 2010.

The factual narration relied upon by the learned counsel for the Corporation does show that the preparatory steps were being undertaken since 2010 with the C appointment of an expert committee and publication of draft rules. It appears that the Corporation had to collect voluminous data. But in order to enable the Corporation to compute or levy property tax based on capital value, the concerned rules had to be in force. There being no empowerment to compute and/or D levy property tax with retrospective effect by the statute itself, the rule making power, in any view of the matter, could not have created a liability pertaining to the period well before the Rules came into effect. The first ground as set out in paragraph 15 was, therefore, rightly answered by the High Court against the Corporation. Logically, the Rules having come into force on E 20. 3. 2012, the levy and computation of property tax on capital value would be available and possible on and with effect from 20. 3.

2012 and not with any retrospective operation. [Para 39][745-F-H; 746-A] 1. 7 The question then arises as to what would be the scope F and extent of the present property tax regime. It is quite clear that with the amendment to Section 154 and other provisions, the property tax can be levied on the basis of capital value of the land or building. To that extent, there would be departure from the regime which was in existence when Patel Gordhandas and Polychem Ltd. were decided by this Court. Now, the statute G certainly empowers and contemplates imposition of property tax on the capital value. However, the capital value must be one which answers the postulates in sub-clauses (a) to (e) of sub-Section (1A) read with sub-Section (1B) of Section 154. Since the statutory provisions do not contemplate any likelihood of exploitation of H capacity in future, the capital value of the land and building must MUNICIPAL CORP. OF GREATER MUMBAI v.

PROPERTY 685 OWNERS’ ASSOCIATION be based on situation “in presenti”. It must be clarified here that A in projects which are in progress, the value addition to the property would be ongoing feature. However, considering clauses (a) to (d), it would mean that the governing principle must be the actual use and not the intended use in future. The challenge raised by the Corporation must fail and the appeal preferred by the B Corporation is dismissed. Challenges raised by the original writ petitioners on various grounds as detailed hereinabove including the grounds of legislative competence; validity of certain provisions and basis of alleged violation of Article 14 of the Constitution, were considered by the High Court in extenso. No reason or room to take a different view. Therefore, the view is C affirmed and the challenge is dismissed. [Paras 40, 41][746-B-F] Marathwada University v. Seshrao Balwant Rao Chavan (1989) 3 SCC 132 : [1989] 2 SCR 454; Delhi Race Club Limited v.

Union of India & Ors. (2012) 8 SCC 680 : [2012] 8 SCR 1; Devi Das Gopal Krishnan D etc. v. State of Punjab & Ors. AIR 1967 SC 1895 : [1967] 3 SCR 557; Avinder Singh &Ors. v. State of Punjab & Ors. (1979) 1 SCC 137 : [1979] 1 SCR 845; State of Uttar Pradesh & Ors. v. Systematic Conscom Ltd. (2014) 13 SCC 627; State of Himachal Pradesh & E Ors. v. Nurpur Private Bus Operators’ Union & Ors. (1999) 9 SCC 559 : [1999] 3 Suppl. SCR 430 – referred to. Campaign for People Participation in Development Planning v. Lieutenant Governor of NCT of Delhi & F Ors. (2016) SCC Online Del 80 – referred to. Case Law Reference [1964] 2 SCR 608 referred to Para 23 [1989] 2 SCR 454 referred to Para 23 G [2012] 8 SCR 1 referred to Para 23 [1967] 3 SCR 557 referred to Para 23 [1979] 1 SCR 845 referred to Para 23 [1974] 3 SCR 687 referred to Para 23 H 686 SUPREME COURT REPORTS [2022] 14 S. C. R. A (2014) 13 SCC 627 referred to Para 23 [1999] 3 Suppl.

SCR 430 referred to Para 23 (2016) SCC Online Del 80 relied on Para 25 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8239 of 2022. B From the Judgment and Order dated 24. 04. 2019 of the High Court of Judicature at Bombay in Writ Petition No. 2592 of 2013. With Civil Appeal Nos. 8240, 8241, 8242, 8243, 8244 of 2022 And Contempt Petition (C) No. 38 Of 2021 In Special Leave Petition (C) C No. 17009 of 2019. Neeraj Kishan Kaul, Huzefa Ahmadi, Sreedharan, Dr. Milind Sathe, Shekhar Naphade, H. L. Tiku, Sr. Advs. , Akshay Arora, Praval Arora, Ms. Chesta Mehta Arora, Jappanpreet Hora, A. Karthik, Y. P. Dandiwala, R. K. Satpalkar, Dhruv V. Sharma, Toshiv Goyal, Ms. D Delnavaz Patel, Saswat Pattnaik, Ms. Shaheen Moghul, Hasan Murtaza, Abhishek Bharti, Ms. Aarti Mahto, Balaji Srinivasan, Sameer Parekh, Sumit Goel, Abhiram Naik, Ms. Tanya Chaudhary, Paritosh Arora, M/s. Parekh & Co. , H . Devrajan, P. N. Gupta, Mrs. Bharti Gupta, Jayom Mahesh Shah, Ashish Wad, Ms. Tamali Wad, Ms.

Aruna Savla, Pimple Sharad, Sidharth Mahajan, Ms. Sukriti Jaggi, Ajeyo Sharma, M/s. J S E Wad & Co, Kunal Vajani, Sanjay Kadam, Chirag M. Shroff, Mahesh Agarwal, Ankur Saigal, Anshuman Srivastava, Shaishir Divatia, Sunil Mittal, Digit Saikia, Suneet Tyagi, Ms. Reshma Kalsekar, E. C. Agrawala, Vikas Kumar, Manish Paliwal, Yashmeet Kaur, Mayank Grover, M/s. Corporate Legal Partners, Rahul Chitnis, Sachin Patil, Aaditya A. Pande, F Geo Joseph, Shikhil Suri, Ms. Madhu Suri, T. R. B. Sivakumar, Aman Raj Gandhi, Abhishek Sharma, Udayaditya Banerjee, Adbhut Pathak, Advs. for the appearing parties. The Judgment of the Court was delivered by UDAY UMESH LALIT, CJI G 1. Leave granted in all Special Leave Petitions. 2. These appeals are challenging the common judgment and order dated 24. 4. 2019 passed by the Division Bench of the High Court of Judicature at Bombay in Writ Petition No. 2592/2013 and connected matters. Contempt Petition (Civil) No.

38/2021has been filed against the alleged contemnor for disobedience of orders dated 29. 7. 2019, H MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 687 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] 21. 10. 2019 and 22. 11. 2019 passed by this Court in the appeal arising out A of said SLP(C) No. 17009 of 2019. For the present purposes, said Contempt Petition is segregated with a direction to list the same before an appropriate Court after six weeks. 1 3. The Mumbai Municipal Corporation Act, 1888 has been enacted by the State Government to consolidate and amend various Municipal B Acts which were in force relating to the Municipal administration of the city of Mumbai. The Municipal Corporation of Greater Mumbai (“the Corporation” for short)has been established and discharging its duties under the MMC Act. 4. The MMC Act authorizes the Corporation to impose property C tax on lands and buildings.

