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2023 (2) TMI 95 - HC - Indian LawsSEZ unit - Levy property tax at industrial rates instead of Commercial Rates - it is argued that the petitioner's property which is IT/ITES and SEZ is liable to be classified under the category of Industry and cannot be treated as a subject matter of taxation under Para 2 F (xiii) of the notification dated 11.10.2013 (Annexure P-5) by virtue of the amendment carried out vide notification dated 03.03.2014 - violation of principles of natural justice. HELD THAT - Clause 2 (G) of the notification dated 11.10.2013 (Anenxure P-5) stipulates that in case of the mixed used of premises in any property, the liability of tax shall be calculated as per area under different usage. In other words if a single building is being used for different and mixed purposes, then the property tax will be levied taking into consideration the usage of the specific area of the building/premises under different heads. The petitioner cannot escape the rigors of imposition of property tax at commercial rates in respect of such specific area which is being used for IT/ITES only on the basis that it falls under a separate distinct category of SEZ and as such ought to be levied property tax at industrial rates. It is not even the case projected in the pleadings that no area of the building/premises of the petitioner even though recognised as SEZ is not being used for IT/ITES purposes. Mere non-mention of IT in the SEZ category cannot be taken as a tenable ground for non-levy of property tax at commercial rates - there are no infirmity in the impugned order dated 30.11.2021 at Annexure P-1 whereby property tax stands levied as per actual usage of the petitioner SEZ and which would strictly be in terms of the charging provision i.e. Section 87 of the 1994 Act as also the notifications dated 11.10.2013 (Annexure P-5) and 03.03.2014 (Annexure P-6) respectively. In the present case, the charging provision is under Section 87 of the 1994 Act which rather permits levy of property tax based on various factors including actual usage of the premises. It is towards exercise of powers under the provisions of the 1994 Act that the notifications dated 11.10.2013 and 03.03.2014 Annexures P-5 and P-6 have been issued. The levy of property tax has to be necessarily as per the charging provision contained under the 1994 Act as also the notifications issued therein. The petitioner as such cannot be permitted to gain any mileage from the notifications/SEZ policies that may have been issued in relation to other states across the country. Violation of the principles of natural justice - HELD THAT - Admittedly, after issuance of the demand notices levying property tax at commercial rates, the petitioner availed of the statutory remedy of appeal before the Divisional Commissioner under the provisions of the 1994 Act. The appellate authority took a view in favour of the petitioner. It is thereafter that Municipal Corporation Gurugram preferred a revision before the State Government under Section 140 of the 1994 Act. It is upon consideration of such revision petition that the impugned order dated 30.11.2021 (Annexure P-1) has been passed by the Principal Secretary, Urban Local Bodies Department. Both at the appellate and revisional stage the petitioner/authorized representative were granted effective opportunity of hearing - petitioner having contested the demand notices in terms of filing an appeal under Section 138 of the 1994 Act had succeeded at the appellate stage and merely for the reason that the revisional authority after granting due opportunity has taken a different view, would not tantamount to a situation which would permit the petitioner to allege violation of the principles of natural justice. The entire issue stands thrashed out on merits and after duly associating the petitioner/authorized representative/its counsel. The contention as such is sans merit. The impugned order dated 30.11.2021 (Annexure P-1) passed by the first respondent is based on cogent and valid reasoning and in conformity with the relevant provisions of the 1994 Act as also the notifications dated 11.10.2013 (Annexure P-5) and 03.03.2014 (Annexure P-6). Petition dismissed.
Issues Involved:
1. Classification of IT/ITES SEZ for property tax purposes. 2. Applicability of the notification dated 03.03.2014. 3. Taxation by implication. 4. Comparative treatment of SEZs in other states. 5. Delay in filing the revision petition. 6. Violation of principles of natural justice. Detailed Analysis: 1. Classification of IT/ITES SEZ for Property Tax Purposes The petitioner contended that their IT/ITES SEZ property should be taxed at industrial rates rather than commercial rates. They argued that the notification dated 03.03.2014 prescribing rates for IT Park, Cyber City/Park is inapplicable to their SEZ property. The court examined the relevant statutory provisions and concluded that the charging provision under Section 87 of the Haryana Municipal Corporation Act 1994 (1994 Act) allows for property tax based on the actual usage of the premises. The court found that the petitioner's property, being used for IT/ITES purposes, falls under the commercial category as per the notification dated 03.03.2014. Therefore, the court upheld the levy of property tax at commercial rates. 2. Applicability of the Notification Dated 03.03.2014 The petitioner argued that the notification dated 03.03.2014, which amended the earlier notification dated 11.10.2013, should not apply to their SEZ property. The court noted that the notification dated 03.03.2014 clearly includes IT Park, Cyber City/Park under commercial space rates. The court held that the petitioner's property, being used for IT/ITES purposes, is correctly classified under the commercial category as per the amended notification. 3. Taxation by Implication The petitioner argued that there cannot be taxation by implication and that the charging section in a tax statute must be construed strictly. The court found that Section 87 of the 1994 Act explicitly provides for the levy of property tax based on the purpose for which the area is used. The court held that the petitioner's property, being used for IT/ITES purposes, falls within the scope of the charging provision and is liable to be taxed at commercial rates. 4. Comparative Treatment of SEZs in Other States The petitioner cited instances from other states where SEZs were given preferential treatment or exempted from property tax. The court noted that the Haryana SEZ Act 2005 and the Haryana Industrial and Investment Policy 2011 do not provide for such exemptions. The court held that the petitioner cannot gain any mileage from the notifications or SEZ policies of other states, as the levy of property tax in Haryana is governed by the 1994 Act and the relevant notifications. 5. Delay in Filing the Revision Petition The petitioner argued that the revision petition filed by the Municipal Corporation, Gurugram, was delayed by 53 days and should be dismissed on this ground. The court examined the provisions of the Limitation Act 1963 and the 1994 Act. The court held that the provisions of the Limitation Act apply to the 1994 Act, and the delay in filing the revision petition can be condoned. The court found that the delay was attributable to administrative exigencies and did not cause any prejudice to the petitioner. 6. Violation of Principles of Natural Justice The petitioner alleged that the demand notices were issued without following due process and in violation of principles of natural justice. The court noted that the petitioner had availed of the statutory remedy of appeal and was granted an effective opportunity of hearing at both the appellate and revisional stages. The court held that there was no violation of principles of natural justice, as the petitioner was duly heard and their contentions were considered. Conclusion The court dismissed the writ petition, upholding the order dated 30.11.2021, which levied property tax on the petitioner's IT/ITES SEZ property at commercial rates. The court found that the impugned order was based on valid reasoning and in conformity with the relevant provisions of the 1994 Act and the notifications dated 11.10.2013 and 03.03.2014.
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