HC interim relief for 4 metro contractors asked to pay ₹370 cr property tax for using govt land

The contractors had challenged the BMC’s final notice and sought a waiver of the property tax imposed on them

MUMBAI: The Bombay high court this week granted ad interim relief to four Mumbai Metro Rail Corporation Ltd (MMRCL) contractors who were slapped with a property tax bill of ₹370 crore by the BMC for utilising a plot of land as a casting yard at Wadala Truck Terminal. The contractors had challenged the BMC’s final notice and sought a waiver of the property tax imposed on them. The HC has prevented the BMC from any coercive recovery until April 30.

Mumbai, India. April 01,2024 : The Brihanmumbai Municipal Corporation (BMC) sent property notices to Dogus Soma JV, HCC MMS JV and Continental ITD Cementation Tata Project JV Compony`s casting yard. April 01,2024. (Photo by Raju Shinde/HT Photo)

Additional municipal commissioner (city) Ashwini Joshi, who was the investigating officer in the case, had passed speaking orders on March 27 that the contractors were liable to pay the tax. While Dogus Soma JV was liable to pay a property tax of ₹66.64 crore with a penalty of ₹27.75 crore, HCC MMS JV was sent a bill of ₹72.85 crore with a ₹26.08-crore penalty. CEC-ITD (Continental ITD Cementation Tata Projects JV) was slapped with a bill of ₹67.41 crore and a penalty of ₹28.18 crore.

Advocate Prerak Choudhary, who is representing the contractors, said that the BMC had levied property tax on land used in connection with the metro railway which was “ex-facie contrary to the Railways Act”. “Apart from HCC-MMS JV, CEC ITD TPL Consortium and Dogus Soma JV, L&T have also filed a writ in the high court,” he said. “The court has restrained the BMC from taking coercive action till the next date. We are confident that the rule of law will prevail, and these arbitrary demands will be quashed. The hearing is on April 30, and we are confident about the merits of our case.”

The present petition pertains to a major infrastructure project executed by the petitioners for the Mumbai Metro Rail project carried out by MMRCL. The petitioners, as per the requirement of the contract, were provided with a casting yard/RMC plant/ stacking works yard in the Wadala TT terminal. This was used exclusively for the metro project.

In their writ, the petitioners stated that they were entitled to the exemptions carved out u/s 184 of the Railways Act, 1989, against local taxes. However, disregarding the same, the BMC assessed, levied and demanded property tax from the petitioners. The petitioners objected to the demands, which, however, were not considered positively by Joshi who, the petitioners say, rejected the complaints and representations made by them and passed an unreasonable order.

Joshi had stated in her speaking order on March 27: “As per Section 146 (1) of the MMC Act 1888, the actual occupier is liable for the payment of property tax. Moreover, Clause No 7 of the letter of terms & conditions dated January 9, 2017 between MMRCL and the contractors, it is mentioned that any charges to be paid to BMC, like property tax etc shall be paid by the contractor. MMRDA has also mentioned in the letter dated February 2, 2010, that property tax is to be recovered from the contractors.”

Joshi added that she did not agree with the complainants’ contention that they were a part of the Railways. She stated that the contractors were “private companies” and the actual occupier of the government land under the agreement, hence the provision of Sec 146(1) of the MMC Act was applicable.