Importantly, property tax is one of the main sources of revenue for the Corporation, specifically after abolition of Octroi. The MMC Act earlier provided for levy of property tax on the basis of certain percentage of rateable value of the buildings or lands. The basis of determination of rateable value as provided in the MMC D Act was the annual rent for which such buildings or lands might reasonably be expected to be let from year to year. 5. The Corporation appointed Tata Institute of Social Sciences (for short “TISS”) and University of Mumbai to study the system of levy of property tax and to suggest alternative system for such levy. E TISS submitted a detailed report recommending that capital value-based system of assessment be adopted in place of annual rental system. After detailed discussions with stake holders and based on the recommendations of TISS, the MMC Act was amended by the Maharashtra Act No. XI of 2009.

The amendment incorporated an option and empowered the Corporation to levy property tax on the basis of capital value as an F alternative to the earlier method of levying property tax on the basis of rateable value. 6. The Statement of Objects forming part of the Bill which led to the passing of the Maharashtra Act No. XI of 2009 was as under: - “STATEMENT OF OBJECTS AND REASONS G Section 139 of the Mumbai Municipal Corporation Act (Bom. III of 1888) provides for imposition of taxes by the Municipal Corporation of Brihan Mumbai. The taxes to be so imposed provide 1 “MMC Act”, for short H 688 SUPREME COURT REPORTS [2022] 14 S. C. R. A inter alia property taxes on buildings or lands. The property taxes include water tax, water benefit tax, sewerage tax, sewerage benefit tax, general tax, education cess and street tax, which are leviable on the basis of certain percentage of rateable value of the buildings or lands. B 2.

Section 154 of the Act provides the method of fixing rateable value of any buildings or lands assessable to property tax. The basis to determine the rateable value is the annual rent for which such buildings or lands might reasonably be expected to let from year to year, less 10 per centum of the said annual rent and the said deduction is in lieu of all allowances for repairs or on any C other account whatever. 3. The determination or fixation of the rateable value under different Municipal Acts or Municipal Corporation Acts throughout India for the purpose of levy of property taxes under these Acts has resulted in ceaseless dispute. There has been a catena of D decisions rendered by various High Courts and the Supreme Court in respect of the matter of fixation of rateable value particularly because of the provisions of Rent Control Legislation in various States including the State of Maharashtra.

On account of these decisions the annual rent to be taken into account for fixation of E rateable value of any buildings or lands has been pegged down to the standard rent of any buildings or lands according to the provisions of the Rent Control Acts. In so far as the area of the Municipal Corporation of Brihan Mumbai is concerned, the Rent Control Act, which provided for standard rent for the first time, was the Bombay Rent Restriction Act. 1939 (Bom. XVI of 1939). F This Act was repealed by the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1944 (Bom. VII of 1944), which had been replaced by the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (Bom. LVII of 1947), which has also been now repealed by the Maharashtra Rent Control Act, st 1999 (Mah. XVIII of 2000) which came into force on the 31 day G of March 2000 and is at present in operation. Thus the Rent Control Act has been in operation in the Mumbai Municipal Corporation area for over 65 years.

In effect, therefore, the property tax has to be determined on the basis of rateable value fixed considering the annual rent, being the fair rent (standard rent) alone, regardless H MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 689 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] of the actual rent received. Fair rent very often means the rent A prevailing prior for the year 1940 with some marginal modifications and additions. Because of the limitations or restrictions brought into play by the provisions of the Maharashtra Rent Control Act, 1999 and the various judgements of the Court in respect of fixation of rateable value for the purpose of levy of property taxes a lot of B subjectivity has crept into the system by which the rent of buildings or lands is determined. Apart from this, it has also resulted in lack of transparency, equity and rationality in the system of assessment of property taxes. Property tax is one of the main sources of revenue to the Corporation.

Due to such restrictions or limitations the income of the Corporation from property tax has remained C static. To continue to compel the Corporation to levy and collect the property tax on the basis of fair rent or standard rent alone, while at the same time under Section 61 in Chapter III and other provisions of the Mumbai Municipal Corporation Act making it incumbent on the Corporation to make adequate provisions to D perform all its obligatory and discretionary functions laid down by the Act may be to ask for the impossible. The cost of maintaining and laying roads, drains, water supply lines and providing other essential civic services and amenities, the salaries of staff and wages of employee and all other types of expenditure have gone up steeply over the last more than 65 years. E 4.

With a view to exploring the possibility of reforming the property tax system, so as to augment the revenue of the Corporation, the Tata Institute of Social Sciences (TISS), Mumbai were entrusted by the Corporation with the job to study the present system of levy of property taxes and to suggest any alternative F system for such levy. After studying various systems available for assessment of property taxes within and without India, they have recommended that Capital Value Based System of Assessment in place of the Annual Rental System may be adopted, as according to them the trend in property tax practices in G developing countries is to move away from the Annual Rental Value base to Capital Value base. The capital value based system of assessment has the following merits:- (1) Formula based assessment is possible with simplicity, (2) Self-assessment is possible, H 690 SUPREME COURT REPORTS [2022] 14 S. C. R.

A (3) Greater flexibility in tax administration which provides control over revenue, (4) Subjectivity is eliminated to the extent possible, (5) There is transparency and easy to understand, (6) Tax revenue can keep pace with inflation and cost of living. B 5. The highlights of the system recommended by the Tata Institute of Social Sciences is the shift from Annual Rental Value to Capital Value as the base for the purpose of levy of property taxes at a certain rate which may be determined by the Corporation and such value is proposed to be adopted as the value of any C buildings or lands as is indicated in the Stamp Duty Ready Reckoner for the time being in force as prepared under the Bombay Stamp (Determination of True Market Value of Property) Rules, 1995 and the capital value of the property could then be computed by applying thereto factors such as location, carpet area, type of D construction, age of property and user thereof.

In this system properties which are old or of semi-permanent structures including chawls, will be given due consideration and concession. Care is also taken to provide for an appropriate cap on the increase on property tax on account of switching over to the capital value base of levy. E 6. It is a modest attempt to enable the Corporation to augment its revenue so as to meet the ever-rising expenditure in providing appropriate an adequate infrastructure for rendering civic services in the City like Mumbai and its suburbs. Having regard to the status thereof as a financial capital of India, the Mumbai City F requires a special attention. 7. The amendments to the Mumbai Municipal Corporation Act (Bom. III of 1888) proposed in this Bill are intended to achieve the above-mentioned objectives. ” G 7.

The MMC Act was, thereafter, amended by successive amendments as a result of which newly introduced Section 154(1A) and (1B) MMC Act now authorizes Municipal Commissioner to fix the Capital Value of land and building with the approval of the Standing Committee. Accordingly, the Commissioner formulated Factors and Categories of Users of Buildings or Lands (Assignment of Weightages by Multiplication) H MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 691 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] Fixation of Capital Value Rules, 2010 (‘the Capital Value Rules of 2010’, A for short) which came into force on and with effect from 20. 03. 2012,and Factors and Categories of Users of Buildings or Lands (Assignment of Weightage by Multiplication) Fixation of Capital Value Rules, 2015 (‘the Capital Values Rules of 2015’, for short), which came into force on 01. 04. 2015. B 8. It must be stated here that on 20. 01. 2010 a resolution was passed appointing an expert committee comprising of Dr. D. M.

