Legal Advice

Property Tax

Question: I am a Senior citizen aged 73 years Ex-serviceman was in active service during all the three wars. Suffering from high blood pressure. I purchased House flat No.6-3-790/3/1 and registered on my name on 5.12.2003 from xxx and let out for residential use. The person lived with family children and running kitchen. His wife used the sewing machine and embroidery. They maintained that they were using the flat for residential. I have paid property tax up to 2015 but received several notices from GHMC. I have given several representations to the concerned authority but nothing has been done till date. Please advice what action should I take.

Advise

Have a look at how the property tax is assessed by the Commissioner of the GHMC. According to the A.P. Municipalities Act, 1965 (APM Act), where the Council by resolution determines that a property tax shall be levied, such tax shall be levied on all buildings and lands within Municipal limits at a percentage of their Annual Rental Value (ARV) or capital value of the land.

Section 85 of APM Act, 1965 prescribed that property tax shall be levied at such percentages of the capital value of lands or buildings on such graded basis, as may be fixed by the Council in respect of buildings or lands used or occupied by the owner. Secondly, property tax shall be levied at such percentages of the Annual Rental Value of such buildings or lands let out on rent. Tax levied for the residential building, within the municipal area, @ 25 per cent of Annual Rental Value.

The Annual Rental Value (ARV) of lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be expected to let from month-to-month or year-to-year with reference to the following factors:

  • Location of the building
  • Type of construction
  • Plinth area
  • Age of the building
  • Nature of usage to which it is put

According to your question, all the notices of the GHMC are issued on an arbitrary basis and no reasoned decision based upon reasoning have been given ever. According to the Hyderabad Municipal Corporations Act, 1955 property tax cannot be fixed on the basis of a photograph of the property. In each case on spot physical verification is necessary. Whenever a notice has been given to the assessee it must be reasoned and prepared in the format prescribed in Assessment of Property Tax Rules, 1990.

The Commissioner is bound by the AMP Act to duly fix the monthly rental value and records reasons for increase/decrease of Property Tax for each assessment. As soon as the assessment is fixed by the Commissioner in the Assessment list, a special notice of property tax for assessment of property tax or amendment where there is an enhancement in the tax shall be prepared in the format prescribed in Assessment of Property Tax Rules, 1990. Where there is the enhancement of the tax, the owners of properties are entitled to file revision petitions within 30 days from the date of service of special notice.

As soon as a revision petition is received in municipal office from a taxpayer against the property tax assessment fixed by the Commissioner, the revision petition shall be entered in a Register of Revision Petitions in Form E appended to Andhra Pradesh Municipalities (Assessment of Taxes) Rules, 1990.

The Commissioner shall give an opportunity to the petitioner to appear either in person or by an authorized agent. At the time of the hearing, the Commissioner shall record the statement of the petitioner regarding the submissions made by him for reduction of property tax. After recording the statement of the petitioner by the Commissioner, the signature of the petitioner shall be obtained on the statement.

After completing the hearing of the revision petition, the Commissioner shall pass a speaking order. In simple terms, a speaking order is an order that speaks for itself. The order should contain all the details of the case, pleadings of the petitioner, clear findings of the competent authority on the case and should appear as a reasoned order.

The above-mentioned procedure for assessment of property tax has not been followed by the concerned authority in your case. The concerned authority has passed all the orders arbitrarily without giving reasons about the enhancement of tax and penalty thereupon. This act of authority constitutes the cause of action to initiate legal recourse against those orders.

According to para 16 of your question, a Tax Inspector was visited your house and conducted physical verification. In order to that verification, a revised bill was sent to you. If you find this revised bill of tax Rs, 29698/ annum is legally assessed thus you can file a suit.

You should file a civil suit before the City Small causes Court, Hyderabad for fixing of property tax as per the law framed by the GHMC and compensation for mental agony, cost incurred in the litigation and rebate from late payment of tax.

In M/S. Big Apple Manufacturing Co. vs GHMC [State Consumer Disputes Redressal Commission 2012] Held by the State Forum that:-

“The purpose of the tax is to raise funds for the support of the Government or for a public purpose. The tax levied for the general purpose of the state provides various forms of facilities to citizens cannot be said to be a consideration for any specific facility, benefit, or service provided by the state. There can be no nexus between the tax and service rendered by the municipality and on this ground assesses does not become a consumer. Thus matter has to be decided by the City Small causes Court and not by Consumer Forum.

Shivendra Pratap Singh

Advocate

High Court Lucknow

Property

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