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Link between water, sewerage taxes and property tax
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Chennai Metropolitan Water Supply and Sewerage Act says the water tax should not be more than 35 per cent of the property tax, informs C.H. Gopinatha Rao
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— Photo: T. Vijaya Kumar
A package: Prior to the 1978 Act the water supply and sewerage taxes were included in the property tax.
As per the Chennai Metropolitan Water Supply and Sewerage Act, the Board is entitled to levy water and sewerage tax. The Act states that water tax should not be more than 35 per cent and the sewerage tax not more than 15 per cent of the property tax. For this purpose, the Board does not arrive the annual value of the property by itself and has been adopting the annual value arrived at by the Chennai Corporation for making demand and collection of a sum equivalent to 30% of
the property tax as water and sewerage tax. .
Prior to the above Act, which came into force in 1978, the water supply and sewerage taxes were included in the property tax itself. The property tax in Chennai had not been revised for long. The question in many minds is that can the Board revise the water and sewerage tax if the property tax is not revised?
This was the point of contention in the case of M.O.P. Iyengar Charities Vs. Special Thasildar (Revenue Recovery) Chennai and others (MLJ 2007 (4) 119 ).
The petitioner is the owner of a property in Chennai and has been regularly paying property water and sewerage taxes due to the property. He was paying a property tax of Rs. 17,230 every half year. This was later revised and he is currently paying Rs. 25,844 every half year.
In August 2006 he received a letter from CMWSSB directing him to pay Rs. 1,47,233 towards water and sewerage tax and surcharges from 2/1999-2000 to 1/2006-07. The petitioner submitted a letter to the board that he has not received any communication from the Chennai Corporation about the enhancement of property tax increasing the annual value, and hence corresponding increase made by the board is untenable and exorbitant. The board sent the distraint warrant notice in 2007 and directed him to pay the sun of Rs. 1,67,495 towards tax and surcharge within three days. This was challenged in the court.
The respondent board contended that following the enhancement of property tax the communication was sent calling upon the petitioner to pay the tax amount at the enhanced rate. However the Board in their letter dated August 14, 2006, arrived at the annual value of Rs. 4,10,974 without any basis.
The respondent board has not given any opportunity or notice prior to the impugned communication. The petitioner’s representation in 2006 questioning the demand was not disposed of by the board. In view of the said facts, particularly the grievance of the petitioner that the respondent has not afforded any opportunity and the fact that the property tax stated have not increased the Court, quashed the impugned orders. The Ratio Decidedness was “when the assessment of water as sewerage tax is based upon the property tax, in the absence of enhancement of property tax by the Corporation enhancement of water and sewerage tax, that too without giving an opportunity or prior notice to the assessee is not proper.”
The author is former National President, Institution of Valuers
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