Delhi HC strikes down NDMC’s property tax on vacant land

The Delhi High Court has struck down the New Delhi Municipal Council’s practice of charging property tax on vacant land and also invalidated the method of arriving at the rateable value, for the purpose of calculating property tax

The Delhi High Court has struck down the New Delhi Municipal Council (NDMC) bye-laws of 2009, under which it was allegedly charging property tax on vacant land. A bench of justices S Muralidhar and Pratibha M Singh also invalidated the action taken by the NDMC under the new bye-laws, which had brought about a change in the method of arriving at the rateable value, for the purposes of property tax.

In 28 writ petitions filed a few years ago and later clubbed together, a group of individuals, corporates and residents’ welfare associations, had alleged that under the 2009 NDMC bye-laws, the civic body was charging property tax on vacant, unconstructed land, at a rate equal to the constructed area.

See also: NDMC relaunches website, with e-mutation facility for property tax records

This was despite the fact that in a large portion of the NDMC area, no construction is permitted on vacant land, due to the Lutyen’s Bungalow Zone restrictions or Archaeological Survey of India regulations, they had contended.

Allowing the petitions challenging the constitutional validity these bye-laws, the bench said, “The court strikes down the new impugned bye-laws as being ultra vires the NDMC Act, as they are in excess of the scope and ambit of the powers vested in the NDMC under Section 388(1)A(9) of NDMC Act. Consequently, the court invalidates all actions taken by the NDMC under the new bye-laws, in terms of levy, assessment, collection and enforcement of the demand of property tax. All property demands made under the new bye-laws, are hereby invalidated and declared unenforceable,” it added.

It further said that in terms of the interim order passed by the court, the excess of the tax deposited has to be refunded but the determination of such excess, will have to await the making of the assessments, in accordance with the extant provisions of the NDMC Act.

“Such refund of excess tax deposited, would be in accordance with the law and together with the interest payable thereon, in terms of the NDMC Act. It will be open to the individual tax payers to seek appropriate remedies, with regard to refund, together with interest at the appropriate stage, after completion of the assessment, in terms of the extant provisions of the NDMC Act,” the bench said in its 40-page order.

 

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