MUNICIPAL CORPORATION OF GREATER MUMBAI & ORS versus PROPERTY OWNERS’ ASSOCIATION & ORS.

ABCDEFGH679 [2022] 14 S.C.R. 679679MUNICIPAL CORPORATION OF GREATER MUMBAI & ORS.v.PROPERTY OWNERS’ ASSOCIATION & ORS.(Civil Appeal No 8239 of 2022)(SLP (C) No. 17009 of 2019)NOVEMBER 07, 2022[UDAY UMESH LALIT, CJI AND AJAY RASTOGI, J.]Mumbai Municipal Corporation Act, 1888 – s.154(1A)(a)-(e), (1B) – Factors and Categories of Users of Buildings or Lands(Assignment of Weightages by Multiplication) Fixation of CapitalValue Rules, 2010 – Factors and Categories of Users of Buildingsor Lands (Assignment of Weightage by Multiplication) Fixation ofCapital Value Rules, 2015 – High Court rejected the challenge asto the validity of various provisions of the MMC Act however, heldrr.20, 21 and 22 of the Capital Value Rules 2010 and 2015 to beultra vires the provisions of the MMC Act – On appeal, held:Widthof clauses (a) to (e) read with sub-Section (1B) do not by any stretchof imagination contemplate taking into account the future prospectsof the land in question – The empowerment in terms of clauses (a)to (e) r/w with sub-Section (1B) or the conferral of rule-makingpower would not permit the Corporation to determine the capitalvalue beyond the scope of said clauses (a) to (e) – Thus, for thepurpose of determining capital value, only the present physicalattributes and status of the land and building can be consideredand not the future prospects of the land – Conclusion arrived at bythe High Court are correct – Also, the High Court was right inconcluding that r.20 of the Capital Value Rules of 2010 and theCapital Value Rules of 2015 would be ultra vires the provisions ofsub-Sections (1A) and (1B) of s.154 of the MMC Act – Further, theRules having come into force on 20.3.2012, the levy andcomputation of property tax on capital value would be availableand possible on and with effect from 20.3.2012 and not with anyretrospective operation – Challenge raised by the Corporation fails– Challenges raised by the original writ petitioners on variousgrounds including the grounds of legislative competence; validityof certain provisions and basis of alleged violation of Article 14 of ABCDEFGH680SUPREME COURT REPORTS[2022] 14 S.C.R.the Constitution, were considered by the High Court in extenso – Noreason to take a different view – Therefore, the said view is affirmed.Constitution of India – Article 243Y, 243X – MumbaiMunicipal Corporation Act, 1888 – Plea that any proposal forchange or modification in the methodology adopted for levy ofproperty tax ought to have been initiated through the FinanceCommission alone – Held: It is the Legislature of the State whichwill ultimately take an appropriate action with respect to therecommendations made by the Finance Commission and the papersplaced before it – If the Legislature itself has taken into accountcertain prevailing situation, which according to the Legislature iscausing some prejudice to the financial health and condition of themunicipalities and, therefore, the method of imposition of propertytax ought to be changed, then it cannot be said that the matter mustnecessarily and ought to have emanated from the FinanceCommission or that in the absence of such recommendations by theFinance Commission, no steps could have been taken by theLegislature – In the instant case, the exercise undertaken by theLegislature is completely consistent with the empowerment relatableto Article 243X and does not in any way go counter to saidempowerment.Dismissing the appeals, the CourtHELD: 1.1 Article 243Y of the Constitution deals withconstitution of Finance Commission whose principal duty is toreview the financial position of the municipalities and to makerecommendations to the Governor as to the relevant principleswhich should govern distribution of the net proceeds of the taxesand the measures needed to improve the financial position of themunicipalities. It is true that certain functions are entrusted tothe Finance Commission and the recommendations made by theFinance Commission must carry great weightage. However, thematter has to be seen from the perspective: whether any“measures needed to improve the financial position of themunicipalities” must necessarily emanate from therecommendations of the Finance Commission. Sub-Article (2)contemplates that the recommendations made by the FinanceCommission along with the explanatory memorandum as to theaction taken thereon must be laid before the Legislature of the ABCDEFGH681State. Thus, it is the Legislature of the State which will ultimatelytake an appropriate action with respect to the recommendationsmade by the Finance Commission and the papers placed beforeit. If the Legislature itself has taken into account certain prevailingsituation, which according to the Legislature is causing someprejudice to the financial health and condition of the municipalitiesand, therefore, the method of imposition of property tax ought tobe changed, it cannot then be said that the matter must necessarilyand ought to have emanated from the Finance Commission orthat in the absence of such recommendations by the FinanceCommission, no steps could have been taken by the Legislature.Article 243X of the Constitution states that the Legislature of aState may by law authorize a municipality to levy, collect andappropriate such taxes etc. in accordance with such procedureand subject to such limits as may be specified in law. The exerciseundertaken by the Legislature in the instant case is completelyconsistent with the empowerment relatable to Article 243X ofthe Constitution and does not in any way go counter to saidempowerment. [Paras 25-27][738-H; 739-A-B, E-H; 740-A-B]1.2 Coming to the effect and scope of the statutoryprovisions, it must be stated that Sections 123 to 128 of the MMCAct deal with accounts and annual budget estimates. With thefixed parameters and scope of taxation, as well as, the elementsthat can be covered by levy of such taxes, depending upon theannual budget estimates, the rates of municipal taxes, fares andcharges can certainly be fixed in terms of Section 128 of the MMCAct. In such cases, the width of the tax regime is already decidedand the rates of taxes would be dependent upon the annualestimates. What the present amendments seek to achieve is tochange the methodology on the basis of which property tax canbe levied. Instead of rateable value, the property tax can now belevied going by the capital value. Such exercise could not havebeen undertaken through the process of annual estimates and interms of Sections 120, 123, 125 and 128 of the MMC Act. Allthat could be done under these provisions would be to vary orchange the rates and not the very basis of taxation. Thesubmission in that behalf, therefore, does not merit acceptance.[Para 28][740-C-E]MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION ABCDEFGH682SUPREME COURT REPORTS[2022] 14 S.C.R.1.3 Section 154(1A) of the MMC Act is the crucial provisionfor the present discussion. The opening part of subsection (1A)states that in order to fix the capital value of any building or landassessable to property tax, regard shall be had to the value ofany building or land as indicated in the SDRR for the time beingin force. The value so indicated in SDRR is to be the base valueto which certain factors delineated in clauses (a) to (e) ofsubsection (1A) are to be applied while fixing the capital value.Clauses (a) to (d) are physical features or attributes of the landor building which are in existence when the value is to bereckoned. In essence these attributes are situations “inpraesenti”. The buildable potential of the land in future is not anattribute “in praesenti” but is in the nature of likelihood of useror exploitation of the asset “in futuro”. The crucial question is:whether such potential of the land or the likelihood of exploitationin future can also be taken into consideration while fixing thecapital value in terms of sub- Section (1A), especially when noneof the factors delineated in clauses (a), (b), (c) and (d) speaks offuture prospects or such likelihood? [Para 30, 31][741-C-F]1.4 Both the decisions in Patel Gordhandas and PolychemLtd. were rendered in the regime when the property tax could belevied on rateable value. In the first decision, it was found thatfixing of the rate at a percentage of the capital value was not amodality permitted by the Act and, therefore, Rules 350-A readwith Rule 243, which permitted such exercise, were struck down.Therefore, to the extent the rules went beyond the statutoryimport and extent, the transgression was not accepted by thisCourt. In the second decision, it was held that so long as thebuilding was not completed and ready for occupation, the land inquestion for the purposes of rating must be equated with andtreated as “vacant land”. In the second decision, the constructionwas actually going on but the building was not ready. Theconclusion from the second decision is quite clear that unlessand until the building was ready to be occupied, the land must betreated as vacant land. Notably, the second decision was premisedon the methodology where the rateable value was the determiningcriteria. Therefore, so long as the building could not be let out inopen market, the land would continue to be treated as “vacant ABCDEFGH683land”. However, after the amendments, the emphasis has nowchanged and the basis for taxation is now to be capital value ofland and building. Capital value again can have two dimensions.First, the value of land or building as it stands today or secondly,the value as may be in future as per anticipated development.However, the legislative intent, as is clear from clauses (a) to(d), is about actual status and user as on the date the capital valueis to be reckoned or considered. These clauses clearly show thatthe features contemplated therein must be in existence as onsuch date and not what would be the projection in future. Thereare two ways in which sub-clause (e) of sub-Section (1A) of Section154 can be construed. In the first case, said clause can be readejusdem generis along with sub-clauses (a) to (d), in which eventthe scope of any rules to be made in terms of power granted bysub-clause (e) read with sub-Section (1B), would be relatable tothe factors actually in existence and not as somethingcontemplated in future. On the other hand, if the clause is readindependently, there is nothing in clause (e) or in the language ofsub-Section (1B) that the future prospects of the land in questioncould be reckoned or noted for arriving at the capital value. Theconclusion is thus quite clear that the width of clauses (a) to (e)read with sub-Section (1B) do not by any stretch of imaginationcontemplate taking into account the future prospects of the landin question. Therefore, the empowerment in terms of clauses (a)to (e) read with subsection (1B) or the conferral of rule makingpower would not permit the Corporation to determine the capitalvalue beyond the scope of said clauses (a) to (e). Thus, for thepurpose of determining capital value, only the present physicalattributes and status of the land and building can be consideredand not the future prospects of the land. [Paras 33-36][743-H;744-A-H; 745-A]Patel Gordhandas Hargovindas & Ors. v. MunicipalCommissioner, Ahmedabad & Anr. AIR 1963 SC 1742: [ 1964] 2 SCR 608; The Municipal Corporation ofGreater Bombay v. Polychem Ltd. (1974) 2 SCC 198 :[1974] 3 SCR 687 – referred to.1.5 To the extent Rule 20 of the Capital Value Rules of2010 and the Capital Value Rules of 2015 empower theCommissioner to consider the capability of the open land ofMUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION ABCDEFGH684SUPREME COURT REPORTS[2022] 14 S.C.R.utilizing more than 1 floor space index (FSI) or any transfer ofdevelopment right (TDR), would go well beyond the permissiblescope delineated by the provisions of Section 154 of the MMCAct. The High Court, was, therefore, right in concluding that Rule20 of the Capital Value Rules of 2010 and the Capital Value Rulesof 2015 would be ultra vires the provisions of subsections (1A)and (1B) of Section 154 of the MMC Act. [Para 38][745-D-F]1.6 In regard to the issue of retrospectivity of the CapitalValue Rules of 2010. The factual narration relied upon by thelearned counsel for the Corporation does show that thepreparatory steps were being undertaken since 2010 with theappointment of an expert committee and publication of draft rules.It appears that the Corporation had to collect voluminous data.But in order to enable the Corporation to compute or levyproperty tax based on capital value, the concerned rules had tobe in force. There being no empowerment to compute and/orlevy property tax with retrospective effect by the statute itself,the rule making power, in any view of the matter, could not havecreated a liability pertaining to the period well before the Rulescame into effect. The first ground as set out in paragraph 15 was,therefore, rightly answered by the High Court against theCorporation. Logically, the Rules having come into force on20.3.2012, the levy and computation of property tax on capitalvalue would be available and possible on and with effect from20.3.2012 and not with any retrospective operation. [Para39][745-F-H; 746-A]1.7 The question then arises as to what would be the scopeand extent of the present property tax regime. It is quite clearthat with the amendment to Section 154 and other provisions, theproperty tax can be levied on the basis of capital value of the landor building. To that extent, there would be departure from theregime which was in existence when Patel Gordhandas andPolychem Ltd. were decided by this Court. Now, the statutecertainly empowers and contemplates imposition of property taxon the capital value. However, the capital value must be one whichanswers the postulates in sub-clauses (a) to (e) of sub-Section(1A) read with sub-Section (1B) of Section 154. Since the statutoryprovisions do not contemplate any likelihood of exploitation ofcapacity in future, the capital value of the land and building must ABCDEFGH685be based on situation “in presenti”. It must be clarified here thatin projects which are in progress, the value addition to theproperty would be ongoing feature. However, considering clauses(a) to (d), it would mean that the governing principle must be theactual use and not the intended use in future. The challenge raisedby the Corporation must fail and the appeal preferred by theCorporation is dismissed. Challenges raised by the original writpetitioners on various grounds as detailed hereinabove includingthe grounds of legislative competence; validity of certainprovisions and basis of alleged violation of Article 14 of theConstitution, were considered by the High Court in extenso. Noreason or room to take a different view. Therefore, the view isaffirmed and the challenge is dismissed. [Paras 40, 41][746-B-F]Marathwada University v. Seshrao Balwant RaoChavan (1989) 3 SCC 132 : [1989] 2 SCR 454; DelhiRace Club Limited v. Union of India & Ors. (2012) 8SCC 680 : [2012] 8 SCR 1; Devi Das Gopal Krishnanetc. v. State of Punjab & Ors. AIR 1967 SC 1895 :[1967] 3 SCR 557; Avinder Singh &Ors. v. State ofPunjab & Ors. (1979) 1 SCC 137 : [1979] 1 SCR 845;State of Uttar Pradesh & Ors. v. Systematic ConscomLtd. (2014) 13 SCC 627; State of Himachal Pradesh &Ors. v. Nurpur Private Bus Operators’ Union & Ors.(1999) 9 SCC 559 : [1999] 3 Suppl. SCR 430 –referred to.Campaign for People Participation in DevelopmentPlanning v. Lieutenant Governor of NCT of Delhi &Ors. (2016) SCC Online Del 80 – referred to.Case Law Reference[1964] 2 SCR 608referred toPara 23[1989] 2 SCR 454referred toPara 23[2012] 8 SCR 1referred toPara 23[1967] 3 SCR 557referred toPara 23[1979] 1 SCR 845 referred toPara 23[1974] 3 SCR 687 referred toPara 23MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION ABCDEFGH686SUPREME COURT REPORTS[2022] 14 S.C.R.