Sukthankar, Dr. D. N. Choudhary and Dr. Roshan Namavati to make recommendations on the Capital Value System. The draft rules prepared by the Committee were published in various newspapers on 18. 10. 2010 C inviting objections. The last date for submissions and objections after due extension expired on 30. 11. 2010, whereafter final report was submitted. After obtaining the sanction of the Standing Committee, the Capital Value Rules, of 2010 were published on 20. 03. 2012. Subsequently, the Capital Value Rules of 2015 were also framed. D 9. The relevant provisions of the MMC Act dealing with the matters in issue are extracted here for ready reference: “120. Constitution of Fines Fund.

Fines collected under section 83 shall be credited to a separate fund to be called “the Fines Fund” the proceeds of which shall be expended in promoting the E well-being of municipal officers and servants other than those appointed under the provisions of Chapter XVIA of this Act, and for the payment of compassionate allowances to the widows of such officers and servants who die while in municipal service and to such other relation of the officers and servants as the corporation may from time to time determine. F xxx xxx xxx 123. Accounts to be kept in forms prescribed by Standing Committee.

Subject to the provisions of Chapter XVI-A of this Act accounts of the receipts and expenditure of the corporation shall be kept in such manner and in such forms as the Standing G Committee shall from time to time prescribe: Provided that, the accounts of the Water and Sewage Fund and the Consolidated Water Supply and Sewage Disposal Loan Fund shall be maintained on the accrual basis, unless otherwise prescribed by the Standing Committee. H 692 SUPREME COURT REPORTS [2022] 14 S. C. R. A xxx xxx xxx 125. Estimates of expenditure and income to be prepared annually by Commissioner.

The Commissioner shall on or before eachfifth day of February, have prepared and lay before the Standing Committee, in such B form as the said Committee shall from time to time approve, — (1) (a) an estimate of the expenditure which must or should, in his opinion be incurred by the corporation in the next ensuing Official Year, other than— ***** C (ii) expenditure to be incurred by reason of the obligations imposed on the corporation arising out of the transfer to the corporation of the powers, duties, assets and liabilities of the Board of Trustees for the improvement of the City of Bombay constituted under the City of Bombay Improvement D Trust Transfer Act, 1925 13or for any of the purposes of Chapter XII-A; and (iii) expenditure to be incurred on account of the Brihan Mumbai Electric Supply and Transport Undertaking; E (iv) expenditure to be incurred for the purposes of clause (q) of section 61; (v) expenditure to be incurred for the purposes of Chapters IX and X; (b) an estimate of the balances, if any (other than balances) shown F in the accounts maintained under sections 123A and 123C which will be available for re-appropriation or expenditure at the commencement of the next ensuing official year; (c) an estimate of the corporation’s receipts and income for the next ensuing official year other than from taxation and from the G Brihan Mumbai Electric Supply and Transport Undertaking and other than that referred to in clause (c) of sub-section (2) and in clause (d) of section 126C and in section 126E; (cc) an estimate of the amount due to be transferred during the next ensuing official year to the municipal fund under the provisions H of sections 460KK and 460LL; MUNICIPAL CORP.

OF GREATER MUMBAI v.

PROPERTY 693 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] (d)a statement of proposals as to the taxation which it will, in his A opinion, be necessary or expedient to impose under the provisions of this Act in the next ensuing official year; (2) (a) an estimate of the expenditure which must or should, in his opinion, be incurred by the corporation in the next ensuing official year by reason of the obligations imposed upon the corporation B arising out of the transfer to the corporation of the powers, duties, assets and liabilities of the Board of Trustees for the Improvement of the City of Bombay constituted under the City of Bombay Improvement Trust Transfer Act, 1925 or for any of the purposes of Chapter XII-A; C (b)an estimate of all balances, if any in the account maintained under section 122A, which will be available for re-appropriation or expenditure at the commencement of the next ensuing official year; (c) an estimate of the corporation’s receipts and income for the D next ensuing official year— (i) arising from sales, leases and otherdispositions of immovable property vesting in the corporation by reason of the enactment of the City of Bombay Municipal (Amendment) Act, 1933 or acquired by the Corporation for E any of the purposes of Chapter XII-A; and (ii) being payments of interest on and repayments in whole or part of the capital of loans granted by the corporation and secured on the aforesaid immovable property; (d) an estimate of three times the amount of the net estimated F realisations of the corporation in the then current financial year under the head of general tax (including arrears and payments in advance) divided by the rate fixed for general tax for the then current financial year; xxx xxx xxx G Provided further that, with effect from the financial year 1974- 75, this subclause shall have effect as if for the words “three-times” the word “twice” were substituted; (e) an estimate of the Corporation’s receipts and income, other H than receipts and income referred to in other clauses of this sub- 694 SUPREME COURT REPORTS [2022] 14 S.

C. R. A section arising from or relating to, transaction connected with the obligations imposed upon the Corporation by the transfer to the Corporation of the powers, duties, assets and liabilities of the said Board of Trustees or with the exercise of the powers and duties conferred or imposed upon the Corporation by Chapter XII-A including grants from the State Government. B xxx xxx xxx 128.

Fixing rates, of municipal taxes and of fares and charges of “Brihan Mumbai Electric Supply and Transport Undertaking” C (1) The Corporation shall, on or before the twentieth day of March after considering the Standing Committee’s proposals in this behalf,— (a) determine, subject to the limitations and conditions prescribed in Chapter VIII, the rates at which municipal D taxes shall be levied, and the articles on which octroi shall be levied, in the next ensuing official year: Provided that, the Corporation may determine different rates of property taxes for different categories of users of a building or land or part thereof; and E (b) approve, subject to the limitations and conditions which may have been prescribed by or under any of the enactments or any licence referred to in clause (i-a) of sub-section (2) of section 126B, the rates at which the fares and charges in respect of the Brihan Mumbai Electric Supply and F Transport Undertaking shall be levied.

(2) Except under sections 134,196, 460H and 460I, the rates so fixed and the articles so appointed shall not be subsequently altered for the year for which they have been fixed. (3) Notwithstanding anything contained in sub-sections (1) and G (2), the Corporation may, at any time during the official years 2010-2011, 2011-2012 and 2012-2013 determine, separately for each of the said three years, the rates of property taxes for different categories of users of a building or land or part thereof. The rates of property taxes so determined shall be effective and shall be deemed to have been effective from the 1st of H MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 695 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] April of those three years and the taxes for the said three A years shall be leviable and payable at the rates so determined. xxx xxx xxx 139. Taxes to be imposed under this Act.

