Mumbai Property Tax Dispute: Supreme Court Directs Final Assessment

The Supreme Court of India, in the case of M/s. Municipal Corporation of Greater Mumbai & Ors. vs. Crescent Builders, addressed the contentious issue of property tax assessment by the Mumbai Municipal Corporation. The ruling, delivered by Justices Kurian Joseph and Rohinton Fali Nariman, vacated a prior High Court finding on the method of assessment while directing the Assessing Authority to complete the property tax evaluation in accordance with the law.

Background of the Case

The dispute arose over the assessment of property tax on land owned by Crescent Builders in Mumbai. The Municipal Corporation of Greater Mumbai (MCGM) sought to levy property tax, leading to legal proceedings over the method and validity of the tax assessment. The Bombay High Court had earlier directed Crescent Builders to deposit 25% of the due amount from April 1, 2008, with an 18% interest rate as an interim measure.

Key Legal Issues

• Was the Municipal Corporation’s method of property tax assessment legally valid?
• Did the High Court err in pre-determining the method of assessment before the completion of tax evaluation?
• Should an interim deposit be required before finalizing the tax liability?

Arguments of the Parties

Petitioner’s Arguments (Municipal Corporation of Greater Mumbai)

The MCGM argued that the High Court had prematurely ruled on the method of assessment, limiting the Assessing Authority’s discretion. The Corporation maintained that the property tax should be determined per applicable municipal laws and precedents.

Respondent’s Arguments (Crescent Builders)

Crescent Builders contended that the assessment should align with prior legal rulings and a 1997 municipal circular governing property tax evaluation. They supported the High Court’s directive that property tax must be imposed only per the settled legal position.

Supreme Court’s Observations

Justice Kurian Joseph, delivering the judgment, noted:

“The Assessing Authority has to complete the assessment in accordance with law. Therefore, the factual and legal positions are at large before the Assessing Authority and it is for both the parties to take all available contentions before the Assessing Authority.”

The Court vacated the High Court’s finding on the method of assessment but upheld the interim arrangement requiring Crescent Builders to deposit 25% of the tax liability with 18% interest.

Final Verdict

The Supreme Court directed the Assessing Authority to complete the tax assessment independently, without being bound by the High Court’s findings. It preserved the interim financial arrangement and left all contentions open for argument before the Assessing Authority.

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Download Judgment: Ms. Municipal Corpo vs Crescent Builders Supreme Court of India Judgment Dated 01-03-2016-1741853850260.pdf