SC to hear BBMP plea on Kalyana Mantapa, hotel tax

The Supreme Court will hear the BBMP’s appeal against a Karnataka High Court ruling that barred the civic body from imposing higher taxes on hotels with lodging facilities and Kalyana Mantapas (marriage halls).

A bench of Justices U U Lalit and Vineet Saran issued notices to a group of property and hotel owners on whose writ petitions a single bench of the high court had nullified the rules on October 24, 2013. Later, on February 15, 2019, a division bench of the high court rejected the BBMP’s appeal against the order, making it suffer losses in crores.

In the petition before the top court, the BBMP, represented by advocate Sanjay M Nuli, contended that the high court had failed to appreciate that the municipal body was empowered to classify certain buildings on the basis of their use. The Kalyana Mantapas and hotels are generally the highest generators of municipal solid waste, disposing of which is the duty of the municipal authorities.

“The imposition of property tax is a burden which is shared commonly amongst all the property owners in the vicinity based on the usage of the property which they possess,” the BBMP stated.

It further argued: “The classification of the property or goods or services is an accepted principle of taxation. It is only fair and just that the properties are charged for the purpose they are utilised for. The classification of the buildings is completely dependent on the usage and its nature and can be taxed at a different rate as a distinct entry from the general entry under the provisions of the Karnataka Municipal Corporation Act.”

The high court had quashed the Rules 3 (v) of the Bruhat Bangalore Mahanagara Palike Property Tax Rules, 2009, in so far as it related to the properties mentioned in categories 9 and 13 in Table 2.

Admitting the BBMP’s petition for consideration, the Supreme Court said: “Before the next date of hearing, the petitioner shall file a tabulated chart indicating what was the situation before the amendment and the result or impact of the amendment.”

Prior to the amendment in 2009, the BBMP had brought a scheme for self-assessment for the payment of property tax in 2000.

The hotel owners contended that according to the KMC Act, the tax levied should not be less than 20% and more than 25% of the taxable annual value.

The high court had noted that it was not in dispute that the levy of tax ranged from 300% to 600% after the amendment, which ran contrary to the KMC Act and was ultra vires of the law and the Constitution for being arbitrary.

The court put the matter for hearing on November 25.