Case Note & Summary
The petitioners, Chennai Network Infrastructure Ltd. and another, carry on business of providing infrastructure services including installation and maintenance of mobile towers and passive infrastructure. They installed several cellular sites within the limits of the Kalyan Dombivli Municipal Corporation (Respondent No.1). The Corporation raised demand notices for property tax for assessment years 2015-16 and 2016-17 for sums of Rs.3,75,33,415 and Rs.1,55,35,314 respectively, followed by final demand notices under Section 41 of the Maharashtra Municipal Corporations Act threatening to attach movable and immovable properties of Petitioner No.1. The petitioners challenged the demand notices under Article 227 of the Constitution. The main challenge regarding exigibility of mobile towers to property tax was already settled by the Supreme Court in Ahmedabad Municipal Corporation vs. G.T.L. Infrastructure Ltd., holding them exigible. The petitioners did not dispute that but challenged individual items of demand. Out of eleven items, the dispute pertained to five: conservancy tax, water supply benefit tax, conservancy benefit tax, shasti on illegal constructions, and penalty. The petitioners pressed submissions only on conservancy tax, shasti, and penalty, stating they would pursue the other two before the appellate forum under Section 406 of the Act. The court examined each item. On conservancy tax, the court noted that under Section 127(1)(b) of the Act, conservancy tax is a tax for services rendered. Since cellular sites are not provided any conservancy service by the Corporation, the levy of conservancy tax was invalid. On penalty, the court observed that under Section 148(3) of the Act, penalty for non-payment of property tax can only be imposed after giving the defaulter an opportunity of being heard. The demand notice did not provide any such opportunity, hence the penalty was set aside. On shasti for illegal constructions, the court held that under Section 54 of the Act, such fine can only be levied after a determination that the construction is unauthorized. No such determination was made, so the shasti demand was quashed. The court directed the Corporation to issue fresh bills excluding these three items and allowed the petitioners to pay the balance in installments. The petition was disposed of accordingly.
Headnote
A) Municipal Law - Property Tax - Conservancy Tax - Section 127(1)(b) of Maharashtra Municipal Corporations Act - Conservancy tax is a tax for services rendered; where no conservancy service is provided to a property, such tax cannot be levied - Held that cellular sites are not provided conservancy service by the corporation, hence conservancy tax demand is quashed (Paras 6-8). B) Municipal Law - Penalty - Section 148(3) of Maharashtra Municipal Corporations Act - Penalty for non-payment of property tax cannot be imposed without a prior notice and opportunity of hearing - Held that the demand notice did not provide any opportunity, hence penalty is set aside (Paras 9-10). C) Municipal Law - Shasti on Illegal Constructions - Section 54 of Maharashtra Municipal Corporations Act - Shasti (fine) for unauthorized construction can only be levied after determination of such construction under Section 54 - Held that no such determination was made, hence shasti demand is quashed (Paras 11-12).
Issue of Consideration
Whether conservancy tax, penalty, and shasti on illegal constructions levied by the municipal corporation on cellular sites are valid under the Maharashtra Municipal Corporations Act.
Final Decision
The court quashed the demands for conservancy tax, penalty, and shasti on illegal constructions. Directed the Corporation to issue fresh bills excluding these items. Petitioners to pay the balance amount in installments as agreed. Petition disposed of.
Law Points
- Conservancy tax cannot be levied on cellular sites if no conservancy service is provided
- Penalty under Section 148(3) of Maharashtra Municipal Corporations Act cannot be imposed without prior notice and opportunity of hearing
- Shasti on illegal constructions cannot be levied without determination of unauthorized construction under Section 54 of the Act