For the purpose of B this Act, taxations shall be imposed as follows, namely:- (1) property taxes; (2) a tax on dogs: and (3) a theatre tax; C 139A. Property taxes what to consist. (1) Property taxes leviable on buildings and lands in Brihan Mumbai under this Act shall include water tax, water benefit tax, sewerage tax, sewerage benefit tax, general tax, education cess, street tax and betterment charges. D (2) For the purposes of levy of property taxes, the expression “Building” includes -a flat, a gala, a unit or any portion of the building. (3) All or any of the property taxes may be imposed on agraduated E scale. (4) Save as otherwise provided in this Act, it shall be lawful - for the Corporation to levy all property taxes on the rateable value of buildings and lands until the Corporation adopts levy of any or all the property taxes on such buildings and lands on the capital value F thereof under section 140A. 140.

Property taxes leviable on rateable value, or capital value as the case may be, and at what rate. (1) The following property taxes shall be levied on building and lands in Brihan Mumbai, namely: - G (a) (i) the water tax of so many per centum of their rateable value, or their capital value, as the case may be, as the Standing Committee may consider necessary for providing water supply; (ii) an additional water tax which shall be called ‘the water benefit tax’ of so many per centum of their rateable value, or their capital H 696 SUPREME COURT REPORTS [2022] 14 S. C. R. A value, as the case may be, as the Standing Committee may consider necessary for meeting the whole or part of the expenditure incurred or to be incurred on capital works for making and improving the facilities of water-supply and for maintaining and operating such works; B Provided that all or any of the property taxes may be imposed on a graduated scale.

(b) (i) the sewerage tax of so many per centum of their rateable value, or their capital value, as the case may be, as the Standing Committee may consider necessary for collection, removal and C disposal of human waste and other wastes; (ii) an additional sewerage tax which shall be called the “sewerage benefit tax” of so many per centum of their rateable value, or their capital value, as the case may be, as the Standing Committee may consider necessary for meeting the whole or a part of the expenditure incurred or likely to be incurred on capital work - for D making and improving facilities for the collection, removal and disposal of human waste and other wastes and for maintaining and operating such works; General tax E (c) a general tax of not less than eight and not more than fifty per centum of their rateable value, or of not less than 0.

1 and not more than 1 per centum of their capital value, as the case may be, together with not less than one-eight and not more than five per centum of their rateable value or not less than 0. 01 and not more than 0. 2 per centum of their capital value, as the case may be, F added thereto in order to provide for the expense necessary for fulfilling the duties of the corporation arising under clause (k) of section 61 and Chapter XIV; Education cess G (ca) the education cess leviable under section 195E; (cb) the street tax leviable under section 195G; (d) betterment charges leviable under Chapter XII-A. (2) Any reference in this Act or in any instrument to a water tax or a halalkhor tax shall after the commencement of the Bombay H MUNICIPAL CORP. OF GREATER MUMBAI v.

PROPERTY 697 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] Municipal Corporation (Amendment) Ordinance, 1973, be A construed as a reference to the water tax or the water benefit tax or both or the sewerage tax or the sewerage benefit tax, or both as the context may require; 140A. Property taxes to be levied on capital value and the rate thereof.

(1) Notwithstanding anything contained in section B 140 or any other provision of this Act, the Corporation may pass a resolution to adopt levy of property tax on buildings and lands in Brihan Mumbai on the basis of capital value of the buildings and lands on and from such date, and at such rates, as the Corporation may determine in accordance with the provisions of section 128: C Provided that, for the period of five years from the date on and from which such property tax is levied on capital value, the tax shall not: (a) exceed, - D (i) in respect of building used for residential purposes, two times, and (ii) in respect of building or land used for non-residential purposes, three times, and (b) where the tax so levied on any building or land, whether E used for residential or for non-residential purposes, gets reduced, be less than half of the amount of the property tax leviable in respect thereof in the year immediately preceding such date: shall not exceed,- (i) in respect of building used for residential purposes, two F times, and (ii) in respect of building or land used for non-residential purposes, three times, the amount of the property tax leviable in respect thereof in the G year immediately preceding such date: Provided further that, where the property taxes levied in respect of any residential or non-residential building or portion thereof were on the basis of annual letting value arrived at considering the leave and licence charges, by whatever name called, then for the purposes of the first proviso it shall be lawful H 698 SUPREME COURT REPORTS [2022] 14 S.

C. R. A for the Commissioner to ascertain such tax leviable during such immediately preceding year, as if such building or portion thereof were self-occupied and had been so entered in the assessment book: Provided also that, the property tax levied on the basis of B capital value of any building or land on revision made under sub section (1C) of section 154 shall not in any case exceed 40 per centum of the amount of the property tax payable in the year immediately preceding the year of such revision: Provided also that, for the period of five years commencing C from the year of adoption of capital value as the base, for levy of property tax under section 140A, the amount of property tax leviable in respect of a residential building or residential tenement, having carpet area of 46. 45 sq. meter (500 sq. feet) or less, shall not exceed the amount of property tax levied and payable in the year immediately preceding the year of such adoption of capital D value as the basis.

Provided also that, for a period of five years commencing onthe 1st April 2015, the amount of property tax leviable in respect of a residential building or residential tenement, having carpet area of 46. 45 sq. meter (500 sq. feet) or less, shall not exceed the E amount of property tax which is being levied and payable in respect of such residential building or tenement as on the 31st March 2015. Provided also that, for the financial year 2019-20, the provisions of the preceding proviso shall apply as if the general F tax leviable under clause (c) of sub-section (1) of section 140 do not form part of the property tax leviable under that section.

(2) Notwithstanding anything contained in sub-section (4) of section 139A or any other provisions of this Act or Resolution, if any, passed by the Corporation for adopting the levy of property tax G on the basis of capital value but subject to the provisions of section 154A, buildings and lands in respect of which the process of fixing capital value is in progress on the 26th August 2010, being the date of coming into force of section 3 of the Maharashtra Municipal Corporations and Municipal Councils (Third Amendment) Act, 2010, until it is so fixed, the tax leviable and payable in respect of H MUNICIPAL CORP. OF GREATER MUMBAI v.

PROPERTY 699 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] such buildings and lands shall provisionally be equal to the amount A of tax leviable and payable in the preceding year, that is to say, for the year commencing on the first day of April 2009 and ending on the thirty-first day of March 2010 and such provisional tax shall be leviable and payable for each of the years 2010-2011, 2011- 2012 and 2012-2013, according to the provisional bills which may B be issued separately for each such year; so, however, that on fixation of capital value of the respective buildings and lands, final bill of assessment of property taxes on the basis of capital value may then be issued for each such year as aforesaid.

After such final assessment, if it is found that the assessee has paid excess amount, such excess shall, notwithstanding anything contained in C section 179, be refunded within three months from the date of issuing the final bill, along with interest from such date as provided in the first proviso to sub-section (5) of section 217, or after obtaining the consent of the assessee, shall be adjusted towards payment of property tax due, if any, for the subsequent years; and D if the amount of taxes on final assessment is more than the amount of tax already paid by the assessee, the difference shall be recovered from the assessee.

