A recent verdict of the Supreme Court upholding the power of State governments to impose property/building tax on mobile telecommunication towers has brought great relief to various local bodies which are facing serious funds crunch.
The verdict will come in handy for certain local bodies and the State government in their legal fight against mobile tower operators who had challenged the imposition of property/building taxes on them, according to legal experts.
The mobile tower operators contended in their writ petition filed before the High Court that mobile telecommunication towers cannot be taxed as it was beyond the remit of the taxation power of the State government
The apex court, while throwing out a challenge by mobile tower operators against the Gujarat government’s demand for property/building tax on mobile towers, observed that State governments could impose property tax on mobile towers as the levy was not on the use of the plant and machinery but on the land and building.
Though in common parlance and in everyday life a mobile tower is certainly not a building, there is no reason why it should not be considered as a building for levy of the tax under Entry 49 List II of the Seventh Schedule of the Constitution, the apex court observed.
The operators further argued that there had been no taxation on mobile telecommunications under the head of the property either under the Municipality Act 1994 or under the Kerala Panchayath Raj Act, 1994. Although the government had issued an order in 2009 imposing taxes on the towers, it had subsequently been withdrawn.
However, in 2011, the government had asked the local bodies to collect the tax as per the provisions of the Kerala Municipality Act and Kerala Panchayat Raj Act. It had been specified that the rate of tax should be fixed subject to minimum or maximum rate based on the plinth area per square metre with effect from April1, 2011.
The claims of local bodies for levying property tax on telephone towers are based on the definition ‘building,’ which includes any structure for whatever purpose and of whatever material.
In fact, the government in 2014 had rejected the plea of the tower operators to exempt their towers from property tax. The property tax or building tax are calculated on the basis of the plinth area of the building and other factors as provided under the respective Act and Rules.
