The functioning of Mysore City Corporation is governed by Karnataka Municipal Corporations Act, 1976. MCC can exercise its powers only within the limits set by the KMC Act and any act of MCC beyond these limits is illegal. In light of this fact, let us see if the various taxes and cesses levied by MCC are legal.
KMC Act available here is up-to-date and includes all the amendments made to the Act till now. Sec. 103 of the Act lists all the taxes and cesses that can be levied by any city corporation in Karnataka.
They are
1. tax on buildings or vacant land or both (property tax)
2. tax on advertisement
3. duty on certain transfers of property
4. infrastructure cess on motor vehicles and
5. solid waste management cess (Water "tax" levied by MCC is not considered a tax but a usage fee and is authorized by Sec. 191 of the KMC Act). The KMC Act also prescribes exactly how property tax is to be levied. Comparing the provisions of the KMC Act with the taxes and cesses levied by MCC, we were shocked to find that most of the cesses levied are illegal and the way the property tax is levied is also illegal. We were not sure that there might not be sections of the KMC Act which escaped our attention which permit the taxes and cesses of MCC and therefore we filed an application under Right to Information to MCC about the legal basis of the taxes and cesses levied by it. We have received the reply and after going through it we are certain that most levies of MCC are illegal.
Let us look at them one by one.
1. Health cess, anti-beggary cess, library cess: The MCC reply quotes government circulars of 30-3-76 (health cess), 30-5-76 (anti-beggary cess) and 26-3-94 (library cess) as the authority for levying these cesses. But as mentioned above, Sec. 103 of the KMC Act permits only five taxes and cesses and no other. Since the health cess, anti-beggary cess and library cess are not in this list and since goverment circulars can not override a law passed by the legislature, these cesses are illegal.
2. Vacant site cleaning cess: Starting this year, MCC is levying a fee of Rs. 0.50 per sq.ft on all vacant sites as cleaning cess. MCC says it is relying on a government circular of 25-3-10 as the authority for the levy. Again this cess is not in the list of Sec. 103 of KMC Act and is illegal.
3. UGD cess: MCC is levying an UGD cess along with the water bill. This is also illegal since it is not in the list contained in Sec. 103 of the KMC Act.
4. Depreciation: In calculating property tax, MCC permits an annual depreciation of the value of buildings based on a government circular of 28-8-03. But there is no provision for depreciation in the KMC Act and so it is illegal.
5. 50% rebate for self-occupation: MCC says the rebate is based on Sec. 109A of the KMC Act. But Sec 109A of the KMC Act which gave 50% rebate for self-occupation was deleted with effect from 1-4-2005. It is amazing that neither the state government not MCC is aware of this change even after six years. So the 50% rebate for self-occupancy is also illegal.
6. Fresh calculation every year: MCC is forcing the citizens to calculate the property tax afresh every year. This is also illegal. Sec. 109A of the KMC Act clearly says that the property tax shall not be assessed each year but shall stand enhanced by 15 percent once in every three years commencing from the financial year 2005-2006. So once the property tax is calculated, it need not be calculated afresh every year after that.
Perusal of MCC's reply revealed two more anomalies. Firstly, the 2% per month penalty for late payment applies only to the property tax and not to the cesses. This seems absurd.
Secondly, the online calculator enhances the site value by 10% if it is a corner site. This is in accordance with the property guideline values published by the district registrar. But the printed form does not ask whether the site is a corner site. Property values in various areas of Mysore published by MCC itself in 2007 also do not mention this 10% enhancement for corner sites. So owners of corner sites who use the online calculator pay 10% extra while those who use the printed form do not. This also seems absurd.
Let us look at them one by one.
1. Health cess, anti-beggary cess, library cess: The MCC reply quotes government circulars of 30-3-76 (health cess), 30-5-76 (anti-beggary cess) and 26-3-94 (library cess) as the authority for levying these cesses. But as mentioned above, Sec. 103 of the KMC Act permits only five taxes and cesses and no other. Since the health cess, anti-beggary cess and library cess are not in this list and since goverment circulars can not override a law passed by the legislature, these cesses are illegal.
2. Vacant site cleaning cess: Starting this year, MCC is levying a fee of Rs. 0.50 per sq.ft on all vacant sites as cleaning cess. MCC says it is relying on a government circular of 25-3-10 as the authority for the levy. Again this cess is not in the list of Sec. 103 of KMC Act and is illegal.
3. UGD cess: MCC is levying an UGD cess along with the water bill. This is also illegal since it is not in the list contained in Sec. 103 of the KMC Act.
4. Depreciation: In calculating property tax, MCC permits an annual depreciation of the value of buildings based on a government circular of 28-8-03. But there is no provision for depreciation in the KMC Act and so it is illegal.
5. 50% rebate for self-occupation: MCC says the rebate is based on Sec. 109A of the KMC Act. But Sec 109A of the KMC Act which gave 50% rebate for self-occupation was deleted with effect from 1-4-2005. It is amazing that neither the state government not MCC is aware of this change even after six years. So the 50% rebate for self-occupancy is also illegal.
6. Fresh calculation every year: MCC is forcing the citizens to calculate the property tax afresh every year. This is also illegal. Sec. 109A of the KMC Act clearly says that the property tax shall not be assessed each year but shall stand enhanced by 15 percent once in every three years commencing from the financial year 2005-2006. So once the property tax is calculated, it need not be calculated afresh every year after that.
Perusal of MCC's reply revealed two more anomalies. Firstly, the 2% per month penalty for late payment applies only to the property tax and not to the cesses. This seems absurd.
Secondly, the online calculator enhances the site value by 10% if it is a corner site. This is in accordance with the property guideline values published by the district registrar. But the printed form does not ask whether the site is a corner site. Property values in various areas of Mysore published by MCC itself in 2007 also do not mention this 10% enhancement for corner sites. So owners of corner sites who use the online calculator pay 10% extra while those who use the printed form do not. This also seems absurd.
P.M.Bhat, Mysore Grahakara Parishat