The Madhya Pradesh High Court has restrained the Bhopal Municipal Corporation through an interim order "from taking any kind of coercive action” against the petitioner of an educational institution, whicy had challenged the levy of various taxes by the corporation based on "commercial rates of property tax".
Petitioner Siddharth Gupta said in the last week of March, a fresh demand notice was issued to the Corporate Institute of Science and Technology, Bhopal, to deposit Rs 25 lakh as taxes.
Gupta said a division bench of the Jabalpur HC presided by Chief Justice AM Khanvilkar and Justice Rohit Arya passed the interim order on Tuesday.
According to the petitioner, various taxes like property tax and other residuary taxes like Conservancy Tax, Education Cess, City Development Cess and Samekti Kar are also levied on the fixed percentile of property tax payable by every building owner every year.
The demand for various taxes was raised against educational institution of the city in 2009, when the High Court in 2012 held that 'property tax' cannot be realised from educational institution in view of their exemption under Section 135 of the Municipal Corporation Act 1956.
Gupta argued that the BMC has been demanding taxes from educational institutions on the basis of "commercial rates of property tax", when they are exempted from payment of property tax.
He said the BMC, however, has decided to levy other types of taxes such as education cess, city development cess, samekit kar, water supply charges on the various institutions through its resolutions.
Gupta said the HC has issued notices to the BMC and urban administration department to file their replies by April 28.
"The calculation of the amount of tax was done on the varying percentages of property tax applicable for commercial buildings and fresh demand notices were issued in the last week of March.
"The educational institutions challenged the said levy of other taxes on them on various grounds before the high court, principal being that the taxes cannot be quantified / calculated with reference to property tax leviable on 'commercial premises', the rate has to be separately fixed by the corporation.
"Demand notices were challenged further on the ground that necessary prior approval of State Government was not taken before levy of various taxes by the corporation," he said.