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Connaught Place traders may move Delhi court, NDMC says tax raids will continue
The civic body hinted that the drive may be extended to other markets in New Delhi area, saying that they have identified 1500 tax defaulters in the area
A day after the New Delhi Municipal Council sealed seven properties in Connaught Place for non-payment of property tax, the civic body on Thursday said that the drive will continue in the coming days even as the traders association said that they were planning to move court in the matter.
The civic body hinted that the drive may be extended to other markets in New Delhi area, saying that they have identified 1500 tax defaulters in the area who owe ₹3,500 crore in tax dues. The traders have called the action arbitrary, alleging that NDMC had been using different ways of calculating tax leading to discrepancies.
“Around 1,500 tax defaulters across markets in New Delhi have total pending dues of Rs3,500 crore. Just the top 100 defaulters owe the civic body ₹1,500 crore. These long-term defaulters have been provided multiple opportunities to clear their dues for over a year but they have failed to pay. Some of these pending cases go back to 2009,” an official of the civic body said asking not to be named.
According to NDMC data, there are around 16,500 property tax payers in the New Delhi area, including the residential properties.
On Wednesday, teams from the New Delhi Municipal Council (NDMC) had sealed at least seven properties in Connaught Place over non-payment of property tax dues. Teams from the tax department covered shops located in D, A and L blocks. Among the shops sealed on Thursday were an outlet of a popular ice-cream brand and Alka hotel and office of an architect and other premises.
A notice was put up in D block listing attachment/sealing of 22 more units but the action was not followed up on Thursday. The teams visited many other outlets which were re-opened after the shopkeepers cleared dues, giving an undertaking that they will clear the arrears too.
The traders said that they were being harassed with demands of exorbitant tax bills of ₹10 to ₹25 crores.
On Thursday, the New Delhi Traders Association (NDTA) held a meeting and demanded that there should be a uniform way of assessing the taxable value of the property across the city and that there must be no arbitrariness in the assessment process. The tax department and police teams did not return on Thursday. However, several visitors were seen outside the doors of the sealed units.
Hotel Alka in M-block was sealed around 3pm on Wednesday, said Ajay Jha who was guarding the closed property. “NDMC officials asked the guests to pack up and leave the hotel rooms. We had to hurriedly shift them all to the second outlet. We were issued no prior notice about the sealing,” Jha added. The hotel management did not responded to requests for comments.
Manish Kalra, a businessman who was seen waiting the ice cream shop, said, “We were surprised to find it sealed. We regularly visited the outlet but today, we found it shut.”
Atul Bhargava, who heads NDTA, said the members decided during the meeting that they have to take legal recourse. “All the affected property owners have decided to seek legal opinion and NDTA will follow it up in courts based on the legal opinion. Our stand still remains that prior notices should have been served to the shops before initiating any action, and there should be a uniform tax assessment system,” Bhargava said.
A senior NDMC official said that around 14 properties were expected to be sealed on Wednesday but seven owners made part payments and gave an undertaking about paying the rest of the arrears. A NDMC official aware of the development said, “The process of attachment is undertaken only after the expiry of notice period for payment of outstanding dues. In cases where the person remits his dues within the given time limit then the recovery action is concluded without any attachment.”
NDTA’s Bhargava said that the tax department teams may come back on Friday. “We are saying that there should be one tax system --- the unit area method --- across the city. Under the old system, the taxable value is calculated depending on the rental amount which varies for different properties. Some units have been issued tax notices of ₹20 crores. This is not the way to recover tax. We need to find a common ground. NDTA will oppose any sealing action in the market,” he added.
The unit area method of calculating property tax was introduced in MCD areas in April 2004. MCD’s formula used for calculation of tax depends on unit area value (per sq metre) depending on the category of area, age of the property, nature of the structure and occupancy.
An NDMC official said the civic body tried to implement the unit area method in 2009, but the traders moved court against it can only be done by an amendment of the NDMC Act.
“Earlier the tax was calculated based on the rent value but when NDMC introduced the unite area method in 2009, the trade associations opposed it in courts. It was argued that the NDMC Act needs to be amended by Parliament for implementing any change in the tax system. The courts allowed the petitioners to voluntarily adopt the unit area method or continue the existing assessment formula. The civic body is working on getting the NDMC Act for bringing a uniform tax policyy,” the official who asked not to be named said.
Bhargava said that the all traders should adopt the unit area method.
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