Upholding the rule that allows categorisation of non-residential buildings based on facilities like ‘centrally air-conditioned’ industrial units and technology parks, the High Court on Wednesday rejected a plea by promoters of Manyata Tech Park against the payment of additional Rs. 83.45 crore as differential tax.
Justice L. Narayana Swamy delivered the verdict while dismissing the petition by M/s Manyata Promoters Pvt., Ltd, which questioned the notices by Bruhat Bangalore Mahanagara Palike (BBMP) in 2015 demanding differential tax. The petitioner had paid property tax at Rs. 8 per square feet through the Self Assessment Scheme from 2008-09 to 2015-16, declaring that the tech park came under the category of non-residential buildings without central air-conditioning.
In 2014 the Principal Accountant General pointed out that the BBMP should have collected tax at Rs. 10 per sq ft as the tech park comes under the category of ‘centrally air-conditioned non-residential buildings’.
In 2014, the BBMP issued three separate notices asking the petitioner to pay the revised tax. As the petitioner did not respond, the BBMP issued demand notices seeking Rs. 83,45,16,845. The petitioner had contended that that BBMP had no power to make a fiscal demand or levy tax classifying the buildings as centrally air-conditioned besides questioning the legality of Rule 4 of the BBMP Property Tax Rules, 2009, which authorises the commissioner to categorise buildings based on the nature of commercial use and facilities offered therein. Justice Swamy held that ‘classification made by virtue of notifications with respect to industrial units and non-residential buildings with central air-condition is rationality based classification strictly in compliance of Article 14 of the Constitution and as no stretch of imagination can it be rendered as unconstitutional or arbitrary’.
Observing that ‘a fraud or misrepresentation or illegality can be unearthed at any stage’, the court noted that it was the petitioner’s fault in paying tax applied to a lower category though the petitioner knew that the buildings were centrally air-conditioned. The court also pointed out that the petitioner had not objected when the BBMP notified the draft rules prior to finalising it.
The court did not accept the petitioner’s claim that the BBMP, having accepted the tax returns without any objection, has no right under the Karnataka Municipal Corporation Act to scrutinise tax returns after the lapse of three years.