(2014) 13 SCC 627referred toPara 23[1999] 3 Suppl. SCR 430referred toPara 23(2016) SCC Online Del 80relied onPara 25CIVIL APPELLATE JURISDICTION : Civil Appeal No.8239of 2022.From the Judgment and Order dated 24.04.2019 of the High Courtof Judicature at Bombay in Writ Petition No.2592 of 2013.WithCivil Appeal Nos.8240, 8241, 8242, 8243, 8244 of 2022 AndContempt Petition (C) No.38 Of 2021 In Special Leave Petition (C)No.17009 of 2019.Neeraj Kishan Kaul, Huzefa Ahmadi, Sreedharan, Dr. MilindSathe, Shekhar Naphade, H.L. Tiku, Sr. Advs., Akshay Arora, PravalArora, Ms. Chesta Mehta Arora, Jappanpreet Hora, A. Karthik, Y.P.Dandiwala, R.K. Satpalkar, Dhruv V. Sharma, Toshiv Goyal, Ms.Delnavaz Patel, Saswat Pattnaik, Ms. Shaheen Moghul, Hasan Murtaza,Abhishek Bharti, Ms. Aarti Mahto, Balaji Srinivasan, Sameer Parekh,Sumit Goel, Abhiram Naik, Ms. Tanya Chaudhary, Paritosh Arora, M/s.Parekh & Co., H . Devrajan, P. N. Gupta, Mrs. Bharti Gupta, JayomMahesh Shah, Ashish Wad, Ms. Tamali Wad, Ms. Aruna Savla, PimpleSharad, Sidharth Mahajan, Ms. Sukriti Jaggi, Ajeyo Sharma, M/s. J SWad & Co, Kunal Vajani, Sanjay Kadam, Chirag M. Shroff, MaheshAgarwal, Ankur Saigal, Anshuman Srivastava, Shaishir Divatia, SunilMittal, Digit Saikia, Suneet Tyagi, Ms. Reshma Kalsekar, E.C. Agrawala,Vikas Kumar, Manish Paliwal, Yashmeet Kaur, Mayank Grover, M/s.Corporate Legal Partners, Rahul Chitnis, Sachin Patil, Aaditya A. Pande,Geo Joseph, Shikhil Suri, Ms. Madhu Suri, T. R. B. Sivakumar, AmanRaj Gandhi, Abhishek Sharma, Udayaditya Banerjee, Adbhut Pathak,Advs. for the appearing parties.The Judgment of the Court was delivered byUDAY UMESH LALIT, CJI1. Leave granted in all Special Leave Petitions.2. These appeals are challenging the common judgment and orderdated 24.4.2019 passed by the Division Bench of the High Court ofJudicature at Bombay in Writ Petition No. 2592/2013 and connectedmatters. Contempt Petition (Civil) No. 38/2021has been filed against thealleged contemnor for disobedience of orders dated 29.7.2019, ABCDEFGH68721.10.2019 and 22.11.2019 passed by this Court in the appeal arising outof said SLP(C) No. 17009 of 2019. For the present purposes, saidContempt Petition is segregated with a direction to list the same beforean appropriate Court after six weeks.3. The Mumbai Municipal Corporation Act, 18881 has been enactedby the State Government to consolidate and amend various MunicipalActs which were in force relating to the Municipal administration of thecity of Mumbai. The Municipal Corporation of Greater Mumbai (“theCorporation” for short)has been established and discharging its dutiesunder the MMC Act.4. The MMC Act authorizes the Corporation to impose propertytax on lands and buildings. Importantly, property tax is one of the mainsources of revenue for the Corporation, specifically after abolition ofOctroi. The MMC Act earlier provided for levy of property tax on thebasis of certain percentage of rateable value of the buildings or lands.The basis of determination of rateable value as provided in the MMCAct was the annual rent for which such buildings or lands might reasonablybe expected to be let from year to year.5. The Corporation appointed Tata Institute of Social Sciences(for short “TISS”) and University of Mumbai to study the system oflevy of property tax and to suggest alternative system for such levy.TISS submitted a detailed report recommending that capital value-basedsystem of assessment be adopted in place of annual rental system. Afterdetailed discussions with stake holders and based on the recommendationsof TISS, the MMC Act was amended by the Maharashtra Act No. XIof 2009. The amendment incorporated an option and empowered theCorporation to levy property tax on the basis of capital value as analternative to the earlier method of levying property tax on the basis ofrateable value.6. The Statement of Objects forming part of the Bill which led tothe passing of the Maharashtra Act No. XI of 2009 was as under: -“STATEMENT OF OBJECTS AND REASONSSection 139 of the Mumbai Municipal Corporation Act (Bom.IIIof 1888) provides for imposition of taxes by the MunicipalCorporation of Brihan Mumbai. The taxes to be so imposed provide1 “MMC Act”, for shortMUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH688SUPREME COURT REPORTS[2022] 14 S.C.R.inter alia property taxes on buildings or lands. The property taxesinclude water tax, water benefit tax, sewerage tax, seweragebenefit tax, general tax, education cess and street tax, which areleviable on the basis of certain percentage of rateable value ofthe buildings or lands.2. Section 154 of the Act provides the method of fixing rateablevalue of any buildings or lands assessable to property tax. Thebasis to determine the rateable value is the annual rent for whichsuch buildings or lands might reasonably be expected to let fromyear to year, less 10 per centum of the said annual rent and thesaid deduction is in lieu of all allowances for repairs or on anyother account whatever.3. The determination or fixation of the rateable value underdifferent Municipal Acts or Municipal Corporation Acts throughoutIndia for the purpose of levy of property taxes under these Actshas resulted in ceaseless dispute. There has been a catena ofdecisions rendered by various High Courts and the Supreme Courtin respect of the matter of fixation of rateable value particularlybecause of the provisions of Rent Control Legislation in variousStates including the State of Maharashtra. On account of thesedecisions the annual rent to be taken into account for fixation ofrateable value of any buildings or lands has been pegged down tothe standard rent of any buildings or lands according to theprovisions of the Rent Control Acts. In so far as the area of theMunicipal Corporation of Brihan Mumbai is concerned, the RentControl Act, which provided for standard rent for the first time,was the Bombay Rent Restriction Act. 1939 (Bom. XVI of 1939).This Act was repealed by the Bombay Rents, Hotel Rates andLodging House Rates (Control) Act, 1944 (Bom.VII of 1944),which had been replaced by the Bombay Rents, Hotel and LodgingHouse Rates Control Act, 1947 (Bom. LVII of 1947), which hasalso been now repealed by the Maharashtra Rent Control Act,1999 (Mah. XVIII of 2000) which came into force on the 31st dayof March 2000 and is at present in operation. Thus the Rent ControlAct has been in operation in the Mumbai Municipal Corporationarea for over 65 years. In effect, therefore, the property tax hasto be determined on the basis of rateable value fixed consideringthe annual rent, being the fair rent (standard rent) alone, regardless ABCDEFGH689of the actual rent received. Fair rent very often means the rentprevailing prior for the year 1940 with some marginal modificationsand additions. Because of the limitations or restrictions broughtinto play by the provisions of the Maharashtra Rent Control Act,1999 and the various judgements of the Court in respect of fixationof rateable value for the purpose of levy of property taxes a lot ofsubjectivity has crept into the system by which the rent of buildingsor lands is determined. Apart from this, it has also resulted in lackof transparency, equity and rationality in the system of assessmentof property taxes. Property tax is one of the main sources ofrevenue to the Corporation. Due to such restrictions or limitationsthe income of the Corporation from property tax has remainedstatic. To continue to compel the Corporation to levy and collectthe property tax on the basis of fair rent or standard rent alone,while at the same time under Section 61 in Chapter III and otherprovisions of the Mumbai Municipal Corporation Act making itincumbent on the Corporation to make adequate provisions toperform all its obligatory and discretionary functions laid down bythe Act may be to ask for the impossible. The cost of maintainingand laying roads, drains, water supply lines and providing otheressential civic services and amenities, the salaries of staff andwages of employee and all other types of expenditure have goneup steeply over the last more than 65 years.4. With a view to exploring the possibility of reforming theproperty tax system, so as to augment the revenue of theCorporation, the Tata Institute of Social Sciences (TISS), Mumbaiwere entrusted by the Corporation with the job to study the presentsystem of levy of property taxes and to suggest any alternativesystem for such levy. After studying various systems availablefor assessment of property taxes within and without India, theyhave recommended that Capital Value Based System ofAssessment in place of the Annual Rental System may be adopted,as according to them the trend in property tax practices indeveloping countries is to move away from the Annual RentalValue base to Capital Value base. The capital value based systemof assessment has the following merits:-(1) Formula based assessment is possible with simplicity,(2) Self-assessment is possible,MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH690SUPREME COURT REPORTS[2022] 14 S.C.R.(3) Greater flexibility in tax administration which provides controlover revenue,(4) Subjectivity is eliminated to the extent possible,(5) There is transparency and easy to understand,(6) Tax revenue can keep pace with inflation and cost of living.5.The highlights of the system recommended by the TataInstitute of Social Sciences is the shift from Annual Rental Valueto Capital Value as the base for the purpose of levy of propertytaxes at a certain rate which may be determined by the Corporationand such value is proposed to be adopted as the value of anybuildings or lands as is indicated in the Stamp Duty ReadyReckoner for the time being in force as prepared under the BombayStamp (Determination of True Market Value of Property) Rules,1995 and the capital value of the property could then be computedby applying thereto factors such as location, carpet area, type ofconstruction, age of property and user thereof. In this systemproperties which are old or of semi-permanent structures includingchawls, will be given due consideration and concession. Care isalso taken to provide for an appropriate cap on the increase onproperty tax on account of switching over to the capital valuebase of levy.6. It is a modest attempt to enable the Corporation to augmentits revenue so as to meet the ever-rising expenditure in providingappropriate an adequate infrastructure for rendering civic servicesin the City like Mumbai and its suburbs. Having regard to thestatus thereof as a financial capital of India, the Mumbai Cityrequires a special attention.7. The amendments to the Mumbai Municipal Corporation Act(Bom. III of 1888) proposed in this Bill are intended to achievethe above-mentioned objectives.”7. The MMC Act was, thereafter, amended by successiveamendments as a result of which newly introduced Section 154(1A) and(1B) MMC Act now authorizes Municipal Commissioner to fix the CapitalValue of land and building with the approval of the Standing Committee.Accordingly, the Commissioner formulated Factors and Categories ofUsers of Buildings or Lands (Assignment of Weightages by Multiplication) ABCDEFGH691Fixation of Capital Value Rules, 2010 (‘the Capital Value Rules of 2010’,for short) which came into force on and with effect from 20.03.2012,andFactors and Categories of Users of Buildings or Lands (Assignment ofWeightage by Multiplication) Fixation of Capital Value Rules, 2015 (‘theCapital Values Rules of 2015’, for short), which came into force on01.04.2015.8. It must be stated here that on 20.01.2010 a resolution waspassed appointing an expert committee comprising of Dr. D.M.Sukthankar, Dr. D.N. Choudhary and Dr. Roshan Namavati to makerecommendations on the Capital Value System. The draft rules preparedby the Committee were published in various newspapers on 18.10.2010inviting objections. The last date for submissions and objections afterdue extension expired on 30.11.2010, whereafter final report wassubmitted. After obtaining the sanction of the Standing Committee, theCapital Value Rules, of 2010 were published on 20.03.2012. Subsequently,the Capital Value Rules of 2015 were also framed.9. The relevant provisions of the MMC Act dealing with the mattersin issue are extracted here for ready reference:“120.Constitution of Fines Fund. Fines collected under section83 shall be credited to a separate fund to be called “the FinesFund” the proceeds of which shall be expended in promoting thewell-being of municipal officers and servants other than thoseappointed under the provisions of Chapter XVIA of this Act, andfor the payment of compassionate allowances to the widows ofsuch officers and servants who die while in municipal service andto such other relation of the officers and servants as the corporationmay from time to time determine.xxxxxxxxx123.Accounts to be kept in forms prescribed by StandingCommittee. Subject to the provisions of Chapter XVI-A of thisAct accounts of the receipts and expenditure of the corporationshall be kept in such manner and in such forms as the StandingCommittee shall from time to time prescribe:Provided that, the accounts of the Water and Sewage Fund andthe Consolidated Water Supply and Sewage Disposal Loan Fundshall be maintained on the accrual basis, unless otherwiseprescribed by the Standing Committee.MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH692SUPREME COURT REPORTS[2022] 14 S.C.R.xxxxxxxxx125. Estimates of expenditure and income to be preparedannually by Commissioner.The Commissioner shall on or before eachfifth day of February,have prepared and lay before the Standing Committee, in suchform as the said Committee shall from time to time approve, —(1) (a) an estimate of the expenditure which must or should, in hisopinion be incurred by the corporation in the next ensuing OfficialYear, other than—*****(ii) expenditure to be incurred by reason of the obligationsimposed on the corporation arising out of the transfer to thecorporation of the powers, duties, assets and liabilities ofthe Board of Trustees for the improvement of the City ofBombay constituted under the City of Bombay ImprovementTrust Transfer Act, 1925 13or for any of the purposes ofChapter XII-A; and(iii) expenditure to be incurred on account of the BrihanMumbai Electric Supply and Transport Undertaking;(iv) expenditure to be incurred for the purposes of clause(q) of section 61;(v) expenditure to be incurred for the purposes of ChaptersIX and X;(b) an estimate of the balances, if any (other than balances) shownin the accounts maintained under sections 123A and 123C whichwill be available for re-appropriation or expenditure at thecommencement of the next ensuing official year;(c) an estimate of the corporation’s receipts and income for thenext ensuing official year other than from taxation and from theBrihan Mumbai Electric Supply and Transport Undertaking andother than that referred to in clause (c) of sub-section (2) and inclause (d) of section 126C and in section 126E;(cc) an estimate of the amount due to be transferred during thenext ensuing official year to the municipal fund under the provisionsof sections 460KK and 460LL; ABCDEFGH693(d)a statement of proposals as to the taxation which it will, in hisopinion, be necessary or expedient to impose under the provisionsof this Act in the next ensuing official year;(2) (a) an estimate of the expenditure which must or should, in hisopinion, be incurred by the corporation in the next ensuing officialyear by reason of the obligations imposed upon the corporationarising out of the transfer to the corporation of the powers, duties,assets and liabilities of the Board of Trustees for the Improvementof the City of Bombay constituted under the City of BombayImprovement Trust Transfer Act, 1925 or for any of the purposesof Chapter XII-A;(b)an estimate of all balances, if any in the account maintainedunder section 122A, which will be available for re-appropriationor expenditure at the commencement of the next ensuing officialyear;(c) an estimate of the corporation’s receipts and income for thenext ensuing official year—(i) arising from sales, leases and otherdispositions ofimmovable property vesting in the corporation by reason ofthe enactment of the City of Bombay Municipal(Amendment) Act, 1933 or acquired by the Corporation forany of the purposes of Chapter XII-A; and(ii) being payments of interest on and repayments in wholeor part of the capital of loans granted by the corporationand secured on the aforesaid immovable property;(d) an estimate of three times the amount of the net estimatedrealisations of the corporation in the then current financial yearunder the head of general tax (including arrears and payments inadvance) divided by the rate fixed for general tax for the thencurrent financial year;xxxxxxxxxProvided further that, with effect from the financial year 1974-75, this subclause shall have effect as if for the words “three-times” the word “twice” were substituted;(e) an estimate of the Corporation’s receipts and income, otherthan receipts and income referred to in other clauses of this sub-MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH694SUPREME COURT REPORTS[2022] 14 S.C.R.section arising from or relating to, transaction connected with theobligations imposed upon the Corporation by the transfer to theCorporation of the powers, duties, assets and liabilities of the saidBoard of Trustees or with the exercise of the powers and dutiesconferred or imposed upon the Corporation by Chapter XII-Aincluding grants from the State Government.xxxxxxxxx128. Fixing rates, of municipal taxes and of fares and chargesof “Brihan Mumbai Electric Supply and TransportUndertaking”(1) The Corporation shall, on or before the twentieth day ofMarch after considering the Standing Committee’s proposalsin this behalf,—(a) determine, subject to the limitations and conditionsprescribed in Chapter VIII, the rates at which municipaltaxes shall be levied, and the articles on which octroi shallbe levied, in the next ensuing official year:Provided that, the Corporation may determine different ratesof property taxes for different categories of users of abuilding or land or part thereof; and(b) approve, subject to the limitations and conditions whichmay have been prescribed by or under any of the enactmentsor any licence referred to in clause (i-a) of sub-section (2)of section 126B, the rates at which the fares and chargesin respect of the Brihan Mumbai Electric Supply andTransport Undertaking shall be levied.(2) Except under sections 134,196, 460H and 460I, the ratesso fixed and the articles so appointed shall not be subsequentlyaltered for the year for which they have been fixed.(3) Notwithstanding anything contained in sub-sections (1) and(2), the Corporation may, at any time during the official years2010-2011, 2011-2012 and 2012-2013 determine, separately foreach of the said three years, the rates of property taxes fordifferent categories of users of a building or land or part thereof.The rates of property taxes so determined shall be effectiveand shall be deemed to have been effective from the 1st of ABCDEFGH695April of those three years and the taxes for the said threeyears shall be leviable and payable at the rates so determined.xxxxxxxxx139.Taxes to be imposed under this Act. For the purpose ofthis Act, taxations shall be imposed as follows, namely:-(1) property taxes;(2) a tax on dogs: and(3) a theatre tax;139A. Property taxes what to consist.(1) Property taxes leviable on buildings and lands in Brihan Mumbaiunder this Act shall include water tax, water benefit tax, seweragetax, sewerage benefit tax, general tax, education cess, street taxand betterment charges.(2) For the purposes of levy of property taxes, the expression“Building” includes -a flat, a gala, a unit or any portion of thebuilding.(3) All or any of the property taxes may be imposed on agraduatedscale.(4) Save as otherwise provided in this Act, it shall be lawful - forthe Corporation to levy all property taxes on the rateable value ofbuildings and lands until the Corporation adopts levy of any or allthe property taxes on such buildings and lands on the capital valuethereof under section 140A.140. Property taxes leviable on rateable value, or capitalvalue as the case may be, and at what rate. (1) The followingproperty taxes shall be levied on building and lands in BrihanMumbai, namely: -(a) (i) the water tax of so many per centum of their rateablevalue, or their capital value, as the case may be, as the StandingCommittee may consider necessary for providing water supply;(ii) an additional water tax which shall be called ‘the water benefittax’ of so many per centum of their rateable value, or their capitalMUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH696SUPREME COURT REPORTS[2022] 14 S.C.R.value, as the case may be, as the Standing Committee may considernecessary for meeting the whole or part of the expenditure incurredor to be incurred on capital works for making and improving thefacilities of water-supply and for maintaining and operating suchworks;Provided that all or any of the property taxes may be imposedon a graduated scale.