(2A) Notwithstanding anything contained in sub-section (1) or (2) or any other provisions of this Act, the tax on buildings and lands, E which are liable to be assessed for the first time on or after the 1st April 2010, shall provisionally be equal to the amount of tax, as if such buildings and lands are liable to be assessed in the year 2009-2010; and on ascertainment of the capital value of such ‘buildings and lands, the corporation may issue a final bill in respect of the years for which they are liable to be assessed, on the basis F of capital value thereof and accordingly it shall be the duty of the owner and occupier of such buildings and lands to pay such tax within the period specified in the final bill issued as aforesaid.

(3) Notwithstanding anything contained in section 163 or 217 or any other provisions of this Act and having regard to the fact that G the property tax bill has been issued in accordance with the provisions of sub-section (2), not being a final bill, such bill shall not be questioned before any forum; and no complaint or appeal shall lie against such bill merely on the ground that capital value in respect of the property which is subject matter of the bill is not H 700 SUPREME COURT REPORTS [2022] 14 S. C. R. A yet fixed, or that the amount of tax leviable and payable at the rate of property tax determined by the Corporation is not yet finally ascertained, or on any other ground whatever. Explanation.

- For the purposes of this section, after the Corporation adopts the Capital Value as the basis of levy of property tax, the B property tax in respect of any taxable building shall be revised after every five years and on each such revision, such amount of property tax, shall not in any case exceed the forty per cent of the amount of the property tax levied and payable in the year immediately preceding the year of the revision. C xxx xxx xxx 154. Rateable value or capital value how to be determined. (1) In order to fix the rateable value of any building or land assessable to a property-tax, there shall be deducted from the amount of the annual rent for which such land or building D might reasonably be expected to let from year to year as unequal to ten per centum of the said annual rent and the said deduction shall be in lieu of all allowances for repairs or on any other account whatever.

(1A) In order to fix the capital value of any building or land E assessable to a property tax the Commissioner shall have regard to the value of any building or land as indicated in the Stamp Duty Ready Reckoner for the time being in force as prepared under the Bombay Stamp (Determination of True Market Value of Property) Rules, 1995, framed under the provisions of the Bombay 2 Stamp Act, 1958, as a base value or where the Stamp Duty Ready F Reckoner does not indicate Value of any properties in any particular area wherein a building or land in respect of which capital value is required to be determined is situate, or in case such Stamp Duty Ready Reckoner does not exist, then the Commissioner may fix the capital value of any building or land taking into consideration G the market value of such building or land, as a base value.

The Commissioner while fixing the capital value as aforesaid, shall 3 have regard to the following factors, namely: - 2 and 3 The expressions were added / substituted by 2010 Amendment. The erstwhile sub-section (1A) introduced by Maharashtra Act No. XI of 2009 was : - H MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 701 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] (a) the nature and type of the land and structure of the building,- A (b) area of land or carpet area of building, (c) user category, that is to say, (i) residential, (ii) commercial (shops or the like), (iii) offices, (iv) hotels (upto 4 stars), (v) hotels (more than 4 stars), (vi) banks, (vii) industries and B factories, (viii) school and college building or building used for educational purposes, (ix) malls and (x) any other building or landnot covered by any of the above categories, (d) age of the building, or (e) such other factors as may be specified by rules made under C subsection (1B).

(1B) The Commissioner shall with the approval of the Standing Committee, frame such rules as respects the details of categories of building or land and the weightage by multiplication to be assigned to various such factors and categories for the purpose D of fixing the capital value under sub-section (1A).

(1C) The capital value of any building or land fixed under sub-section (1A) shall be revised every five years: Provided that, the Commissioner may, for reasons to be recorded in writing, revise the capital value of any building or land E “”(1A) In order to fix the capital value of any building or land assessable to a property tax the Commissioner shall have regard to the value of any building or land as indicated in the Stamp Duty Ready Reckoner for the time being in force as prepared under the Bombay Stamp (Determination of True Market Value of Property) Rules, 1995, framed under the provisions of the Bombay Stamp Act, 1958, or where the F Stamp Duty Ready Reckoner does not indicate value of any properties in any particular area wherein a building or land in respect of which capital value is required to be determined is situate, or in case such Stamp Duty Ready Reckoner does not exist, then the Commissioner may fix the capital value of any building or land taking into consideration the market value of such building or land, as a base value; and also have regard to the following factors, namely: - (a) the nature and type of the land and structure of the building, G (b) area of land or carpet area of building, (c) user category, that is to say, (i) residential, (ii) commercial (shops or the like), (iii) offices, (iv) hotels (upto 4 stars), (v) hotels (more than 4 stars) (vi) banks, (vii) industries and factories, (viii) school and college building or building used for educational purposes, (ix) malls and (x) any other building or land not covered by any of the above categories, (d) age of the building, or such other factors as may be specified by rules made under subsection (1B).

”” H 702 SUPREME COURT REPORTS [2022] 14 S. C. R. A any time during the said period of five years and shall accordingly amend the assessment book in relation to such building or land under section 167. (1D) (a) Notwithstanding anything contained in sub-section (1C),- (i) due to the spread of COVID-19 pandemic, the capital value B of any building or land fixed under sub-section (1A) shall not be revised in the year 2020-21 and the year 2021-22; (ii) for the year 2020-21 and the year 2021-22, the property tax bill for any building or land shall be the same as is for the year 2019-20; C (iii) the capital value of any building or land fixed under sub-section (1A) shall be revised in the year 2022-23, as if the clause (i) is not applicable for the year 2020-21 and the year 2021-22.

(b) Subject to the proviso to sub-section (1C), the next D revision shall be in the year 2025-26, and, thereafter, the revision of capital value of any building or land, shall be in accordance with the provisions of sub-section (1C). (2) The value of any machinery contained or situate in or upon any building or land shall not be included in the rateable value or E the capital value, as the case may be, of such building or land. 154A. Provisional fixation of capital value in certain cases.

Notwithstanding anything contained in section 154, the rateable value of any building or land or part thereof, for the official year 2009-2010, shall be the provisional capital value of such building F and lands in respect of the official years 2010-2011, 2011-2012 and 2012-2013, and such provisional capital value shall be deemed to be the capital value validly and legally fixed under the provisions of this Act, pending fixing the capital value thereof, and it shall be lawful for the Commissioner to treat it as such for the purposes of G assessment book kept under the provisions of this Act, and the bill for property taxes issued under sub-section (2) of section 140A shall be deemed to have been validly and legally issued under the provisions of this Act. Provided that, in respect of the buildings and lands which are liable to be assessed for the first time on or after the 1st April H MUNICIPAL CORP. OF GREATER MUMBAI v.

PROPERTY 703 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] 2010, the capital value of such buildings and lands shall, until the A final capital value is determined under this section, be provisionally equal to the amount of rateable value worked out on the basis of the prescribed letting rates by the corporation in respect of the official year 2009-2010. 155. Commissioner may call for information or returns from B owner or occupier or enter and inspect assessable premises.

