Citizens have complained to Mysore Grahakara Parishat that they have received notices from Mysore City Corporation telling them that they have not paid the property tax for previous years and asking them to pay it now along with penalty. In some cases, the tax arrears go as far back as the year 2001-2002.
If the citizen receiving such a notice has paid the tax in question and has the receipt for it, he can go to the MCC office and show it. But people may not keep old receipts and if the receipt is lost, he will be in trouble.
The question is, can MCC issue notices for property tax eight years after it is to be paid? Is there not any period of limitation for property tax?
This question has been answered by a recent judgment of the Punjab and Haryana High Court (dated 20.11.2009 in RSA No.3305 of 2005 (O&M)). The court order can be found here. The salient points of this judgment are:
1. If the Municipal Corporations Act contains the limitation period for property tax explicitly, it applies.
2. If the Municipal Corporations Act does not contain the limitation period for property tax explicitly, Item No. 113 of the Schedule of the Limitation Act, 1963 applies and the limitation period is 3 years.
3. If the Corporation issues a notice on tax arrears within the limitation period (given in 1. and 2. above) and the respondent fails to pay, the arrears of property tax will become a charge on the property. When the arrears become a charge on the property, the limitation gets enlarged by Item No. 62 of the Schedule of the Limitation Act, 1963 to 12 years.
Sec. 474 of the Karnataka Municipal Corporations Act, 1976 sets the limitation period for collection of taxes as 6 years. Therefore, MCC can not demand tax arrears for tax years 2003-4 or earlier. If it issues a demand for tax arrears for tax years 2004-5 or later and the citizen fails to pay, MCC will get 12 more years to recover it.
B.Vaikunth Shenoy, Mysore Grahakara Parishat