(b) (i) the sewerage tax of so many per centum of their rateablevalue, or their capital value, as the case may be, as the StandingCommittee may consider necessary for collection, removal anddisposal of human waste and other wastes;(ii) an additional sewerage tax which shall be called the “seweragebenefit tax” of so many per centum of their rateable value, ortheir capital value, as the case may be, as the Standing Committeemay consider necessary for meeting the whole or a part of theexpenditure incurred or likely to be incurred on capital work - formaking and improving facilities for the collection, removal anddisposal of human waste and other wastes and for maintainingand operating such works;General tax(c) a general tax of not less than eight and not more than fifty percentum of their rateable value, or of not less than 0.1 and notmore than 1 per centum of their capital value, as the case may be,together with not less than one-eight and not more than five percentum of their rateable value or not less than 0.01 and not morethan 0.2 per centum of their capital value, as the case may be,added thereto in order to provide for the expense necessary forfulfilling the duties of the corporation arising under clause (k) ofsection 61 and Chapter XIV;Education cess(ca) the education cess leviable under section 195E;(cb) the street tax leviable under section 195G;(d) betterment charges leviable under Chapter XII-A.(2) Any reference in this Act or in any instrument to a water taxor a halalkhor tax shall after the commencement of the Bombay ABCDEFGH697Municipal Corporation (Amendment) Ordinance, 1973, beconstrued as a reference to the water tax or the water benefit taxor both or the sewerage tax or the sewerage benefit tax, or bothas the context may require;140A.Property taxes to be levied on capital value and therate thereof. (1) Notwithstanding anything contained in section140 or any other provision of this Act, the Corporation may pass aresolution to adopt levy of property tax on buildings and lands inBrihan Mumbai on the basis of capital value of the buildings andlands on and from such date, and at such rates, as the Corporationmay determine in accordance with the provisions of section 128:Provided that, for the period of five years from the date onand from which such property tax is levied on capital value, thetax shall not:(a) exceed, -(i) in respect of building used for residential purposes, twotimes, and(ii) in respect of building or land used for non-residentialpurposes, three times, and(b) where the tax so levied on any building or land, whetherused for residential or for non-residential purposes, gets reduced,be less than half of the amount of the property tax leviable inrespect thereof in the year immediately preceding such date:shall not exceed,-(i)in respect of building used for residential purposes, twotimes, and(ii)in respect of building or land used for non-residentialpurposes, three times,the amount of the property tax leviable in respect thereof in theyear immediately preceding such date:Provided further that, where the property taxes levied inrespect of any residential or non-residential building or portionthereof were on the basis of annual letting value arrived atconsidering the leave and licence charges, by whatever namecalled, then for the purposes of the first proviso it shall be lawfulMUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH698SUPREME COURT REPORTS[2022] 14 S.C.R.for the Commissioner to ascertain such tax leviable during suchimmediately preceding year, as if such building or portion thereofwere self-occupied and had been so entered in the assessmentbook:Provided also that, the property tax levied on the basis ofcapital value of any building or land on revision made under subsection (1C) of section 154 shall not in any case exceed 40 percentum of the amount of the property tax payable in the yearimmediately preceding the year of such revision:Provided also that, for the period of five years commencingfrom the year of adoption of capital value as the base, for levy ofproperty tax under section 140A, the amount of property taxleviable in respect of a residential building or residential tenement,having carpet area of 46.45 sq. meter (500 sq. feet) or less, shallnot exceed the amount of property tax levied and payable in theyear immediately preceding the year of such adoption of capitalvalue as the basis.Provided also that, for a period of five years commencingonthe 1st April 2015, the amount of property tax leviable in respectof a residential building or residential tenement, having carpet areaof 46.45 sq. meter (500 sq. feet) or less, shall not exceed theamount of property tax which is being levied and payable in respectof such residential building or tenement as on the 31st March2015.Provided also that, for the financial year 2019-20, theprovisions of the preceding proviso shall apply as if the generaltax leviable under clause (c) of sub-section (1) of section 140 donot form part of the property tax leviable under that section.(2) Notwithstanding anything contained in sub-section (4) of section139A or any other provisions of this Act or Resolution, if any,passed by the Corporation for adopting the levy of property taxon the basis of capital value but subject to the provisions of section154A, buildings and lands in respect of which the process of fixingcapital value is in progress on the 26th August 2010, being thedate of coming into force of section 3 of the Maharashtra MunicipalCorporations and Municipal Councils (Third Amendment) Act,2010, until it is so fixed, the tax leviable and payable in respect of ABCDEFGH699such buildings and lands shall provisionally be equal to the amountof tax leviable and payable in the preceding year, that is to say, forthe year commencing on the first day of April 2009 and ending onthe thirty-first day of March 2010 and such provisional tax shallbe leviable and payable for each of the years 2010-2011, 2011-2012 and 2012-2013, according to the provisional bills which maybe issued separately for each such year; so, however, that onfixation of capital value of the respective buildings and lands, finalbill of assessment of property taxes on the basis of capital valuemay then be issued for each such year as aforesaid. After suchfinal assessment, if it is found that the assessee has paid excessamount, such excess shall, notwithstanding anything contained insection 179, be refunded within three months from the date ofissuing the final bill, along with interest from such date as providedin the first proviso to sub-section (5) of section 217, or afterobtaining the consent of the assessee, shall be adjusted towardspayment of property tax due, if any, for the subsequent years; andif the amount of taxes on final assessment is more than the amountof tax already paid by the assessee, the difference shall berecovered from the assessee.(2A) Notwithstanding anything contained in sub-section (1) or (2)or any other provisions of this Act, the tax on buildings and lands,which are liable to be assessed for the first time on or after the1st April 2010, shall provisionally be equal to the amount of tax, asif such buildings and lands are liable to be assessed in the year2009-2010; and on ascertainment of the capital value of such‘buildings and lands, the corporation may issue a final bill in respectof the years for which they are liable to be assessed, on the basisof capital value thereof and accordingly it shall be the duty of theowner and occupier of such buildings and lands to pay such taxwithin the period specified in the final bill issued as aforesaid.(3) Notwithstanding anything contained in section 163 or 217 orany other provisions of this Act and having regard to the fact thatthe property tax bill has been issued in accordance with theprovisions of sub-section (2), not being a final bill, such bill shallnot be questioned before any forum; and no complaint or appealshall lie against such bill merely on the ground that capital value inrespect of the property which is subject matter of the bill is notMUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH700SUPREME COURT REPORTS[2022] 14 S.C.R.yet fixed, or that the amount of tax leviable and payable at therate of property tax determined by the Corporation is not yet finallyascertained, or on any other ground whatever.Explanation.- For the purposes of this section, after the Corporationadopts the Capital Value as the basis of levy of property tax, theproperty tax in respect of any taxable building shall be revisedafter every five years and on each such revision, such amount ofproperty tax, shall not in any case exceed the forty per cent of theamount of the property tax levied and payable in the yearimmediately preceding the year of the revision.xxxxxxxxx154.Rateable value or capital value how to bedetermined. (1) In order to fix the rateable value of any buildingor land assessable to a property-tax, there shall be deducted fromthe amount of the annual rent for which such land or buildingmight reasonably be expected to let from year to year as unequalto ten per centum of the said annual rent and the said deductionshall be in lieu of all allowances for repairs or on any other accountwhatever.(1A) In order to fix the capital value of any building or landassessable to a property tax the Commissioner shall have regardto the value of any building or land as indicated in the Stamp DutyReady Reckoner for the time being in force as prepared underthe Bombay Stamp (Determination of True Market Value ofProperty) Rules, 1995, framed under the provisions of the BombayStamp Act, 1958, as a base value2or where the Stamp Duty ReadyReckoner does not indicate Value of any properties in any particulararea wherein a building or land in respect of which capital value isrequired to be determined is situate, or in case such Stamp DutyReady Reckoner does not exist, then the Commissioner may fixthe capital value of any building or land taking into considerationthe market value of such building or land, as a base value. TheCommissioner while fixing the capital value as aforesaid, shallhave regard3 to the following factors, namely: -2 and3 The expressions were added / substituted by 2010 Amendment. The erstwhile sub-section (1A) introduced by Maharashtra Act No. XI of 2009 was : - ABCDEFGH701(a) the nature and type of the land and structure of the building,-(b) area of land or carpet area of building,(c) user category, that is to say, (i) residential, (ii) commercial(shops or the like), (iii) offices, (iv) hotels (upto 4 stars), (v)hotels (more than 4 stars), (vi) banks, (vii) industries andfactories, (viii) school and college building or building used foreducational purposes, (ix) malls and (x) any other building orlandnot covered by any of the above categories,(d) age of the building, or(e) such other factors as may be specified by rules made undersubsection (1B).(1B) The Commissioner shall with the approval of the StandingCommittee, frame such rules as respects the details of categoriesof building or land and the weightage by multiplication to beassigned to various such factors and categories for the purposeof fixing the capital value under sub-section (1A).(1C) The capital value of any building or land fixed under sub-section (1A) shall be revised every five years:Provided that, the Commissioner may, for reasons to berecorded in writing, revise the capital value of any building or land“”(1A)In order to fix the capital value of any building or land assessable toa property tax the Commissioner shall have regard to the value of any building or landas indicated in the Stamp Duty Ready Reckoner for the time being in force as preparedunder the Bombay Stamp (Determination of True Market Value of Property) Rules,1995, framed under the provisions of the Bombay Stamp Act, 1958, or where theStamp Duty Ready Reckoner does not indicate value of any properties in any particulararea wherein a building or land in respect of which capital value is required to bedetermined is situate, or in case such Stamp Duty Ready Reckoner does not exist, thenthe Commissioner may fix the capital value of any building or land taking intoconsideration the market value of such building or land, as a base value; and also haveregard to the following factors, namely: -(a)the nature and type of the land and structure of the building,(b)area of land or carpet area of building,(c)user category, that is to say, (i) residential, (ii) commercial (shops or the like), (iii)offices, (iv) hotels (upto 4 stars), (v) hotels (more than 4 stars) (vi) banks, (vii) industriesand factories, (viii) school and college building or building used for educational purposes,(ix) malls and (x) any other building or land not covered by any of the above categories,(d)age of the building, orsuch other factors as may be specified by rules made under subsection (1B).””MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH702SUPREME COURT REPORTS[2022] 14 S.C.R.any time during the said period of five years and shall accordinglyamend the assessment book in relation to such building or landunder section 167.(1D) (a)Notwithstanding anything contained in sub-section (1C),-(i) due to the spread of COVID-19 pandemic, the capital valueof any building or land fixed under sub-section (1A) shall notbe revised in the year 2020-21 and the year 2021-22;(ii) for the year 2020-21 and the year 2021-22, the propertytax bill for any building or land shall be the same as is for theyear 2019-20;(iii) the capital value of any building or land fixed under sub-section (1A) shall be revised in the year 2022-23, as if theclause (i) is not applicable for the year 2020-21 and the year2021-22.(b)Subject to the proviso to sub-section (1C), the nextrevision shall be in the year 2025-26, and, thereafter, the revisionof capital value of any building or land, shall be in accordancewith the provisions of sub-section (1C).(2) The value of any machinery contained or situate in or uponany building or land shall not be included in the rateable value orthe capital value, as the case may be, of such building or land.154A. Provisional fixation of capital value in certain cases.Notwithstanding anything contained in section 154, the rateablevalue of any building or land or part thereof, for the official year2009-2010, shall be the provisional capital value of such buildingand lands in respect of the official years 2010-2011, 2011-2012and 2012-2013, and such provisional capital value shall be deemedto be the capital value validly and legally fixed under the provisionsof this Act, pending fixing the capital value thereof, and it shall belawful for the Commissioner to treat it as such for the purposes ofassessment book kept under the provisions of this Act, and the billfor property taxes issued under sub-section (2) of section 140Ashall be deemed to have been validly and legally issued under theprovisions of this Act.Provided that, in respect of the buildings and lands which areliable to be assessed for the first time on or after the 1st April ABCDEFGH7032010, the capital value of such buildings and lands shall, until thefinal capital value is determined under this section, be provisionallyequal to the amount of rateable value worked out on the basis ofthe prescribed letting rates by the corporation in respect of theofficial year 2009-2010.155. Commissioner may call for information or returns fromowner or occupier or enter and inspect assessable premises.(1) To enable him to determine the rateable value or the capitalvalue, as the case may be, of any building or land and the personprimarily liable for the payment of any property tax leviable inrespect thereof the Commissioner may require the owner oroccupier of such building or land, or of any portion thereof, tofurnish him, within such reasonable period as the Commissionerprescribes in this behalf, with information or with a written returnsigned by such owner or occupier-(a) as to the name and place of abode of the owner or occupier,or of both owner and occupier of such building or land; and(b) as to the details in respect of any or all the items asenumerated in clauses (a) to (e) of sub-section (1A) of section154 in relation to such building or land or any portion thereof.(2) Every owner or occupier on whom any such requisition ismade shall be bound to comply with the same and to give trueinformation or to make a true return to the best of his knowledgeor belief.