Vijayawada Municipal Corporation (VMC) is gearing up to collect property tax from Railways, fulfilling its long-cherished dream. The corporation has been making attempts to collect the tax from the Railways ever since T. Venkateswara Rao became Mayor of the city. The first demand was raised in 1984 and the accumulated demand touched Rs.10 crore in 2006.

The Railways, citing a Supreme Court judgment, has been claiming exemption from the property tax.

The Supreme Court upheld the railway contention that it was not required to pay property tax. Article 285(1) of the Constitution makes it clear that property of the Union shall be exempt from all taxes imposed by a State or by any authority within a State.

The Apex Court, however, in a recent judgment, while hearing a petition filed by Rajkot Municipal Corporation, has observed that the Railways has to pay 33 per cent of the property tax demand if it was not dependent on local body for any services; and 75 per cent of the demand if it depends on the local body.

Based on the apex court verdict, the VMC authorities are gearing up to collect the tax from the Railways here. They, however, are yet to arrive at the exact demand. A joint meeting of the Corporation and railway officials is required to settle the matter across the table.

The authorities from both the organisations will have to go for a joint inspection before finalising the demand, sources say.

The Corporation, however, is yet to decide whether it has to press the Railways to clear pending dues or not. It is awaiting pronouncement of a policy from the State government as the issue has State-wide repercussions, officials say.

The VMC officials stopped short of seizing the properties of the Roads & Buildings in December 2007 following the latter not paying the tax dues. However, they did not touch the Railways.

The VMC, for many years now, has stopped generating the demand for the Railways.

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