(1) To enable him to determine the rateable value or the capital value, as the case may be, of any building or land and the person primarily liable for the payment of any property tax leviable in respect thereof the Commissioner may require the owner or C occupier of such building or land, or of any portion thereof, to furnish him, within such reasonable period as the Commissioner prescribes in this behalf, with information or with a written return signed by such owner or occupier- (a) as to the name and place of abode of the owner or occupier, D or of both owner and occupier of such building or land; and (b) as to the details in respect of any or all the items as enumerated in clauses (a) to (e) of sub-section (1A) of section 154 in relation to such building or land or any portion thereof.

(2) Every owner or occupier on whom any such requisition is E made shall be bound to comply with the same and to give true information or to make a true return to the best of his knowledge or belief. (3) The Commissioner may also for the purpose aforesaid make an inspection of any such building or land. F 156. Assessment book what to contain. The Commissioner shall keep a book, in such form and manner as he may, with the approval of the Standing Committee, determine, and such book shall be called “the assessment book” in which shall be entered every official year- G (a) a list of all buildings and lands in Brihan Mumbai distinguishing each either by name or number, as he shall think fit; (b) the rateable value or the capital value, as the case may be, H 704 SUPREME COURT REPORTS [2022] 14 S. C. R.

A of each such building and land determined in accordance with the foregoing provisions of this Act; (c) the name of the person primarily liable for the payment of the property taxes, if any, leviable on each such building or land; B (d) if any such building or land is not liable to be assessed to the general tax or is exempt from payment of property tax either in whole or in part, as the case may be, the reason of such non-liability or exemption, as the case may be; (e) when the rates of the property taxes to be levied for the C year have been duly fixed by the corporation and the period fixed by public notice, as hereinafter provided, for the receipt of complaints against the amount of rateable value or the capital value, as the case may be, entered in any portion of the assessment book, has expired, and in the case of any such entry which is complained against, when such complaint has D been disposed of in accordance with the provisions hereinafter contained, the amount at which each building or land entered in such portion of the assessment book is assessed to each of the property taxes, if any, leviable thereon; (f) if under section 169, a charge is made for water supplied to E any buildings or land by measurement or the water taxes or charges for water by measurement are compounded for, or if, under section 170, the sewerage taxes or sewerage charges for any building or land are fixed at a special rate, the particulars and amount of such charges composition or rates; F (g) such other details, if any, as the Commissioner from time to time thinks fit to direct.

” 10. The relevant portion of the Capital Value Rules, 2010 is as under:- G “No. AC/NTC/1310/2011-22 dated 20. 03. 2012. In exercise of the powers conferred by clause (e)s of sub-section (1A) and sub-section (1B) of section 154 of the Mumbai Municipal Corporation Act (Act No. Bom. III of 1888), and of all other powers enabling him in this behalf, the Commissioner, after having obtained the approval of the Standing Committee, as required under the said H MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 705 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] sub-section (1B), hereby makes the following rules to provide for A the factors and categories of users of buildings or lands and the weightage by multiplication to be assigned to various such factors and categories for the purpose of fixing the capital value of buildings and lands in Brihan Mumbai, namely:- 1.

Short title and commencement: - (i) These rules may be called B for the Factors and Categories of Users of Buildings or Lands (Assignment of Weightages by Multiplication) Fixation of Capital Value Rules, 2010. (ii) They shall come into force forthwith. C xxx xxx xxx 3. Capital of open land :- Save otherwise provided in these rules, where, within the precincts of a building there is vacant land other than the land appurtenant to the building, such land shall be treated as open land and the capital value thereof shall be fixed D accordingly, as provided for in rule 21. 4. User categories of open land and weightages by multiplication to be assigned thereto:- User categories of open land shall be as specified in column (2) of Part 1 of schedule ‘A’ and the weightages by multiplication to base value, to be respectively assigned thereto the purpose of fixing capital value, shall be as shown in column E (3) of the said Part I of schedule ‘A’. 5.

User categories of buildings or part thereof and weightages by multiplication to be assigned thereto:- User categories of buildings part thereof shall be as specified column (2) of each of Parts II, III and IV of schedule ‘A’ and the weightages by multiplication to F the relative base value, to be respectively assigned thereto for the purpose of fixing capital value, shall be as in column (3) of each of the said Parts II, III and IV of schedule ‘A’. 6. The nature and type of building and the weightage by multiplication to be assigned thereto:- The nature and type of a G building shall be as specified in column (2) of schedule ‘B’ and the weightages my multiplication to be assigned thereto for the purpose of fixing capital value, shall be shown in column (3) of the said schedule ‘B’. H 706 SUPREME COURT REPORTS [2022] 14 S. C. R. A 7.

The weightage by multiplication to be assigned to a building on account of the age thereof: - The weightage by multiplication to be assigned to a building on account of age factor, for the purpose of fixing capital value, shall be according to the age of the building as shown in column (2) of schedule ‘C’ and the weightage by multiplication be assigned thereto shall be as shown in column (3) B of the said schedule ‘C’. 8. The weightage by multiplication on account of floor factor to be assigned to RCC building with lift: - Weightage by multiplication on account of floor factor to be assigned to a RCC building with lift, for the purpose of fixing capital value, shall be according to C the number of floors as shown in column (2) of schedule ‘D’ and the weightage by multiplication to be assigned thereto shall be as shown in column (3) of the said schedule ‘D’. 9.

Area of hoarding or tower for the purpose of fixing capital value: -Area of hoarding or tower for the purpose of fixing capital D value thereof shall mean, - (a) in the case of a hoarding, the area of the square of the extremities of the poles on which the hoarding is erected plus the area of the hoarding; and (b) in the case of a tower, the area covered by the extremities of E the foundation of the tower. 10.

Built-up area of a flat or a building: (1) The total carpet area of a flat shall be reckoned by including the area of the following items, namely: (i) terrace in exclusive possession, (ii) mezzanine floor, (iii) loft (excluding loft in residential flat) or attic, (iv) dry F balcony and (v) niches; and (2) The total built-up area of a building shall be reckoned by including the areas of the following items, namely: - (i) total area of the flats in the building computed in accordance with sub rule (1), (ii) basement, (iii) stilt, (iv)porch, (v) podium, (vi) service floor, G (vii) refuge area, (viii) entrance lobby, (ix) lounge, (x) air-conditioning plant room, (xi) air handling room, (xii) the structure for an effluent treatment plant and (xiii) watchman cabin (3) The built-up area of any of the following items shall not be reckoned while computing the carpet area of a building or part thereof, namely: - H MUNICIPAL CORP. OF GREATER MUMBAI v.

PROPERTY 707 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] (i) lift room above topmost storey, (ii) lift well, (iii) stair-case A and passage thereto including staircase room, (iv) chimney and elevated tank, (v) meter room, (vi) pump room, (vii) underground and overhead water tank, (viii) septic tank, (ix)flower-bed and (x) loft in residential flat (4) Where only the carpet area of a flat or building is available on B the record of the Corporation and the total built-up area thereof, computed in the manner as aforesaid in sub-rule (1), or, as the case may be, sub-rule (2), is not available on such record, then the total built-up area of the flat or, as the case may be, of a building shall be arrived at in the following manner, namely :- C Built-up area = 1. 2 x carpet area as available on the record of the Corporation + the built-uparea of the items specified in sub-rule(1),or, as the case may be, sub-rule (2), unless already reckoned in such carpet area. D 11.