(3) The Commissioner may also for the purpose aforesaid makean inspection of any such building or land.156. Assessment book what to contain.The Commissioner shall keep a book, in such form and manner ashe may, with the approval of the Standing Committee, determine,and such book shall be called “the assessment book” in whichshall be entered every official year-(a) a list of all buildings and lands in Brihan Mumbaidistinguishing each either by name or number, as he shall thinkfit;(b) the rateable value or the capital value, as the case may be,MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH704SUPREME COURT REPORTS[2022] 14 S.C.R.of each such building and land determined in accordance withthe foregoing provisions of this Act;(c) the name of the person primarily liable for the payment ofthe property taxes, if any, leviable on each such building orland;(d) if any such building or land is not liable to be assessed tothe general tax or is exempt from payment of property taxeither in whole or in part, as the case may be, the reason ofsuch non-liability or exemption, as the case may be;(e) when the rates of the property taxes to be levied for theyear have been duly fixed by the corporation and the periodfixed by public notice, as hereinafter provided, for the receiptof complaints against the amount of rateable value or the capitalvalue, as the case may be, entered in any portion of theassessment book, has expired, and in the case of any suchentry which is complained against, when such complaint hasbeen disposed of in accordance with the provisions hereinaftercontained, the amount at which each building or land enteredin such portion of the assessment book is assessed to each ofthe property taxes, if any, leviable thereon;(f) if under section 169, a charge is made for water supplied toany buildings or land by measurement or the water taxes orcharges for water by measurement are compounded for, or if,under section 170, the sewerage taxes or sewerage chargesfor any building or land are fixed at a special rate, the particularsand amount of such charges composition or rates;(g) such other details, if any, as the Commissioner from time totime thinks fit to direct.”10. The relevant portion of the Capital Value Rules, 2010 is asunder:-“No. AC/NTC/1310/2011-22 dated 20.03.2012. In exercise of thepowers conferred by clause (e)s of sub-section (1A) and sub-section (1B) of section 154 of the Mumbai Municipal CorporationAct (Act No. Bom.III of 1888), and of all other powers enablinghim in this behalf, the Commissioner, after having obtained theapproval of the Standing Committee, as required under the said ABCDEFGH705sub-section (1B), hereby makes the following rules to provide forthe factors and categories of users of buildings or lands and theweightage by multiplication to be assigned to various such factorsand categories for the purpose of fixing the capital value of buildingsand lands in Brihan Mumbai, namely:-1. Short title and commencement: - (i) These rules may be calledfor the Factors and Categories of Users of Buildings or Lands(Assignment of Weightages by Multiplication) Fixation of CapitalValue Rules, 2010.(ii) They shall come into force forthwith.xxxxxxxxx3. Capital of open land :- Save otherwise provided in these rules,where, within the precincts of a building there is vacant land otherthan the land appurtenant to the building, such land shall be treatedas open land and the capital value thereof shall be fixedaccordingly, as provided for in rule 21.4. User categories of open land and weightages by multiplicationto be assigned thereto:- User categories of open land shall be asspecified in column (2) of Part 1 of schedule ‘A’ and the weightagesby multiplication to base value, to be respectively assigned theretothe purpose of fixing capital value, shall be as shown in column(3) of the said Part I of schedule ‘A’.5. User categories of buildings or part thereof and weightages bymultiplication to be assigned thereto:- User categories of buildingspart thereof shall be as specified column (2) of each of Parts II,III and IV of schedule ‘A’ and the weightages by multiplication tothe relative base value, to be respectively assigned thereto for thepurpose of fixing capital value, shall be as in column (3) of eachof the said Parts II, III and IV of schedule ‘A’.6. The nature and type of building and the weightage bymultiplication to be assigned thereto:- The nature and type of abuilding shall be as specified in column (2) of schedule ‘B’ andthe weightages my multiplication to be assigned thereto for thepurpose of fixing capital value, shall be shown in column (3) ofthe said schedule ‘B’.MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH706SUPREME COURT REPORTS[2022] 14 S.C.R.7. The weightage by multiplication to be assigned to a building onaccount of the age thereof: - The weightage by multiplication tobe assigned to a building on account of age factor, for the purposeof fixing capital value, shall be according to the age of the buildingas shown in column (2) of schedule ‘C’ and the weightage bymultiplication be assigned thereto shall be as shown in column (3)of the said schedule ‘C’.8. The weightage by multiplication on account of floor factor tobe assigned to RCC building with lift: - Weightage by multiplicationon account of floor factor to be assigned to a RCC building withlift, for the purpose of fixing capital value, shall be according tothe number of floors as shown in column (2) of schedule ‘D’ andthe weightage by multiplication to be assigned thereto shall be asshown in column (3) of the said schedule ‘D’.9. Area of hoarding or tower for the purpose of fixing capitalvalue: -Area of hoarding or tower for the purpose of fixing capitalvalue thereof shall mean, -(a) in the case of a hoarding, the area of the square of theextremities of the poles on which the hoarding is erected plus thearea of the hoarding; and(b) in the case of a tower, the area covered by the extremities ofthe foundation of the tower.10. Built-up area of a flat or a building: (1) The total carpet areaof a flat shall be reckoned by including the area of the followingitems, namely: (i) terrace in exclusive possession, (ii) mezzaninefloor, (iii) loft (excluding loft in residential flat) or attic, (iv) drybalcony and (v) niches; and(2) The total built-up area of a building shall be reckoned byincluding the areas of the following items, namely: - (i) total areaof the flats in the building computed in accordance with sub rule(1), (ii) basement, (iii) stilt, (iv)porch, (v) podium, (vi) service floor,(vii) refuge area, (viii) entrance lobby, (ix) lounge, (x) air-conditioning plant room, (xi) air handling room, (xii) the structurefor an effluent treatment plant and (xiii) watchman cabin(3) The built-up area of any of the following items shall not bereckoned while computing the carpet area of a building or partthereof, namely: - ABCDEFGH707(i) lift room above topmost storey, (ii) lift well, (iii) stair-caseand passage thereto including staircase room, (iv) chimney andelevated tank, (v) meter room, (vi) pump room, (vii) undergroundand overhead water tank, (viii) septic tank, (ix)flower-bed and(x) loft in residential flat(4) Where only the carpet area of a flat or building is available onthe record of the Corporation and the total built-up area thereof,computed in the manner as aforesaid in sub-rule (1), or, as thecase may be, sub-rule (2), is not available on such record, thenthe total built-up area of the flat or, as the case may be, of abuilding shall be arrived at in the following manner, namely :-Built-up area =1.2 x carpet area as available onthe record of the Corporation + the built-upareaof the items specified in sub-rule(1),or, as thecase may be, sub-rule (2), unless alreadyreckoned in such carpet area.11. Fixation of capital value of a flat or building or part thereof.- (1) While fixing the capital value of a flat, the capital value of anyone or more of the relevant items specified in sub-rule (1) of rule10, as fixed in accordance with the provisions of rules 14,15, orsub-rule(1) of rule 16, as the case may be, shall be added to thecapital value of the flat.(2) While fixing the capital value of a building or part thereof, thecapital value of any of the one or more of the relevant itemsspecified in sub-rule (2) of rule 10 as fixed in accordance with theprovisions of sub-rule (2) or, as the case may be, (3) of rule 16,shall be added to the capital value of the building or part thereof.12. Fixation of capital value of a building where there are tenants:- The capital value of a building or part thereof which is occupiedby a tenant shall be fixed at 75% of the capital value of suchbuilding or part thereof; fixed in accordance with the provisionsof sub-rule (1), or, as the case may be, sub-rule (2) of rule 11.Explanation. - For the removal of doubts, it is hereby declaredthat the provisions of this rule shall not apply to a building or partthereof if, -(1) it is occupied by a licensee to whom it is given on leaveand licence;MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH708SUPREME COURT REPORTS[2022] 14 S.C.R.s(2) it is occupied by an office bearer or officer or anemployee of the landlord.13. Fixation of capital value of religious buildings :- The capitalvalue of a religious building which is a temple, math, gurudwara,mosque, takth, church, durgah, synagogue, or agiary or the like,and is used or intended to be used for the purpose of religiousworship or offering prayers or performance of any religious ritesor rituals by a person of, or belonging to, the relevant religion,creed, or sect, shall be fixed at the rate of base value applicable toa residential building as indicated in the Ready Reckoner; and byapplying the relevant weightages by multiplication provided for inthese rules.14. Fixation of capital value of open terrace: - If an open terracein exclusive possession is attached to a flat, the capital value ofsuch terrace of a non-residential flat shall be fixed at 40% of therelative rate of base value of such flat, and of residential flat at10% of the relative rate of base value of such flat; and by applyingthe relevant weightages by multiplication provided for in theserules.15. Fixation of capital value of mezzanine floor, loft and attic floor:-(a) the capital value of mezzanine floor shall be fixed at70% of the relative rate of base value of the flat beneath themezzanine floor; and by applying the relevant weightages bymultiplication provided for in these rules;(b) the capital value of loft or attic floor shall be fixed at50% of the relative rate of base value of the flat beneath the loft,or as the case may be, the attic; and by applying the relevantweightages by multiplication provided for in these rules;Provided that, where the rate of base value applicable tothe mezzanine floor, loft or attic floor having regard to its user ishigher or, as the case may be, lower than the rate of base valueapplicable to the flat beneath such mezzanine floor, loft or atticfloor, the capital value of such mezzanine floor, loft or attic floorshall be fixed at 70% or 50%, as the case may be, of such higheror lower rate of base value; and by applying the relevant weightagesby multiplication provided for in these rules. ABCDEFGH70916. Fixation of capital value of certain other items which are partof a flat or a building or part thereto,- (1) The capital value of drybalcony and niches shall be fixed at 25% of the relative rate ofbase value of the flat, if any one of these items are part of the flat;and by applying the relevant weightages by multiplication providedfor in these rules.(2) The capital value of any one or more of the following items,namely:- (i)porch, (ii) air-conditioning plant room, (iii) air-handlingroom, (iv) structure for an effluent plant, (v) watchman cabin and(vi) refuge area, shall be fixed at 25% of the relative rate of basevalue of the building or part thereof, if any one or more of theseitems are part of the building or part thereof; and by applying therelevant weightages by multiplication provided for in these rules.(3) The capital value of any one or more of the following items,namely:- (i) service floor, (ii) entrance lobby and (iii) lounge, shallbe fixed at the relative rate of base value of the building or partthereof, if any of these items are part of the building or part thereof;and by applying the relevant weightages by multiplication providedfor in these rules.17. Fixation of capital value in respect of demolished building :-(1) Where a building is fully demolished, or has fully collapsed,the land beneath it shall be deemed to be open land and the capitalvalue thereof shall be fixed accordingly, as provided for in rule 21.Explanation –For the purpose of this rule, it is hereby declaredthat where a building is, or is being, demolished, or has collapsed,resulting in the land on which it stood or stands being renderedopen land, or only walls or the like are standing but there is nostructure as such which can be occupied, and on such demolition,or collapse, debris or any remains of the demolished or collapsedbuilding are not yet removed, the land beneath such building shallbe deemed to be open land.(2) Where only part of a building is demolished or has partlycollapsed and the remaining part is yet occupied by occupiers,land beneath the portion of the building which is demolished orhas collapsed shall be deemed to be open land and the portion ofthe structure which is occupied shall be treated as a building, forthe purpose of fixing the capital value thereof.MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH710SUPREME COURT REPORTS[2022] 14 S.C.R.(3) Notwithstanding anything contained in sub rules (1) and (2),where a cessed building is, or is being, demolished, or has collapsed,the land beneath the building or portion of the building which isdemolished or collapsed shall be deemed to be open land and thecapital value thereof shall be fixed as open land and assigningthereto a weightage by multiplication of 0.30 of the base value ofopen land.18. The capital value of storage tank .-The capital value of storagetank shall be fixed in the following manner, namely : –(1) storage tank above the ground level :-(a) land - at the rate of open land in the Ready Reckonerand weightage by multiplication to be assigned thereto shall be1.25,(b) storage tank - capacity of storage tank in litres multipliedby the rate of Rs.40 per litre, with weightage by multiplication tobe assigned thereto on account of age factor as in schedule ‘C’,(c) total capital value of a storage tank = total of items (a)and (b).(2) storage tank below the ground level :-(a) land - at the rate of open land in the Ready Reckonerand weightage by multiplication to be assigned thereto shall be1.25,(b) storage tank - capacity of storage tank in litres multipliedby the rate of Rs.50 per litre, with weightage by multiplication tobe assigned thereto on account of age factor as in schedule ‘C’,(c) total capital value of a storage tank = total of items (a)and (b).19. Capital value of amenities of luxurious RCC building not to beseparately fixed again.- Where the capital value of a luxuriousRCC building is fixed under these rules, then no capital value ofthe amenities specified in the definition of the expression ‘luxuriousRCC building’ shall be separately fixed for the purpose of levy ofproperty tax.20. Valuation of open land capable of utilising more than 1 floorspace index (F.S.I) or transfer of development right (T.D.R.) -As ABCDEFGH711the Ready Reckoner provides for the rate of base value of openland with 1 floor space index, open land which is capable of utilizingmore than 1 floor space index or any transfer of developmentright shall be valued at an increased rate in proportion to the higherfloor space index or transfer of development right proposed to beutilized and approved under the building plan submitted to theCorporation for approval.21. Capital value of open land or building or part thereof.-Capitalvalue of open land or building shall be fixed under the provisionsof the Act and these rules in the following manner, namely:(1) Capital value (CV) of open landRate of base value (BV) of a open land according to ReadyReckoner X weightage by multiplication as per user category(UC) (Part I of schedule ‘A’) X permissible or approved floorspace index (FSI) X area of land (AL).CV = BV x UC x FSI x AL(2) Capital value (CV) of a building --–Relative rate of base value (BV) of a building according toReady Reckoner X weightage by multiplication as per usercategory (UC) (Parts II, III, or as the case may be, IV ofschedule ‘A’) X weightage by multiplication as per the natureand type of building (NTB) (schedule ‘B’) X weightage bymultiplication on account of age of building (AF) (schedule‘C’) X weightage by multiplication on account of floor factor(FF) for RCC building with lift (schedule ‘D’) X carpet area(CA).CV = BV x UC x NTB x AF x FF x CAExamples: - Some examples based and worked out on the formulaeas aforesaid are shown in the Appendix.22. Non-application of Guidelines of Stamp Duty Valuation. -Notwithstanding anything contained in the “Important Guidelinesof Stamp Duty Valuation” as specified in the Ready Reckoner,the provisions made in these rules shall have primacy over thoseguidelines and none of those guidelines shall apply for fixing capitalvalue under the Act and these rules.”MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH712SUPREME COURT REPORTS[2022] 14 S.C.R.11. The relevant portion of Capital Value Rules of 2015 is as under:-“No.AC/NTC/1147/2014-15. In exercise of the powers conferredby clause (e) of sub-section (1A), sub-section (1B) and sub-section(1C) of section 154 of the Mumbai Municipal Corporation Act(Act No.Bom.III of 1888), and of all other powers enabling himin this behalf, the Commissioner, after having obtained the approvalof the Standing Committee, as required under the said sub-section(1B), hereby makes the following rules to provide for the factorsand categories of users of lands and buildings and the weightageby multiplication to be assigned to various such factors andcategories for the purpose of fixing the capital value of lands andbuildings in Brihan Mumbai, namely: -1. Short title and commencement: -(1) These rules may be calledthe Factors and Categories of Users of Buildings or Lands(Assignment of Weightages by Multiplication) Fixation of CapitalValue Rules, 2015.