Sakshi Chhabra
The Orissa High Court gave a significant judgement stating that the Bhubaneshwar Municipal Corporation (BMC) cannot make any attempt in hiking up the tax as it is not sustainable in law.
The court stated that enhancing the tax cannot be done until the state legislature passes a law specifically authorizing the municipal corporation to levy and collect taxes.
The increase must be reasonable, reliable, and affordable and in agreement with the general public.
The BMC raised the tax by following the due procedure envisaged under the transitional provisions contained in the Orissa Municipal Corporation (OMC) Act, 2003.
The division Bench of Chief Justice S Muralidhar and Justice BP Routray ruled that, “The transitional provision, Section 694(3) of the OMC Act cannot be invoked by BMC to justify either the raising of the rate of holding tax or to continue to levy and collect it for a period subsequent to the repeal of the OM Act.“
It was further observed, “The question of BMC resorting to the procedure under the OM Act, after its repeal, is to no avail since under the OMC Act, there is no concept of holding tax at all. So, the question of legitimizing such demand by following the procedure under the OM Act, after its repeal by the OMC Act, does not arise.”
“The legislative intent, engrafted in the OMC Act, was only to preserve the right of BMC to collect tax which were leviable immediately before commencement of the OMC Act and which were being imposed. It by no means permits BMC to raise the rate of a tax that was leviable for a period prior to the coming into force of the Act,” the bench further ruled.
This is an upsurge attempt made by the BMC as it is very difficult for the young professionals and lakhs of tenants to afford this major hike in taxes. Though this decision has been strongly criticized by the general public.
The Orissa High Court has further concluded that holding tax hike by BMC is unsustainable in law as it seeks to collect holding tax for a period after the commencement of the OMC act and at a higher rate than what is prevalent in the OMC Act in force.