Fixation of capital value of a flat or building or part thereof. - (1) While fixing the capital value of a flat, the capital value of any one or more of the relevant items specified in sub-rule (1) of rule 10, as fixed in accordance with the provisions of rules 14,15, or sub-rule(1) of rule 16, as the case may be, shall be added to the E capital value of the flat. (2) While fixing the capital value of a building or part thereof, the capital value of any of the one or more of the relevant items specified in sub-rule (2) of rule 10 as fixed in accordance with the provisions of sub-rule (2) or, as the case may be, (3) of rule 16, shall be added to the capital value of the building or part thereof. F 12.

Fixation of capital value of a building where there are tenants: - The capital value of a building or part thereof which is occupied by a tenant shall be fixed at 75% of the capital value of such building or part thereof; fixed in accordance with the provisions of sub-rule (1), or, as the case may be, sub-rule (2) of rule 11. G Explanation. - For the removal of doubts, it is hereby declared that the provisions of this rule shall not apply to a building or part thereof if, - (1) it is occupied by a licensee to whom it is given on leave and licence; H 708 SUPREME COURT REPORTS [2022] 14 S. C. R. A s(2) it is occupied by an office bearer or officer or an employee of the landlord. 13.

Fixation of capital value of religious buildings :- The capital value of a religious building which is a temple, math, gurudwara, mosque, takth, church, durgah, synagogue, or agiary or the like, B and is used or intended to be used for the purpose of religious worship or offering prayers or performance of any religious rites or rituals by a person of, or belonging to, the relevant religion, creed, or sect, shall be fixed at the rate of base value applicable to a residential building as indicated in the Ready Reckoner; and by applying the relevant weightages by multiplication provided for in C these rules. 14.

Fixation of capital value of open terrace: - If an open terrace in exclusive possession is attached to a flat, the capital value of such terrace of a non-residential flat shall be fixed at 40% of the relative rate of base value of such flat, and of residential flat at D 10% of the relative rate of base value of such flat; and by applying the relevant weightages by multiplication provided for in these rules. 15.

Fixation of capital value of mezzanine floor, loft and attic floor: - E (a) the capital value of mezzanine floor shall be fixed at 70% of the relative rate of base value of the flat beneath the mezzanine floor; and by applying the relevant weightages by multiplication provided for in these rules; (b) the capital value of loft or attic floor shall be fixed at F 50% of the relative rate of base value of the flat beneath the loft, or as the case may be, the attic; and by applying the relevant weightages by multiplication provided for in these rules; Provided that, where the rate of base value applicable to the mezzanine floor, loft or attic floor having regard to its user is G higher or, as the case may be, lower than the rate of base value applicable to the flat beneath such mezzanine floor, loft or attic floor, the capital value of such mezzanine floor, loft or attic floor shall be fixed at 70% or 50%, as the case may be, of such higher or lower rate of base value; and by applying the relevant weightages H by multiplication provided for in these rules.

MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 709 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] 16. Fixation of capital value of certain other items which are part A of a flat or a building or part thereto,- (1) The capital value of dry balcony and niches shall be fixed at 25% of the relative rate of base value of the flat, if any one of these items are part of the flat; and by applying the relevant weightages by multiplication provided for in these rules. B (2) The capital value of any one or more of the following items, namely:- (i)porch, (ii) air-conditioning plant room, (iii) air-handling room, (iv) structure for an effluent plant, (v) watchman cabin and (vi) refuge area, shall be fixed at 25% of the relative rate of base value of the building or part thereof, if any one or more of these C items are part of the building or part thereof; and by applying the relevant weightages by multiplication provided for in these rules.

(3) The capital value of any one or more of the following items, namely:- (i) service floor, (ii) entrance lobby and (iii) lounge, shall be fixed at the relative rate of base value of the building or part D thereof, if any of these items are part of the building or part thereof; and by applying the relevant weightages by multiplication provided for in these rules. 17. Fixation of capital value in respect of demolished building :- (1) Where a building is fully demolished, or has fully collapsed, E the land beneath it shall be deemed to be open land and the capital value thereof shall be fixed accordingly, as provided for in rule 21.

Explanation –For the purpose of this rule, it is hereby declared that where a building is, or is being, demolished, or has collapsed, resulting in the land on which it stood or stands being rendered F open land, or only walls or the like are standing but there is no structure as such which can be occupied, and on such demolition, or collapse, debris or any remains of the demolished or collapsed building are not yet removed, the land beneath such building shall be deemed to be open land. G (2) Where only part of a building is demolished or has partly collapsed and the remaining part is yet occupied by occupiers, land beneath the portion of the building which is demolished or has collapsed shall be deemed to be open land and the portion of the structure which is occupied shall be treated as a building, for the purpose of fixing the capital value thereof. H 710 SUPREME COURT REPORTS [2022] 14 S. C. R.

A (3) Notwithstanding anything contained in sub rules (1) and (2), where a cessed building is, or is being, demolished, or has collapsed, the land beneath the building or portion of the building which is demolished or collapsed shall be deemed to be open land and the capital value thereof shall be fixed as open land and assigning thereto a weightage by multiplication of 0. 30 of the base value of B open land. 18. The capital value of storage tank . -The capital value of storage tank shall be fixed in the following manner, namely : – (1) storage tank above the ground level :- C (a) land - at the rate of open land in the Ready Reckoner and weightage by multiplication to be assigned thereto shall be 1. 25, (b) storage tank - capacity of storage tank in litres multiplied by the rate of Rs. 40 per litre, with weightage by multiplication to D be assigned thereto on account of age factor as in schedule ‘C’, (c) total capital value of a storage tank = total of items (a) and (b).

(2) storage tank below the ground level :- E (a) land - at the rate of open land in the Ready Reckoner and weightage by multiplication to be assigned thereto shall be 1. 25, (b) storage tank - capacity of storage tank in litres multiplied by the rate of Rs. 50 per litre, with weightage by multiplication to F be assigned thereto on account of age factor as in schedule ‘C’, (c) total capital value of a storage tank = total of items (a) and (b). 19. Capital value of amenities of luxurious RCC building not to be separately fixed again. - Where the capital value of a luxurious G RCC building is fixed under these rules, then no capital value of the amenities specified in the definition of the expression ‘luxurious RCC building’ shall be separately fixed for the purpose of levy of property tax. 20. Valuation of open land capable of utilising more than 1 floor H space index (F. S. I) or transfer of development right (T. D. R. ) -As MUNICIPAL CORP. OF GREATER MUMBAI v.

PROPERTY 711 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] the Ready Reckoner provides for the rate of base value of open A land with 1 floor space index, open land which is capable of utilizing more than 1 floor space index or any transfer of development right shall be valued at an increased rate in proportion to the higher floor space index or transfer of development right proposed to be utilized and approved under the building plan submitted to the B Corporation for approval. 21. Capital value of open land or building or part thereof. -Capital value of open land or building shall be fixed under the provisions of the Act and these rules in the following manner, namely: (1) Capital value (CV) of open land C Rate of base value (BV) of a open land according to Ready Reckoner X weightage by multiplication as per user category (UC) (Part I of schedule ‘A’) X permissible or approved floor space index (FSI) X area of land (AL).