(2) They shall come into force from 1st April 2015.2. Definitions – In these rules, unless the context otherwiserequires:- xxxxxxxxx(c) “hoarding” includes boards used to display advertisements,erected on poles, on the ground or on a building; xxxxxxxxx(g) “open land” includes land not built upon or land being builtupon, but does not include land appurtenant to a building;(h) “Ready Reckoner” means the Stamp Duty Ready Reckoner,for the time being in force, referred to in sub-section (1A) ofsection 154 of the Act; xxxxxxxxx3. Capital value of open land :- Save otherwise provided in theserules, where, within the precincts of a building there is vacantland other than the land appurtenant to the building, such landshall be treated as open land and the capital value thereof shall befixed accordingly, as provided for in rule 21. ABCDEFGH7134. User categories of open land and weightages by multiplicationto be assigned thereto:- User categories of open land shall be asspecified in column (2) of Part 1 of schedule ‘A’ and the weightagesby multiplication to base value, to be respectively assigned theretothe purpose of fixing capital value, shall be as shown in column(3) of the said Part I of schedule ‘A’.5. User categories of buildings or part thereof and weightages bymultiplication to be assigned thereto:- User categories of buildingsor part thereof shall be as specified column (2) of each of PartsII, III and IV of schedule ‘A’ and the weightages by multiplicationto the relative base value, to be respectively assigned thereto forthe purpose of fixing capital value, shall be as in column (3) ofeach of the said Parts II, III and Iv of schedule ‘A’.6. The nature and type of building and the weightage bymultiplication to be assigned thereto:- The nature and type of abuilding and type of building shall be as specified in column (2) ofschedule “B” and the weightages assigned thereto for the purposeof fixing capital value, shall be shown in column (3) of the saidschedule ‘B’.7. The weightage by multiplication to be assigned to a building onaccount of the age thereof: - The weightage by multiplication tobe assigned to a building on account of age factor, for the purposeof fixing capital value, shall be according to the age of the buildingas shown in column (2) of schedule ‘C’ and the weightage bymultiplication be assigned thereto shall be as shown in column (3)of the said schedule “C”.8. The weightage by multiplication on account of floor factor tobe assigned to RCC building with lift: - Weightage by multiplicationon account of floor factor to be assigned to a RCC building withlift, for the purpose of fixing capital value, shall be according tothe number of floors as shown in column (2) of schedule ‘D’ andthe weightage by multiplication to be assigned thereto shall be asshown in column (3) of the said schedule ‘D’.9. Area of hoarding or tower for the purpose of fixing capitalvalue: -Area of hoarding or tower for the purpose of fixing capitalvalue thereof shall mean, -(a) in the case of a hoarding, the area of the square of theextremities of the poles on which the hoarding is erected plus thearea of the hoarding; andMUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH714SUPREME COURT REPORTS[2022] 14 S.C.R.(b) in the case of a tower, the area covered by the extremities ofthe foundation of the tower.10. Carpet Area area of a flat or a building: (1) The total carpetarea of a flat shall be reckoned by including the area of thefollowing items, namely: (i) terrace in exclusive possession, (ii)mezzanine floor, (iii) loft (excluding loft in residential flat) or attic,(iv) dry balcony and (v) niches; and(2) The total carpet area area of a building shall be reckoned byincluding the areas of the following items, namely:- (i) total areaof the flats in the building computed in accordance with sub rule(1), (ii) basement, (iii) stilt, (iv)porch, (v) podium, (vi) service floor,(vii) refuge area, (viii) entrance lobby, (ix) lounge, (x) air-conditioning plant room, (xi) air handling room, (xii) the structurefor an effluent treatment plant room and (xiii) watchman cabin(xix)sewerage treatment plant room (xv) water treatment plantroom(3) The carpet area of any of the following items shall not bereckoned while computing the carpet area of a building or partthereof, namely:(i) lift room above topmost storey, (ii) lift well, (iii) stair-caseand passage thereto including staircase room, (iv) chimney andelevated tank, (v) meter room, (vi) pump room, (vii) undergroundand overhead water tank, (viii) septic tank, (ix)flower-bed and(x) loft in residential flat, (xi) entrance lobby of residential building(4) “deleted”11. Fixation of capital value of a flat or building or part thereof.- (1) While fixing the capital value of a flat, the capital value of anyone or more of the relevant items specified in sub-rule (1) of rule10, as fixed in accordance with the provisions of rules 14,15, orsub-rule(1) of rule 16, as the case may be, shall be added to thecapital value of the flat.(2) While fixing the capital value of a building or part thereof, thecapital value of any of the one or more of the relevant itemsspecified in sub-rule (2) of rule 10 as fixed in accordance with theprovisions of sub-rule (2) or, as the case may be, (3) of rule 16,shall be added to the capital value of the building or part thereof. ABCDEFGH71512. “deleted”13. Fixation of capital value of religious buildings :- The capitalvalue of a religious building which is a temple, math, gurudwara,mosque, takth, church, durgah, synagogue, or agiary or the like,and is used or intended to be used for the purpose of religiousworship or offering prayers or performance of any religious ritesor rituals by a person of, or belonging to, the relevant religion,creed, or sect, shall be fixed at the rate of base value applicable toa residential building as indicated in the Ready Reckoner; and byapplying the relevant weightages by multiplication provided for inthese rules.14. Fixation of capital value of open terrace: - If an open terracein exclusive possession is attached to a flat, the capital value ofsuch terrace of a non-residential flat shall be fixed at 50% of therelative rate of base value of such flat, and of residential flat at20% of the relative rate of base value of such flat; and by applyingthe relevant weightages by multiplication provided for in theserules.15. Fixation of capital value of mezzanine floor, loft and attic floor:-(a) the capital value of mezzanine floor shall be fixed at70% of the relative rate of base value of the flat beneath themezzanine floor; and by applying the relevant weightages bymultiplication provided for in these rules;(b) the capital value of loft or attic floor shall be fixed at50% of the relative rate of base value of the flat beneath the loft,or as the case may be, the attic; and by applying the relevantweightages by multiplication provided for in these rules;Provided that, where the rate of base value applicable tothe mezzanine floor, loft or attic floor having regard to its user ishigher or, as the case may be, lower than the rate of base valueapplicable to the flat beneath such mezzanine floor, loft or atticfloor, the capital value of such mezzanine floor, loft or attic floorshall be fixed at 70% or 50%, as the case may be, of such higheror lower rate of base value; and by applying the relevant weightagesby multiplication provided for in these rules.16.”deleted”MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH716SUPREME COURT REPORTS[2022] 14 S.C.R.17. Fixation of capital value in respect of demolished building :-(1) Where a building is fully demolished, or has fully collapsed,the land beneath it shall be deemed to be open land and the capitalvalue thereof shall be fixed accordingly, as provided for in rule 21.Explanation - “deleted”(2) Where only part of a building is demolished or has partlycollapsed and the remaining part is yet occupied by occupiers,land beneath the portion of the building which is demolished orhas collapsed shall be deemed to be open land and the portion ofthe structure which is occupied shall be treated as a building, forthe purpose of fixing the capital value thereof.(3) “deleted”18, “deleted”19. “deleted”.19 A Assessment of Amenities in Luxurious RCC bldgWhere Property tax in respect of amenities of luxuriousRCC building was not levied since 1st April 2010 as per Rule19, while determining the property tax leviable from 1st April2015, subject to capping as provided for in section 140A suchtax shall be considered which would have been continued tolevy from 1st April 2010.20. Valuation of open land capable of utilising more than 1 floorspace index (F.S.I) or transfer of development right (T.D.R.) -Asthe Ready Reckoner provides for the rate of base value of openland with 1 floor space index, open land which is capable of utilizingmore than 1 floor space index or any transfer of developmentright shall be valued at an increased rate in proportion to the higherfloor space index or transfer of development right proposed to beutilized and approved under the building plan submitted to theCorporation for approval.21. Capital value of open land or building or part thereof.-Capitalvalue of open land or building shall be fixed under the provisionsof the Act and these rules in the following manner, namely:(1) Capital value (CV) of open landRate of base value (BV) of a open land according to ReadyReckoner X weightage by multiplication as per user category (UC)(Part I of schedule ‘A’) X permissible or approved floor space ABCDEFGH717index (FSI) X area of land (AL).CV = BV x UC x FSI x AL(2) Capital value (CV) of a building --–Relative rate of base value (BV) of a building according toReady Reckoner X weightage by multiplication as per usercategory(UC) (Parts II, III, or as the case may be, IV of schedule‘A’) X weightage by multiplication as per the nature and type ofbuilding (NTB) (schedule ‘B’) X weightage by multiplication onaccount of age of building (AF) (schedule ‘C’) X weightage bymultiplication on account of floor factor (FF) for RCC buildingwith lift (schedule ‘D’) X carpet area (CA).CV = BV x UC x NTB x AF x FF x CA22. Non-application of Guidelines of Stamp Duty Valuation. -Notwithstanding anything contained in the “Important Guidelinesof Stamp Duty Valuation” as specified in the Ready Reckoner,the provisions made in these rules shall have primacy over thoseguidelines and none of those guidelines shall apply for fixing capitalvalue under the Act and these rules.”12. In Appendix II of Capital Value Rules of 2010, 13 examplesare provided. Examples12 and 13 from said appendix are as under:“(12) OPEN LAND WHERE RESIDENTIAL BUILDINGPLAN WITH HIGHER F.S.I. HAS BEEN APPROVED Weightage Rate of base value Rs.36,400 not applicable User Category Open Land (Resi) 1.00 Nature and Type of Building not applicable not applicable Age of Building not applicable not applicable F.S.I. Factor 2.50 2.50 Land Area 80 sq. mtr. not applicable MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH718SUPREME COURT REPORTS[2022] 14 S.C.R.CV= BV X UC X FSI X LA= 36400 X 1.00 X 2.50 X 80 C.V.= Rs.72,80,000(13) OPEN LAND IN SUBURBAN AREA Weightage Rate of base value Rs.33,200 not applicable User Category Residential 1.00 Nature and Type of Building not applicable not applicable Age of Building not applicable not applicable F.S.I. Factor 1.00 1.00 Land Area 80 sq. mtr. not applicable CV= BV X UC X FSI X LA= 33200 X 1.00 X 1.00 X 80 C.V.= Rs.26,56,000"13. Number of petitions were filed challenging the validity ofcomputation and levy ofproperty tax based on capital value system. Thepetitions also challenged the vires of Capital Value Rules of 2010 andCapital Value Rules of 2015. Some of the petitions also challenged theamendment effected to the MMC Act pertaining to the implementationof the Capital Value System for computing and assessing property tax.During the pendency of these matters before the High Court interimorders were passed by the High Court on or about 29.01.2014 whichwere thereafter modified by subsequent order dated 24.02.2014. Theoperative part of the order dated 24.02.2014 was as under: -“5.In the meantime the petitioners shall pay municipal taxes at thepre-amended rates and also the additional tax at the rate of 50%of the differential tax between the tax payable under the old regime ABCDEFGH719and now payable on the basis of capital value of the property. Thepetitioners will pay such amounts and the Municipal Corporationshall accept the amounts within prejudice to rights and contentionsof parties.”After exchange of pleadings,all the matters were taken up forhearing with Writ Petition No. 2492 of 2014 filed by the PropertyOwners’Association and others as the lead matter. Having consideredthe rival submissions, the High Court rejected the challenge as to thevalidity of various provisions of the MMC Act. It, however, held Rules20, 21 and 22 of the Capital Value Rules 2010 and 2015 to be ultra viresthe provisions of the MMC Act.14. Before considering the challenge raised on various grounds,at the outset the High Courtdealt with the approach to be adopted by aCourt while dealing with the challenge to the validity of tax laws, andconcluded that in case of taxing statute, more latitude would be requiredto be given to the legislature and that the burden on the petitionerschallenging the validity would be more onerous. Thereafter the challengewas considered under following heads: -(a) The argument on legislative competence.The submission that the tax in terms of the instant legislationwould be one covered by Entry 86 of List I of the Seventh Scheduleto the Constitution, was not accepted and the challenge in thatbehalf was rejected with following conclusions: -“155.The legislation providing for the levy of property tax by amunicipality on the basis capital value will be covered by Entry49 of List-II. Now coming to the impugned provisions, we findthat capital value of lands and buildings is adopted only as ameasure to determine the tax on lands and buildings. There isno attempt to levy a tax on capital value of assets. Therefore,the conclusion which can be drawn is that the State Legislaturewas competent to enact provisions regarding property tax basedon capital value under Entry-49 of List-II of Seventh Schedule.The argument that the impugned amended provisions of theBMC Act impinge upon the powers of the Central Legislaturecovered by Entry-86 of List-I of Seventh Schedule deservesto be rejected. The adoption of capital value as a basis ormeasure of tax on land and building will not attract Entry-86 ofList-I of Seventh Schedule.….”MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH720SUPREME COURT REPORTS[2022] 14 S.C.R.(b) Challenge to the validity of sub-Sections (1)(a) and (1)(b)of Section 140 regarding water tax and sewerage tax.The submissions were rejectedwith following observations: -“158.…..A tax is a compulsory exaction as a part of common burdenwithout promise of any special advantages to classes oftaxpayers, whereas a fee is a payment for servicesrendered, benefit provided or privilege conferred. Comingback to sub-sections (1)(a) and (1)(b) of section 140, thesame provide for levy of such water tax as the StandingCommittee may consider necessary for providing watersupply. The imposition of this tax does not depend onwhether the water is being supplied to the premises orproperty in respect of which water tax is demanded.Similarly, in case of additional water tax, the expenditureincurred or to be incurred for capital works for making orimproving the facilities of water supply may not be for adirect benefit to the premises or property subject matter oflevy of tax. The Municipal Corporation may not be providingwater supply to a particular premises or land at a particularpoint of time but it may be providing it to other properties inthe city. Similarly, in respect of sewerage tax or additionalsewerage tax, in case of an open land there may not be anyrequirement for collection or removal and disposal of humanand other wastes or for doing capital works for making andimproving the facilities for collection and removal of waste.Thus, in case of these four taxes, it is a compulsory exactionas part of a common burden without promise of any specialadvantages or promise to the tax payers. The said taxesare imposed to generate revenue. Even assuming that inthe levy of tax under these four heads, an element of quidpro quo exists, that by itself does not mean that the levyceases to be in the nature of tax. We, therefore, reject theargument that these four taxes cannot be levied in respectof vacant land or a land under construction which is notenjoying any service such as water supply or collection ofsewerage or waste. ABCDEFGH721159. Where the facilities of water supply or seweragecollection are provided to a land or building, as per the Rulesframed under sections 169 and 170 of the BMC Act, thewater charges or sewerage charges, as the case may be,by way of fees can be recovered which would have directnexus with the quality and quantity of services provided.Where charge is collected, taxes covered by the above fourheads cannot be levied. Therefore, we do not agree thatthe aforesaid four taxes are not in substance a tax but thesame are in the nature of fees.”(c) Challenge to the validity of sub-Section (1)(c)(a) ofSection 140 regarding levy of Education Cess.The submissions were rejectedthus:-“160.…..On plain reading of sub-section (1) of section 195E, itisclear that this section provides for levy of additional tax onbuildings and lands which is called as education cess of somany per centum not exceeding 12 per centum of theirrateable value or so many per centum of their capital value,as the case may be, as may be determined by theCorporation. Sub-section (1) of section 195E provides thatlevy of said additional tax is for the purposes of clause (q)of section 61. Under clause (q) of section 61, it is anobligation of the BMC to maintain and aid schools of primaryeducation. Therefore, as in the case of the aforesaid fourtaxes which we have discussed above, this tax is acompulsory exaction as a part of a common burden. We,therefore, do not see any merit in the submission that theaforesaid provisions are ultra vires the provisions of theConstitution of India. The argument whether education cesscan be levied on the basis of capital value is dealt withseparately.”(d) Similarly, the argument with regard to sub-Section (1)(d) ofSection 140 dealing with levy of Betterment Charges was rejectedwith following observations: -“162. In none of the Petitions in this group, it is demonstratedthat a demand is made from the petitioners for paymentMUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH722SUPREME COURT REPORTS[2022] 14 S.C.R.Betterment Charge. Elaborate procedure for determinationthereof is laid down. The Authority which has power todetermine the charge is the Improvement Committee. Asper section 49B of the BMC Act, the said Committeeconsists of 26 elected councilors of BMC. Moreover, thebetterment charge is not payable on the basis of the capitalvalue. Hence, the main ground of attack in these petitionsabout the levy of property taxes based on capital value hasno relevance to levy of Betterment charges.”(e) Consideration of challenge on the basis of violation ofprovisions of Chapter IXA and in particular, Article 243-Xof the Constitution of India.The substratum of the challenge was that the levy and collectionas provided in clauses (a) and (b) of Article 243-X of theConstitution must be by the Corporation consisting of the electedand nominated councillors and not by any other authority underSection 4 of the MMC Act. The submissions in that behalf wererejected as under:-“173.`We, firstly, deal with the argument that as the powerto levy and collect property taxes has been assigned to theMunicipality i.e. the Corporation, the power must beexercised by the Corporation consisting of elected andnominated councilors and not by any other municipalauthority. If the said argument is accepted, it will lead toabsurdity for the reason that the exercise of fixing the capitalvalue of all properties, fixing the rate of tax at a particularpercentage of capital value, imposition, levy and collectionwill have to be done by the Corporation which consists ofthe elected councillors and nominated councillors and byno other municipal authority. It will be impossible for theCorporation to do so.”xxxxxxxxx“181. To conclude, the BMC Act has been already amendedin terms of Article 243-ZF. Perusal of various provisions ofPart-IXA of the Constitution of India shows that theconstitutional provisions itself provide for the StateLegislature enacting law providing for constitution of ABCDEFGH723committees and conferring them with powers and authority.We have already referred to the various provisions includingclause (b) of Article 243-W. Therefore, the provision ofsection 4 of the BMC Act is consistent with the provisionof Part-IXA. Clauses (a) and (b) of Article 243-X cannotbe read in isolation and merely because Legislatureauthorizes the Standing Committee to fix the rates of propertytaxes and to approve rules framed by the Commissioner inaccordance with sub-section (1B) of section 154, therelevant provisions of the BMC Act cannot be said to beultra vires Article 243-X. The powers under the chargingsections in Chapter VIII are conferred on the Corporationitself including the power to exercise option of takingrecourse to capital value regime for the levy of propertytaxes. Moreover, we have pointed out that certain provisionsof Chapter VIII are machinery provisions. As required bylaw, the decision adopting Capital Value System has beentaken by the Corporation consisting of 227 elected andnominated councillors. This power cannot be said to beunguided power only because sub-section (1) of section140A does not expressly lay down any specific conditionsfor exercise of the option. The provisions which conferpower on the Standing Committee to fix the rates of taxescontain sufficient guidelines. Even the provision of sub-section (1A) of section 154 which confer power on theCommissioner to determine capital value contains more thansufficient guidelines. We see no violation of Article 243-Xor any other provisions of Part-IX-A.182. If we accept the submissions canvassed across thebar by the petitioners, not only the decision to adopt capitalvalue system but the job of fixing rates in case of allcategories of property taxes, determination of capital valueof all properties liable to taxes, process of serving noticesunder section 162, giving hearing on complaints and decidingthe complaints will have to be done by the Corporationconsisting of elected councillors and nominated councillorsand by no one else. Such interpretation put to clauses (a)and (b) of Article 243-X will lead to absurdity and theprovisions will become unworkable. Such interpretation willMUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH724SUPREME COURT REPORTS[2022] 14 S.C.R.defeat the object of 74th Amendment to the Constitutionand, therefore, the challenge on the ground of violation ofArticle 243-X must fail.”(f) Submissions on the ground of excessive delegation.While observing that the power conferred in sub-Section (1A)of Section 154 of the MMC Act on the Commissioner to fix capitalvalue, was not at all an unguided power and that sufficient guidelineswere set out, it was concluded thus: -“185. …. There are sufficient guidelines and safeguards.Moreover, in case of taxes where power to fix rates is givento the Standing Committee, the same will always form partof proposals of the Standing Committee which will beconsidered by the Corporation in accordance with clause(e) of subsection (1) of Section 128 for determination ofrates. The BMC Act does not provide for delegation ofessential functions of the Corporation. Conferment ofpowers on the Standing Committee and ImprovementCommittee and other municipal authorities is within the fourcorners of Part-IXA of the Constitution. Therefore, theargument of excessive delegation has no merit and deservesto be rejected.”(g) Submission based on violation of Article 14 of theConstitution of India.The submission that there was manifest arbitrariness in theimpugned provisions and that the provisions were confiscatory innature, were rejected by the High Court. It was observed thus: -“189. …. There is an argument canvassed that there is adisparity of tax payable in respect of residential and hotelproperties. An argument is canvassed that there is disparitybetween five star hotel properties and other hotel properties.On first principle, the submissions cannot be accepted. Theuser of residential properties, 5-Star hotel properties andother hotel properties is different. These properties formpart of distinct classes and by itsvary nature cannot betreated as equal. Therefore, it is very difficult to sustain anargument that there is manifest arbitrariness in the impugned ABCDEFGH725provisions. As the provisions do not lead to confiscatorynature of taxes, violation of Article 14 is not attracted.”(h) Challenge to the notification issued under theMaharashtra Education Cess Act, 1962The submissions in that behalf were also negatived withobservation that by adopting capital value system, only thecomputation of property tax was altered.(i) The ground of retrospective operation of the impugnedprovisions of the BMC Act.The contentions advanced in that behalf were rejected by theHigh Court after making following observations: -“205. The liability to pay property taxes was alwaysprovided in the BMC Act. By the impugned amendments,only the basis of computing property taxes has undergonea change. Assuming that there is any retrospective operation,it is no facilitate transition form one regime to another. Asper the amendments, the final assessment for the years2010-11, 2011-12 and 2012-13 can be made after expiry ofthe respective years. But provisional assessment has to bemade during the respective three years. The impugnedprovisions do not take away or affect any vested right asonly the procedure/method of computing the property taxeshas undergone a change. By virtue of the impugnedamendments, a property in respect of which taxes werenot payable earlier does not become subject to taxes. Itcannot be said that by the impugned amendment, from anearlier date, any new obligation or disability has beenattached in respect of any earlier transactions. Theimpugned amendments will affect the properties which evenunder the unamended Act, were subject to payment ofproperty tax. The impugned provisions do not bring aboutany unreasonable or arbitrary consequences. Thus, thereis no merit in the contention based on retrospectiveoperation.”Thus, the majority of submissions advanced on behalf of the writpetitioners were rejected by the High Court.MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH726SUPREME COURT REPORTS[2022] 14 S.C.R.15. The High Court however accepted the challenge on threegrounds, namely: -(i)Challenge to the Capital Value Rules of 2010 onretrospective operation,(ii)Challenge to the Capital Value Rules of2010and 2015, onthe ground that the rule making power did not permit theCommissioner to determine capital value.(iii)Rule 20 of the Capital Value Rules of 2010 was held to beultra vires theprovisions of sub-Section (1A) and (1B) ofSection 154 of the MMC Act.16. On the first issue, the High Court observed that neither clause(e) of sub-Section (1A) nor sub-Section (1B) of Section 154 of the MMCAct conferred powers to frame rules with retrospective effect. TheCapital Value Rules of 2010, which came into effect from 20.3.2012,were, therefore, held to be applicable prospectively and that said Rulescould not be applied from 1st April, 2010.17. With regard to the second issue, it was observed that therewas no provision in the MMC Act regarding consideration of developmentpotential of vacant land for determining its capital value. The conclusionarrived at by the High Court in that behalf was as under: -“211. Now we turn to the Capital Value Rules of 2010. As statedearlier, there is no provision which enables the Commissioner toframe rules for laying down guidelines for determining capitalvalue. Rule 2 contains definition. Rule 3 provides that where withinthe precincts of the building there is a vacant land other than theland appurtenant to the building, such land shall be treated as openland and capital value thereof shall be fixed as provided in Rule21. As observed earlier, the rule making power is confined to thethree aspects mentioned above. As Rule 3 refers to Rule 21, wewill have to consider the provision of Rule 21. Perusal of Rule 21and, particularly clause (1) thereof shows that it lays down howthe capital value of the open land is to be determined. It providesfor a formula. It provides that the capital value of open land willbe equal to rate of base value of open land according to SDRRmultiplied by weightage by multiplication as per user category.The said weightage is provided in Part-I under heading “OpenLand” multiplied by permissible or approved FSI multiplied by ABCDEFGH727area of the land. Once the base value is determined as per SDRR,it is obvious that the said value is fixed taking into considerationpotential of the land. The rates in SDRR are fixed after takinginto consideration all the aspects of market value. The capitalvalue has to be decided in accordance with the base value whichhas to be taken as per SDRR. Clause (1) of Rule 21 provides forweightage by multiplication as per user category. It also providesthat the rate of base value shall be multiplied by permissible FSIfor determining the capital value of the land. There is no provisionunder the BMC Act to take into consideration developmentpotential of vacant land for determining its capital value. Whenthe substantive provision i.e sub-section (1A) of Section 154 laysdown that the base value has to be in terms of SDRR rates, thesubordinate legislation cannot provide for adding additional valueto SDRR rates on account of availability of FSI. Thus, the provisionof multiplying base value with permissible or approved FSI is ultravires the provisions of the BMC Act. Moreover, the rule makingpower does not permit the Commissioner to frame the rules fordetermining what is the capital value. The rule making power isconfined to three aspects which are pointed out earlier. Clause(1) of Rule 21 which provides for taking into consideration thepotential FSI is not covered by any of the three categories. Undersub-section (1B) of section 154 of the BMC Act, the rules can beframed providing for details of categories of buildings or land andthe weightage by multiplication to be assigned to various suchcategories. Under clause (e) of sub-section (1A) of section 154,factors which are to be taken into consideration for determiningbase value can be subject matter of rules. The factors referred inclause (e) will have to be considered ejusdem generis. The otherfactors provided are nature of the land, type of land and structure,areas of land or building, user category such as residential orcommercial and the age of the building. Under clause (e) of sub-section (1A) of section 154, rules cannot be framed to decidehow the capital value should be determined. In fact, framing rulesfor laying down the method of calculating the capital value is itselfultra vires the statutory rule making power.”18. Rule 20 of the Capital Value Rules of 2010 was struck downby the High Court on the reasoning that the effect of said rule would bethat the value higher than what was provided for in Stamp Duty ReadyMUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH728SUPREME COURT REPORTS[2022] 14 S.C.R.Reckoner would be taken into consideration while computing the propertytax. The High Court observed as under: -“216. Rule 20 of Capital Value Rules, 2010 deals with valuation ofopen land capable of utilizing more than 1.0 FSI or transfer ofdevelopment right (TDR). It provides that as the Ready Reckonerprovides for the rate of base value of open land with 1.0 FSI,open land which is capable of utilizing more than 1.0 FSI or anyTDR shall be valued at an increased rate in proportion to thehigher FSI or TDR proposed to be utilized and approved underthe building plan submitted to the Corporation for approval. Thus,the effect of rule 20 is that while fixing capital value of open land,its potential for development by using additional FSI or TDR hasto be considered. Thus, a value higher than what is provided inSDRR should be taken into consideration.”It was further observed thus: -“218. Rule 20 provides for taking into consideration potential ofconstruction on the vacant land for making valuation. For thepurpose of property taxes, not only a vacant land but even a landunder construction will have to be treated as a vacant land.Wherever SDRR is applicable, in view of sub-section (1A) ofsection 154, the base value has to be as per SDRR rate for vacantland. Rule 20 provides for taking into consideration potential fordevelopment. It is completely contrary to the provisions of theBMC Act as interpreted in the case of Polychem Limited (supra)which requires even the land under construction to be treated asa vacant land. Moreover, rule 20 purports to lay down how valuationof the land has to be made. The rule making power under sub-section (1B) or clause (e) of sub-section (1A) of section 154 doesnot confer any such power. Moreover, if rule 20 is implemented,capital value which is higher than SDRR rate will have to be fixedwhich will be in violation of sub-section (1A) of section 154 whichmandates that the Commissioner will take into consideration SDRRrate while finalizing capital value. Thus, rule 20 is ultra vires theprovisions of sub-sections (1A) and (1B) of section 154 of theBMC Act. There is no difference in Rule 20 of the Capital ValueRules of 2010 and 2015.”19. In the end, the conclusions arrived at and the directions issuedby the High Court were as under: - ABCDEFGH729“229. Our conclusions can be summarized as under:(i)We uphold the constitutional validity of the sprovision ofthe BMC Act which are under challenge;(ii)The Capital Value Rules of 2010 shall apply prospectivelyfrom the date on which the same were made;(iii)We strike down rules 20, 21 and 22 of Capital ValueRules of 2010 and 2015. As far as rules 3 and 17 areconcerned, we hold that as rule 21 has been struck down,the capital value of properties covered by the said rulesshall not be fixed in accordance with rule 21. As a resultof striking down of rules 20, 21 and 22, in those caseswhere the capital value has been finally fixed either byissuing notice under section 162 of the BMC Act or byissuing final bills, the Commissioner or the officerempowered to exercise delegated powers will have tore-determine the capital value in accordance with sub-section (1A) of section 154 and serve a fresh specialassessment notice. We hold that if a complaint is filedafter service of special assessment notice, the same shallbe disposed of only after giving an opportunity of beingheard to the assessee filing such complaint. Only afterthe complaint is disposed of in such a fashion, a final billcan be served.(iv)As the Municipal Commissioner will require a reasonabletime to do the tasks as aforesaid, the interim orders whichare operating in these petitions will have to be continuedtill the service of final bills. We also make it clear thatthough we are setting aside the final bills issued, no partywill be entitled to claim refund of the amounts paid underthe interim orders and till the final bills are served, thepetitioners will have to pay the amounts as per the interimorders.(v)This judgment will apply only to the properties subjectmatter of the petitions in this group except Writ PetitionNo. 2592 of 2013 and PIL 46 OF 2014. We make itclear that only those special assessment notices and finalbills which are specifically challenged will stand set aside.MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH730SUPREME COURT REPORTS[2022] 14 S.C.R.In Writ Petition No. 2592 of 2013, the fresh exercisewill have to be undertaken only in relation to theproperties in respect of which there is a specific prayerfor quashing the notices and bills based on finalassessment. The details of properties held by 610members in the lead petition are not set out. Hence, norelief can be extended to the properties of the saidmembers save and except the properties subject matterof bills and notices which are expressly challenged.(vi)This judgment will not affect the final bills which areaccepted by the concerned owners.230. We record our appreciation for the valuable assistancerendered by the learned counsel appearing for various parties.We dispose of the petitions by passing the following order:ORDER(i)We reject the prayers made for challenging the constitutionalvalidity of various provisions of the Mumbai MunicipalCorporation Act, 1888 as prayed in the writ petition/PIL.We hold that Rules 20, 21 and 22 of the Capital Value Rulesof the years 2010 and 2015 are ultra vires the provisionsof the Mumbai Municipal Corporation Act, 1888 and,therefore, the same are struck down;(ii)We quash and set aside the special assessment notices andfinal bills based on final capital value fixed which arespecifically the subject matter of challenge in this group ofpetitions. The demand of provisional taxes is not disturbed.The orders specifically impugned which are passed on thecomplaints do not survive. We direct the Mumbai MunicipalCorporation to re-fix the capital value in respect of theproperties subject matter of the notices/final bills which areset aside in the light of the findings recorded earlier. Afterre-determination of capital value, special assessment noticesbe issued to the persons primarily liable to pay propertytaxesin respect of subject properties. Thereafter, further stepsshall be taken by the Municipal Corporation in accordancewith law;(iii)We hold that the complaints filed objecting to the specialassessment notices issued under sub-section (2) of section ABCDEFGH731162 shall be disposed of only after giving an opportunity ofbeing heard to the complainants.