D CV = BV x UC x FSI x AL (2) Capital value (CV) of a building --– Relative rate of base value (BV) of a building according to Ready Reckoner X weightage by multiplication as per user category (UC) (Parts II, III, or as the case may be, IV of E schedule ‘A’) X weightage by multiplication as per the nature and type of building (NTB) (schedule ‘B’) X weightage by multiplication on account of age of building (AF) (schedule ‘C’) X weightage by multiplication on account of floor factor (FF) for RCC building with lift (schedule ‘D’) X carpet area (CA). F CV = BV x UC x NTB x AF x FF x CA Examples: - Some examples based and worked out on the formulae as aforesaid are shown in the Appendix. 22. Non-application of Guidelines of Stamp Duty Valuation.

- G Notwithstanding anything contained in the “Important Guidelines of Stamp Duty Valuation” as specified in the Ready Reckoner, the provisions made in these rules shall have primacy over those guidelines and none of those guidelines shall apply for fixing capital value under the Act and these rules. ” H 712 SUPREME COURT REPORTS [2022] 14 S. C. R. A 11. The relevant portion of Capital Value Rules of 2015 is as under:- “No. AC/NTC/1147/2014-15. In exercise of the powers conferred by clause (e) of sub-section (1A), sub-section (1B) and sub-section (1C) of section 154 of the Mumbai Municipal Corporation Act (Act No. Bom.

III of 1888), and of all other powers enabling him B in this behalf, the Commissioner, after having obtained the approval of the Standing Committee, as required under the said sub-section (1B), hereby makes the following rules to provide for the factors and categories of users of lands and buildings and the weightage by multiplication to be assigned to various such factors and categories for the purpose of fixing the capital value of lands and C buildings in Brihan Mumbai, namely: - 1. Short title and commencement: -(1) These rules may be called the Factors and Categories of Users of Buildings or Lands (Assignment of Weightages by Multiplication) Fixation of Capital Value Rules, 2015. D st (2) They shall come into force from 1 April 2015. 2.

Definitions – In these rules, unless the context otherwise requires:-xxx xxx xxx E (c) “hoarding” includes boards used to display advertisements, erected on poles, on the ground or on a building; xxx xxx xxx (g) “open land” includes land not built upon or land being built F upon, but does not include land appurtenant to a building; (h) “Ready Reckoner” means the Stamp Duty Ready Reckoner, for the time being in force, referred to in sub-section (1A) of section 154 of the Act; xxx xxx xxx G 3. Capital value of open land :- Save otherwise provided in these rules, where, within the precincts of a building there is vacant land other than the land appurtenant to the building, such land shall be treated as open land and the capital value thereof shall be fixed accordingly, as provided for in rule 21. H MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 713 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] 4.

User categories of open land and weightages by multiplication A to be assigned thereto:- User categories of open land shall be as specified in column (2) of Part 1 of schedule ‘A’ and the weightages by multiplication to base value, to be respectively assigned thereto the purpose of fixing capital value, shall be as shown in column (3) of the said Part I of schedule ‘A’. B 5. User categories of buildings or part thereof and weightages by multiplication to be assigned thereto:- User categories of buildings or part thereof shall be as specified column (2) of each of Parts II, III and IV of schedule ‘A’ and the weightages by multiplication to the relative base value, to be respectively assigned thereto for the purpose of fixing capital value, shall be as in column (3) of C each of the said Parts II, III and Iv of schedule ‘A’. 6.

The nature and type of building and the weightage by multiplication to be assigned thereto:- The nature and type of a building and type of building shall be as specified in column (2) of schedule “B” and the weightages assigned thereto for the purpose D of fixing capital value, shall be shown in column (3) of the said schedule ‘B’. 7. The weightage by multiplication to be assigned to a building on account of the age thereof: - The weightage by multiplication to be assigned to a building on account of age factor, for the purpose of fixing capital value, shall be according to the age of the building E as shown in column (2) of schedule ‘C’ and the weightage by multiplication be assigned thereto shall be as shown in column (3) of the said schedule “C”. 8.

The weightage by multiplication on account of floor factor to be assigned to RCC building with lift: - Weightage by multiplication F on account of floor factor to be assigned to a RCC building with lift, for the purpose of fixing capital value, shall be according to the number of floors as shown in column (2) of schedule ‘D’ and the weightage by multiplication to be assigned thereto shall be as shown in column (3) of the said schedule ‘D’. G 9. Area of hoarding or tower for the purpose of fixing capital value: -Area of hoarding or tower for the purpose of fixing capital value thereof shall mean, - (a) in the case of a hoarding, the area of the square of the extremities of the poles on which the hoarding is erected plus the area of the hoarding; and H 714 SUPREME COURT REPORTS [2022] 14 S. C. R. A (b) in the case of a tower, the area covered by the extremities of the foundation of the tower. 10.

Carpet Area area of a flat or a building: (1) The total carpet area of a flat shall be reckoned by including the area of the following items, namely: (i) terrace in exclusive possession, (ii) B mezzanine floor, (iii) loft (excluding loft in residential flat) or attic, (iv) dry balcony and (v) niches; and (2) The total carpet area area of a building shall be reckoned by including the areas of the following items, namely:- (i) total area of the flats in the building computed in accordance with sub rule C (1), (ii) basement, (iii) stilt, (iv)porch, (v) podium, (vi) service floor, (vii) refuge area, (viii) entrance lobby, (ix) lounge, (x) air-conditioning plant room, (xi) air handling room, (xii) the structure for an effluent treatment plant room and (xiii) watchman cabin (xix)sewerage treatment plant room (xv) water treatment plant room D (3) The carpet area of any of the following items shall not be reckoned while computing the carpet area of a building or part thereof, namely: (i) lift room above topmost storey, (ii) lift well, (iii) stair-case and passage thereto including staircase room, (iv) chimney and E elevated tank, (v) meter room, (vi) pump room, (vii) underground and overhead water tank, (viii) septic tank, (ix)flower-bed and (x) loft in residential flat, (xi) entrance lobby of residential building (4) “deleted” F 11.

Fixation of capital value of a flat or building or part thereof. - (1) While fixing the capital value of a flat, the capital value of any one or more of the relevant items specified in sub-rule (1) of rule 10, as fixed in accordance with the provisions of rules 14,15, or sub-rule(1) of rule 16, as the case may be, shall be added to the capital value of the flat. G (2) While fixing the capital value of a building or part thereof, the capital value of any of the one or more of the relevant items specified in sub-rule (2) of rule 10 as fixed in accordance with the provisions of sub-rule (2) or, as the case may be, (3) of rule 16, shall be added to the capital value of the building or part thereof. H MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 715 OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] 12. “deleted” A 13. Fixation of capital value of religious buildings :- The capital value of a religious building which is a temple, math, gurudwara, mosque, takth, church, d

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