(iv)Till the expiry of a period of 21 days from the date on whichfresh special assessment notices are served in accordancewith clause (ii) above, the ad-interim/interim orders whichare operating in these petitions till today shall continue tooperate subject to compliance of requirement of deposit ofamounts by the petitioners as set out in those orders. Inthose cases where the complaints are lawfully filed withinstipulated time pursuant to the special assessment notices,the ad-interim/interim reliefs will continue to operate on thesame conditions till the date of service of fresh final bills;(v)Rule is made partly absolute on the above terms;(vi)All pending chamber summonses and notices of motion standdisposed of.”20. The Corporation being aggrieved by the decision of the HighCourt on three issues as stated above,approached this Court by filingSpecial Leave Petition (Civil) No. 17009 of 2019. While issuing notice inthe matter on 29.7.2019, by way of interim relief, it was directed:“Pending further consideration, the relationship between theparties shall be governed by interim order dated 24.2.2014 passedby the High Court and more particularly by para 5 as quotedabove.We are conscious of the fact that there were more than 150petitions before the High Court but special leave petition has beenfiled only in one matter. However, since the issues in question arecommon to all the matters and go to the root of the controversy,we direct that this interim order shall apply in every single petitionwhich was considered by the High Court.”Various interim applications have since then been preferred bycertain parties seeking impleadment and projecting their view points. Atthe same time, some of the parties who were aggrieved by the rejectionof their submissions challenging the validity of the various provisions ofMMC Act and other issues which were answered against them alsopreferred Special Leave Petitions.21. Mr. K.K. Venugopal, learned Attorney General for India andMr. V. Sreedharan, learned Senior Advocate appearing on behalf of theCorporation initially advanced submissions on the issueswhich wereMUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH732SUPREME COURT REPORTS[2022] 14 S.C.R.answered against the Corporation. However, after the submissions wereadvanced on behalf of various impleading applicants and other partiesincluding substantive petitions challenging the correctness of the decisionof the High Court, submissions were also advanced in response.22. The factual aspects regarding framing of the Capital ValueRules of 2010 and 2015, as well as the background for some of theamendments effected to the MMC Act, have been dealt with in thewritten submissions of the Corporation, as under:“2.The amendment to the MMC Act introducing the capital valuesystem was brought about inf 2009 (Act No. XI of 2009 on Pg24-39 in Compilation of Corporation – Vol 4). Pursuant to thesame, the Corporation passed resolution dated 27.01.2010 foradoption of capital value with effect from 01.04.2010 (Pg 6 ofconsolidated counter affidavit on behalf of Respondents 2 to 4).Accordingly, the section was already enacted by State Legislatureproviding for levy of tax on capital value basis from 01.04.2010.3. In January 2010, the Corporation appointed an expert committeecomposing of Appointment of expert committee comprising ofShri D.M. Sukthankar, Ex Chief Secretary of the State ofMaharashtra, Shri D.N. Chaudhri, Ex Chairman of MaharashtraLaw Commission and Dr. Roshan Namavati, expert on valuationto make recommendation on the introduction and smoothimplementation of capital value system. (Para 13, Pg 9 ofconsolidated counter affidavit on behalf of Respondents 2 to 4)4. On 08.10.2010, the expert committee published draft rules invarious newspapers for comments of public at large (Pg 79 to 94in Compilation of Corporation – Vol 4). The committee received254 objections and suggestions all of which were considered andscrutinized by the committee. Thereafter, certain benevolentchanges were made by the committee and draft rules wererecommended to the Corporation on 29.12.2010. (Para 14, Pg 10of consolidated counter affidavit)5. After the rules were published, the Corporation appointed achartered accountant firm to suggest a revenue neutral rate.Revenue neutral rate means such rate as would yield the sameamount of property tax as being levied by the Corporation beforeintroduction of capital value system. (Para 39, Pg 22 of consolidatedcounter affidavit) ABCDEFGH7336. Evidently, the rates can be determined only after capital valueof all properties are calculated on memorandum basis. The workof fixing the capital value of land and buildings across GreaterMumbai took time. The scale of the work involved was very largeand extremely time consuming. The data of the old rateable valuesystem which was in physical form had to be digitized for thepurposes of the new capital value system. This voluminous datacovered approximately 2.75 lakh properties (or 27.5 lakh individualunits). In some cases however, the data was not complete andthe carpet area was not available. In these cases the propertyowners were given notices under Section 155 of the MMC Act tofurnish the details in the prescribed format. The response washowever very limited and the officers of the MCGM had tophysically ascertain the required information. (Para 31, Pg 19 ofconsolidated counter affidavit on behalf of Respondents 2 to 4)7. In light of the same, the State Legislature stepped in andintroduced L.A. Bill No. LXXIV of 2010 whereby inserting sub-section (2) in Section 140A to enable the Corporation to issueprovisional bills for the year 2010-11 and treat the rateable valueof the building or land as provisional capital value. (Statement ofobject and reasons on Pg 48 and 49 in Compilation of Corporation– Vol 4). The said bill culminated into Act No. XXVII of 2010 (Pg51 to 58 in Compilation of Corporation – Vol 4).8. The amendments to the MMC Act provided that once the capitalvalue was fixed, final bills would be issued. If the final bill waslower than the provisional bill, the MCGM would refund the excesspayment made with interest at the rate of 6.25% p.a., or with theconsent of the tax payer, adjust the excess amount against futurebills (Section 140A(2). (Para 32, Pg 19 of consolidated counteraffidavit on behalf of Respondents 2 to 4)9. Pursuant to the same, the Corporation started implementationof the capital value system by issuing provisional property taxbills.10. In March 2011, the State Legislature observed that the processof fixing the capital value which had started in August, 2010 isbound to stretch beyond 31st March 2011. This is so because thereare more than 3 lakh properties of which capital value has to befixed for the purposes of such levy of property tax thereon, butMUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH734SUPREME COURT REPORTS[2022] 14 S.C.R.the volume of work of fixing the capital value of all these propertiesbeing so large that it may not be possible for the Corporation tocomplete the fixation of capital value of all these properties before31st March 2011. As a result of this, the work of fixing capitalvalue would continue during the year 2011-2012 also. Unless thecapital value of all the properties is fixed and the total extent thereofis ascertained, it may not also be feasible.11. Accordingly, by Maharashtra Ordinance No. X of 2011, theState Legislature expanded the scope of certain transitoryprovisions as contained in sections 128, 140A, 154A and 219A ofthe Mumbai Municipal Corporation Act, so as to enable theCorporation to separately issue the provisional bills on the basis ofrateable value treating it as provisional capital value for the years2010-11 and 2011-12. Further, with a view to prevent loss ofrevenue in respect of tax on properties which have escaped fromassessment, a new section 216B has also been inserted in the Actto enable the Corporation to assess such properties at any timewithin six years from the date on which such properties shouldhave been assessed. (Statement of object and reasons on Pg 141and 142 in Compilation of Corporation – Vol 4). The said ordinanceculminated into Act No. XI of 2011 (Pg 143 to 148 in Compilationof Corporation – Vol 4).12. In March 2012, the State Legislature observed that the processof fixing the capital value which had started in August, 2010 isbound to stretch beyond 31st March 2012. This is to because theproposal submitted to the Standing Committee of the Corporationfor rules and rates have not yet received the approval. The generalelection of the Corporation is due in February, 2012 and newStanding Committee will be operative only from the end of March,2012.13. Accordingly, the bill proposed to expand the scope of transitoryprovisions so as to enable the Corporation to separately issue theprovisional bills on the basis of rateable value treating it asprovisional capital value for the years 2012-13, as was done forthe period 2010-11 and 2011-12. (Statement of object and reasonson Pg 155 and 156 in Compilation of Corporation – Vol 4). Thesaid ordinance culminated into Act No. VI of 2012 (Pg 157 to 162in Compilation of Corporation – Vol 4). ABCDEFGH73514. It is submitted that, in present case there is no retrospectivelevy of tax. The section for imposition of tax on capital value wasalready in force from 01.04.2010. Draft rules were alreadypublished in October, 2010. The levy is broadly speaking onassesses who were paying tax under earlier regime also.15. The statute provided for transitionary arrangement pursuantto which provisional bills were issued as per Section 140A(2) readwith Section 154A of the MMC Act from official year 2010-2011(under the capital value system), 2011-2012 and till 2012-2013.Refunds are granted, or shortfall recovered after the capital valuesare fixed.16. It is submitted that, time taken in assessment can never makethe levy retrospective when the section imposing a tax is alreadyin force. In case contention raised by assesses is accepted, itwould amount to imposition of tax on rateable value even whenthe statute provides for imposition of tax on capital value w.e.f.01.04.2010.Law laid down in ChhotabhaiJethabhai Patel and Co. v. Union ofIndia AIR 1962 SC 1006. The same notes and proves the practicein USA of levying taxes from the beginning of year even whenthe law is made during the year.”23. In response, the submissions advanced by various learnedcounsel, in the order that they appeared, were as under:(A)Mr. Neeraj Kishan Kaul, learned Senior Advocate appearingfor Indian Hotels Company Limited which has intervenedin the proceedings as well as filed substantial challenge inthe form of Special leave Petition (Civil) No.2568 of 2019submitted that the property tax as a percentage of valuewas confiscatory and exorbitant.On facts it was stated thatinitially for a property situated in the city a property taxwas to the tune of Rs.6.29 crores per annum which hadnow risen to Rs.17.78 crores showing an increase of 275%. Reliance was placed on paragraph 34 of the decision ofthis Court in Patel GordhandasHargovindas&Ors. vs.Municipal Commissioner, Ahmedabad &Anr.4. It wasfurther submitted that the impugned provisions suffered4AIR 1963 SC 1742.MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH736SUPREME COURT REPORTS[2022] 14 S.C.R.from excessive delegation which was without any guidelinesand in any case could not be retrospective in operation. Insupport of the submission, reliance was placed on thedecisions of this Court in Marathwada University vs.Seshrao Balwant Rao Chavan5, Delhi Race ClubLimited v. Union of India &Ors.6, Devi Das GopalKrishnan etc. vs. State of Punjab &Ors.7and AvinderSingh &Ors. vs. State of Punjab &Ors.8.Learned Senior counsel then submitted that the taxcould be levied by the body constituted of electedrepresentatives and not by the Standing Committee and thatthe power to tax could not be delegated. It was furthersubmitted that since a new method of levying and computingproperty tax was revised, it was rightly denied retrospectiveapplication.On facts, it was also submitted that certain areas of theproperties of the entity which housed pump rooms and otherfacilities ought to be excluded while arriving at thedetermination.(B)Dr. Milind Sathe, learned Senior Advocate appeared forcertain entities in IA Nos.110990 of 2019, 163118 of 2019and 160953 of 2019 and submitted that Rules 20, 21 and 22of the Capital Value Rules, 2010 and 2015 were rightlystruck down by the High Court. Relying on the decision ofthis Court in The Municipal Corporation of GreaterBombay v. Polychem Ltd.9, it was submitted that till thepotential of the property was translated into a habitablebuilding, the land must be treated and taxed only as landand not going by its buildable potential. It was furthersubmitted that the process of fixing and/or changing thevalue, must be done in the same financial year.(C)Mr. Shekhar Naphade, learned Senior Advocate appearingfor intervenors in IA Nos.110998 and 158888 of 20195 (1989) 3 SCC 132.6 (2012) 8 SCC 680.7 AIR 1967 SC 1895.8 (1979) 1 SCC 137.9 (1974) 2 SCC 198 ABCDEFGH737submitted that the existing buildings having been demolished,the property could be taxed only as land and not going bythe projected or contemplated developments as a shoppingcentre or a mall.(D)Mr. H. Devarajan, learned Advocate who appeared for theProperty Owners Association submitted that in terms ofArticle 243Y(1)(b) of the Constitution the matter ought tohave come through the suggestions of the FinanceCommission. But the entire process was initiated as a resultof the suggestions made by the TISS.It was also submitted that the exercise adopted in theinstant case was in violation of Article 243-X of theConstitution. Reliance was placed on the decision of thisCourt in State of Uttar Pradesh & Ors. v. SystematicConscom Ltd.10 to submit that the four components ofincidence of tax as explained in Paragraphs 17 and 18 ofsaid decision were not satisfied. The learned counsel furthersubmitted that Sections 125 to 128 of the MMC Act dealwith budget, but by virtue of amendments to the MMC Act,the rates were now being fixed without a budget. Accordingto the learned counsel, the element of property tax underthe new regime would be almost twenty times the rent andthus would be confiscatory.It was submitted that tax on lands and buildings must bedirectly on the land as a unit and must have a definiterelationship with the land. The learned counsel furthersubmitted that the unit for calculation according to SDRRand the Capital Value Rules, was not the same. In one case,the reckonable unit was the built-up area while under thesecond, the reckonable unit was the carpet area.(E)Mr. Darius Khambata, learned Senior Advocate whoappeared in I.A. No.157014 of 2014 submitted that Rules20, 21, 22 of the Capital Value Rules of 2010 and 2015were rightly held to be ultra vires. It was further submittedthat the factors delineated in sub-clause (a) to (d) of Section154 (A) of the MMC Act would be matters “in presenti”10(2014) 13 SCC 627.MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH738SUPREME COURT REPORTS[2022] 14 S.C.R.and not with regard to future prospects and that no reliancecould be placed on sub-clause (e) to introduce the conceptof something “in futuro” i.e., the potential in the market orcapital value.It was further submitted that there could beno retrospectivity to any delegated legislation when theparent Act did not give any indication in that behalf and thatthe final assessment could have altered the basis in the samefinancial year and not otherwise.(F)Mr. Abhishek Bharti, learned counsel relied upon the decisionof this Court in State of Himachal Pradesh &Ors. vs.Nurpur Private Bus Operators’ Union &Ors.11, Mr.Shikhil Suri, learned counsel who appeared for NationalCentre for Performing Arts and Tata Power CompanyLimited adopted the submissions of Dr. Milind Sathe andMr. Darius Khambata, learned senior counsel. Mr. BhushanDeshmukh who appeared for the petitioner in SLP(C) No.25689/2019, also adopted the submissions of Dr. Sathe andMr. Khambata, learned senior counsel. Mr. Satish Muley,learned counsel appearing for a subsequent purchaser, alsoadopted the submissions of Dr. Sathe and Mr. Khambata,learned senior counsel.24. Mr. V. Sreedharan, learned senior counsel for the Corporationmade submissions in rejoinder. He also submitted that the overall taxdemand of the Corporation under the capital value assessment actuallydecreased by 12% to Rs.2908 crores as compared to Rs.3308 croresunder the Relatable Value System. The tax demand for residential unitsgot reduced from Rs.1030 crores to Rs.949 crores while that for theOffices and Banks was reduced from Rs.979 crores to Rs.65 croresand from Rs.342 crores to Rs.222 crores respectively. Thus, accordingto the Corporation, under the new system only 32.20% units suffered anincrease while 21.95 % of the units actually got benefitted as a result ofreduction in the property taxes.25. We will first deal with the submission that any proposal forchange or modification in the methodology adopted for levy of propertytax ought to have been initiated through the Finance Commission alone.Article 243Y of the Constitution deals with constitution of Finance11 (1999) 9 SCC 559. ABCDEFGH739Commission whose principal duty is to review the financial position ofthe municipalities and to make recommendations to the Governor as tothe relevant principles which should govern distribution of the net proceedsof the taxes and the measures needed to improve the financial positionof the municipalities. In Campaign for People Participation inDevelopment Planning vs. Lieutenant Governor of NCT of Delhi&Ors.12, a Division Bench of the High Court of Delhi had the occasionto consider the scope of Article 243Y of the Constitution. It wasobserved:-“14. Article 243I of the Constitution of India mandates constitutionof a Finance Commission by the Governors of the States at theexpiration of every 5th year. Article 243Y further mandates thatthe Finance Commission constituted under Article 243I shall alsoreview the financial position of the municipalities and makerecommendations to the Governors as to the various aspectsspecified therein. As per Clause (2) of Article 243Y, the Governorshall cause every recommendation made by the FinanceCommission under the said Article together with an explanatorymemorandum as to the action taken thereon to be laid before thelegislature of the State.”26. It is true that certain functions are entrusted to the FinanceCommission and the recommendations made by the Finance Commissionmust carry great weightage. However, the matter has to be seen fromthe perspective: whether any “measures needed to improve the financialposition of the municipalities” must necessarily emanate from therecommendations of the Finance Commission. Sub-Article (2)contemplates that the recommendations made by the FinanceCommission along with the explanatory memorandum as to the actiontaken thereon must be laid before the Legislature of the State. Thus, it isthe Legislature of the State which will ultimately take an appropriateaction with respect to the recommendations made by the FinanceCommission and the papers placed before it. If the Legislature itself hastaken into account certain prevailing situation, which according to theLegislature is causing some prejudice to the financial health and conditionof the municipalities and, therefore, the method of imposition of propertytax ought to be changed, it cannot then be said that the matter mustnecessarily and ought to have emanated from the Finance Commission12 (2016) SCC Online Del 80MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH740SUPREME COURT REPORTS[2022] 14 S.C.R.or that in the absence of such recommendations by the FinanceCommission, no steps could have been taken by the Legislature.27. Article 243X of the Constitution states that the Legislature ofa State may by law authorize a municipality to levy, collect and appropriatesuch taxes etc. in accordance with such procedure and subject to suchlimits as may be specified in law. The exercise undertaken by theLegislature in the instant case is completely consistent with theempowerment relatable to Article 243X of the Constitution and does notin any way go counter to said empowerment.28. Coming to the effect and scope of the statutory provisions, itmust be stated that Sections 123 to 128 of the MMC Act deal withaccounts and annual budget estimates. With the fixed parameters andscope of taxation, as well as, the elements that can be covered by levyof such taxes, depending upon the annual budget estimates, the rates ofmunicipal taxes, fares and charges can certainly be fixed in terms ofSection 128 of the MMC Act. In such cases, the width of the tax regimeis already decided and the rates of taxes would be dependent upon theannual estimates. What the present amendments seek to achieve is tochange the methodology on the basis of which property tax can be levied.Instead of rateable value, the property tax can now be levied going bythe capital value. Such exercise could not have been undertaken throughthe process of annual estimates and in terms of Sections 120, 123, 125and 128 of the MMC Act. All that could be done under these provisionswould be to vary or change the rates and not the very basis of taxation.The submission in that behalf, therefore, does not merit acceptance.29. We now turn to the scheme relating to property tax as isdiscernable from the provisions of the MMC Act. Section 139 dealswith taxes including property taxes that can be imposed.Section 139Adeals with the kinds of property taxes while Section 140 deals with theper centum of their rateable value or the capital value as the case maybe. Section 140A enables the Corporation to adopt levy of property taxon the basis of Capital Value of buildings and lands and puts a cap in theproviso to sub-section(1). Section 154 then deals with how rateable valueand capital value are to be determined. Sub-section (1) deals with rateablevalue while sub-section (1A), (1B) and (1C) deal with capital value. Thefirst part of Section 154(IA) contemplates that the value indicated in theStamp Duty Ready Reckoner for the time being in force, would be the“base value.” According to the second part, if such ready reckoner value ABCDEFGH741is not available, the market value can be taken into account while arrivingat a base value. According to the provision, while fixing the capital value,the Commissioner “shall have regard” to the factors enumerated in sub-clauses (a) to (e). Thus, the factors on the basis of which capital valuecan be arrived at are delineated in sub-clauses (a) to (e) of sub-section(1A) of Section 154. While sub-clause (a) to (d) are clear and welldefined, sub-clause (e) refers to the factors as may be specified by rulesunder sub-section (1B). Said sub-section (1B) in turn authorizes theCommissioner, to frame such rules, with the approval of the StandingCommittee as respects details of categories of building or land and theweightage by multiplication to be assigned to various such factors andcategories for the purpose of fixing the capital value.30. Section 154(1A) of the MMC Act is the crucial provision forthe present discussion. The opening part of sub-Section (1A) states thatin order to fix the capital value of any building or land assessable toproperty tax, regard shall be had to the value of any building or land asindicated in the SDRR for the time being in force. The value so indicatedin SDRR is to be the base value to which certain factors delineated inclauses (a) to (e) of sub-Section (1A) are to be applied while fixing thecapital value. Clauses (a) to (d) are physical features or attributes of theland or building which are in existence when the value is to be reckoned.In essence, as submitted by Mr. Khambata, learned senior counsel, theseattributes are situations “in praesenti”. The buildable potential of theland in future is not an attribute “in praesenti” but is in the nature oflikelihood of user or exploitation of the asset “in futuro”.31. The crucial question is: whether such potential of the land orthe likelihood of exploitation in future can also be taken into considerationwhile fixing the capital value in terms of sub-Section (1A), especiallywhen none of the factors delineated in clauses (a), (b), (c) and (d) speaksof future prospects or such likelihood?32. At this stage, we may deal with two decisions of this Courthaving bearing on the controversy before us.(A)It was observed in Patel Gordhandas4 that the statutoryprovision did not contemplate levying of the rates as apercentage of capital value. The relevant portion ofParagraph 34 of the decision was:“34. ….MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH742SUPREME COURT REPORTS[2022] 14 S.C.R...… We are therefore of opinion that thoughmathematically it may be possible to arrive at the samefigure of the actual tax to be paid as a rate whetherbased on capital value or based on annual value, thelevying of the rate as a percentage of capital value wouldstill be illegal for the reason that the law provides that itshould be levied on the annual value and not otherwise.By levying it otherwise directly at a percentage of thecapital value, the real incidence of the rate iscamouflaged, and the electorate not knowing the trueincidence of the tax may possibly be subjected to such aheavy incidence as in some cases may amount toconfiscatory taxation. We are therefore of opinion thatfixing of the rate at a percentage of the capital value isnot permitted by the Act and therefore R. 350-A readwith R. 243 which permits this must be struck down,even though mathematically it may be possible to arriveat the same actual tax by varying percentages in thecase of capital value and in the case of annual value...”(emphasis supplied)(B)In Polychem Ltd.9, a part of the land was being constructedupon while the rest was lying vacant. The Assessor dividedthe plot notionally into two parts – one, which was beingbuilt upon and the other which was lying vacant. One ofthe questions was: whether during the period when theconstruction was going on and was not completed, whatshould be the approach? The following observations arenoteworthy:“12. The principles upon which lands are rated in thiscountry have been practically settled by the decisionsof this Court. But, no case was brought to our notice inwhich an application of these principles to land uponwhich a building was being constructed was involved.In other words, no case was cited by any party in whichthe doctrine of sterility, as indicated above, was invoked.We will, however, glance at the cases cited beforedeciding the question raised before us.xxxxxxxxx ABCDEFGH74322. The abovementioned authorities of this Court, whichwere cited before us, enable us to hold that the mode ofassessment in every case must be directed towards findingout the annual letting value of land which is the basis ofrating of land, and, by definition, “land” includes land whichis either being built upon or has been built upon. Nevertheless,a reference to the provisions of the Act shows that, after abuilding has been completed, the letting value of the building,which becomes part of land, will be the primary ordetermining factor in fixing the annual rent for which theland which has been built upon “might reasonably beexpected to be let from year to year”. All that Section 154seems to contemplate, by mentioning “land or building”, isthat land which is vacant or which has not been built uponmay be treated, for purposes of valuation, on a differentfooting from land which has actually been built upon. But,relevant provisions of the Act do not mention and seem totake no account, for purposes of rating, of any building whichis only in the course of being constructed although Section3(r) of the Act makes it clear that land which is being builtupon is also “land”. Hence, so long as a building is notcompleted or constructed to such an extent that atleast apartial completion notice can be given so that the completedportion can be occupied and let, the land can, for purposesof rating, be equated with or treated as vacant land. It isonly when the building which is being put up is in such astate that it is actually and legally capable of occupationthat the letting value of the building can enter into thecomputation for rating “Rebus sic Stantibus”. Although, thedefinition of land, which is rateable, covers three kinds of“land”, yet, for the purposes of rating Section 154recognises only two categories. Therefore, all “land” mustfall in one of these two categories for purposes of ratingand not outside.”(emphasis supplied)33. Both the decisions were rendered in the regime when theproperty tax could be levied on rateable value. In the first decision, itwas found that fixing of the rate at a percentage of the capital value wasnot a modality permitted by the Act and, therefore, Rules 350-A readMUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH744SUPREME COURT REPORTS[2022] 14 S.C.R.with Rule 243, which permitted such exercise, were struck down.Therefore, to the extent the rules went beyond the statutory import andextent, the transgression was not accepted by this Court. In the seconddecision, it was held that so long as the building was not completed andready for occupation, the land in question for the purposes of rating mustbe equated with and treated as “vacant land”. In the second decision,the construction was actually going on but the building was not ready.The conclusion from the second decision is quite clear that unless anduntil the building was ready to be occupied, the land must be treated asvacant land. Notably, the second decision was premised on themethodology where the rateable value was the determining criteria.Therefore, so long as the building could not be let out in open market, theland would continue to be treated as “vacant land”.34. However, after the amendments, the emphasis has nowchanged and the basis for taxation is now to be capital value of land andbuilding. Capital value again can have two dimensions. First, the valueof land or building as it stands today or secondly, the value as may be infuture as per anticipated development. However, the legislative intent,as is clear from clauses (a) to (d), is about actual status and user as onthe date the capital value is to be reckoned or considered. These clausesclearly show that the features contemplated therein must be in existenceas on such date and not what would be the projection in future.35. There are two ways in which sub-clause (e) of sub-Section(1A) of Section 154 can be construed. In the first case, said clause canbe read ejusdem generis along with sub-clauses (a) to (d), in whichevent the scope of any rules to be made in terms of power granted bysub-clause (e) read with sub-Section (1B), would be relatable to thefactors actually in existence and not as something contemplated in future.On the other hand, if the clause is read independently, there is nothing inclause (e) or in the language of sub-Section (1B) that the future prospectsof the land in question could be reckoned or noted for arriving at thecapital value. The conclusion is thus quite clear that the width of clauses(a) to (e) read with sub-Section (1B) do not by any stretch of imaginationcontemplate taking into account the future prospects of the land inquestion.36. Viewed thus, the conclusion arrived at by the High Court onthe second and third grounds, as stated in paragraph 15 (supra) are quitecorrect. We, therefore, hold that the empowerment in terms of clauses(a) to (e) read with sub-Section (1B) or the conferral of rule-making ABCDEFGH745power would not permit the Corporation to determine the capital valuebeyond the scope of said clauses (a) to (e). Thus, for the purpose ofdetermining capital value, only the present physical attributes and statusof the land and building can be considered and not the future prospectsof the land.37. At this stage, we may consider the scope of Rule 20 of theCapital Value Rules of 2010 and the Capital Value Rules of 2015. Thesaid Rule refers to the Ready Reckoner which provides for the rate ofbase value of open land with 1 (one) floor space index. However, theopen land in question may be capable of utilizing more than 1 (one) floorspace index, for instance in certain areas the floor space index may be1.5 or 2. Such component i.e. the capability of the land in question inutilizing more then 1 (one) floor space index is a postulate which is soughtto be reckoned by Rule 20. The second component to be added in termsof Rule 20 is the intended or proposed utilization of Transfer ofDevelopment right which has been approved under the building plansubmitted for approval. Nonetheless, this component is the intended useor exploitation in future and not something which is available in presenti.38. To the extent Rule 20 of the Capital Value Rules of 2010 andthe Capital Value Rules of 2015 empower the Commissioner to considerthe capability of the open land of utilizing more than 1 floor space index(FSI) or any transfer of development right (TDR), would go well beyondthe permissible scope delineated by the provisions of Section 154 of theMMC Act. The High Court, in our view, was, therefore, right inconcluding that Rule 20 of the Capital Value Rules of 2010 and theCapital Value Rules of 2015 would be ultra vires the provisions of sub-Sections (1A) and (1B) of Section 154 of the MMC Act.39. We now turn to the issue regarding retrospectivity of the CapitalValue Rules of 2010. The factual narration relied upon by the learnedcounsel for the Corporation does show that the preparatory steps werebeing undertaken since 2010 with the appointment of an expert committeeand publication of draft rules. It appears that the Corporation had tocollect voluminous data. But in order to enable the Corporation to computeor levy property tax based on capital value, the concerned rules had tobe in force. There being no empowerment to compute and/or levyproperty tax with retrospective effect by the statute itself, the rule makingpower, in any view of the matter, could not have created a liability pertainingto the period well before the Rules came into effect. The first ground asset out in paragraph 15 (supra) was, therefore, rightly answered by theMUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTYOWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI] ABCDEFGH746SUPREME COURT REPORTS[2022] 14 S.C.R.High Court against the Corporation. Logically, the Rules having comeinto force on 20.3.2012, the levy and computation of property tax oncapital value would be available and possible on and with effect from20.3.2012 and not with any retrospective operation.40. The question then arises as to what would be the scope andextent of the present property tax regime. It is quite clear that with theamendment to Section 154 and other provisions, the property tax can belevied on the basis of capital value of the land or building. To that extent,there would be departure from the regime which was in existence whenPatel Gordhandas4 and PolychemLtd.9 were decided by this Court.Now, the statute certainly empowers and contemplates imposition ofproperty tax on the capital value. However, the capital value must beone which answers the postulates in sub-clauses (a) to (e) of sub-Section(1A) read with sub-Section (1B) of Section 154. At the cost of repetition,we may say that since the statutory provisions do not contemplate anylikelihood of exploitation of capacity in future, the capital value of theland and building must be based on situation “in presenti”. It must beclarified here that in projects which are in progress, the value addition tothe property would be ongoing feature. However, considering clauses(a) to (d), it would mean that the governing principle must be the actualuse and not the intended use in future.41. In the circumstances, the challenge raised by the Corporationmust fail and we dismiss the appeal preferred by the Corporation.42. We now turn to the challenges raised by the original writpetitioners. Those challenges on various grounds as detailed hereinaboveincluding the grounds of legislative competence; validity of certainprovisions and basis of alleged violation of Article 14 of the Constitution,were considered by the High Court in extenso. We do not find anyreason or room to take a different view. We, therefore, affirm the viewand dismiss the challenge. Consequently, the appeals preferred by theoriginal writ petitioners are dismissed.43. These appeals are disposed of in aforesaid terms without anyorder as to costs.Divya PandeyAppeals dismissed.(Assisted by : Shevali Monga, LCRA)