Holding

Only the present physical attributes of land and building may be used to fix capital value; Rules 20, 21 and 22 of the 2010 and 2015 Capital Value Rules are ultra vires, and the amendment to levy tax on capital value is constitutionally valid.

Summary

The Supreme Court examined the validity of the Mumbai Municipal Corporation Act’s amendment that shifted property tax assessment from rateable value to capital value, and the accompanying Capital Value Rules of 2010 and 2015. It held that the rules allowing the Commissioner to factor in future development potential (such as higher FSI or TDR) exceed the scope of Section 154(1A) and (1B) of the Act, which only permits consideration of present physical attributes. Consequently, Rules 20, 21 and 22 of both the 2010 and 2015 Rules were declared ultra vires and struck down, and the Rules were held to operate only prospectively from 20 March 2012. The Court also affirmed the constitutional validity of the amendment under Articles 243X, 243Y and 14 of the Constitution, finding the delegation of authority to the Commissioner and Standing Committee to be within permissible limits. All challenges to the amendment and the capital‑value system were dismissed, and the Corporation’s appeal was rejected.

Issues considered

The power conferred by Section 154(1A) and (1B) of the MMC Act – whether it permits the Commissioner to consider future development potential (FSI, TDR) in fixing capital value.
Whether Rules 20, 21 and 22 of the Capital Value Rules 2010 and 2015 are ultra vires the MMC Act.
Whether the Capital Value Rules can have retrospective effect.
Whether the amendment introducing a capital‑value based property tax is constitutionally valid under Articles 243X, 243Y and 14 of the Constitution.
Whether the State Legislature has competence to enact the capital‑value system (Entry 49 of List II).
Whether the delegation of rule‑making power to the Commissioner and Standing Committee amounts to excessive delegation.
Whether the tax regime is arbitrary or confiscatory, violating Article 14.

Legislation cited

Bombay Stamp Act, 1958
Bombay Stamp (Determination of True Market Value of Property) Rules, 1995
Constitution of Indias. Article 14, s. Article 243X, s. Article 243Y
Maharashtra Act No. VI of 2012 (transitory provisions)
Maharashtra Act No. XI of 2009 (amendment to MMC Act)
Maharashtra Education Cess Act, 1962
Maharashtra Ordinance No. X of 2011 (transitory provisions)
Mumbai Municipal Corporation Act, 1888s. 123, s. 124, s. 125, s. 126, s. 127, s. 128, s. 139, s. 139A, s. 140, s. 140A, s. 154(1A), s. 154(1B), s. 154A, s. 162, s. 216B, s. 49B, s. 61

Subjects

property taxcapital value assessmentmunicipal corporationlegislative competenceultra viresdelegation of powersArticle 14Article 243XArticle 243Yfloor space indextransfer of development rightstax assessmentretrospective legislation

Judgment

[2022] 14 S.C.R. 679 679

MUNICIPAL CORPORATION OF GREATER MUMBAI & ORS. A
v.
PROPERTY OWNERS’ ASSOCIATION & ORS.
(Civil Appeal No 8239 of 2022)
(SLP (C) No. 17009 of 2019) B
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 C
(Assignment of Weightages by Multiplication) Fixation of Capital
Value Rules, 2010 – Factors and Categories of Users of Buildings
or Lands (Assignment of Weightage by Multiplication) Fixation of
Capital Value Rules, 2015 – High Court rejected the challenge as
to the validity of various provisions of the MMC Act however, held
D
rr.20, 21 and 22 of the Capital Value Rules 2010 and 2015 to be
ultra vires the provisions of the MMC Act – On appeal, held:Width
of clauses (a) to (e) read with sub-Section (1B) do not by any stretch
of imagination contemplate taking into account the future prospects
of the land in question – The empowerment in terms of clauses (a)
to (e) r/w with sub-Section (1B) or the conferral of rule-making E
power would not permit the Corporation to determine the capital
value beyond the scope of said clauses (a) to (e) – Thus, for the
purpose of determining capital value, only the present physical
attributes and status of the land and building can be considered
and not the future prospects of the land – Conclusion arrived at by
F
the High Court are correct – Also, the High Court was right in
concluding that r.20 of the Capital Value Rules of 2010 and the
Capital Value Rules of 2015 would be ultra vires the provisions of
sub-Sections (1A) and (1B) of s.154 of the MMC Act – Further, the
Rules having come into force on 20.3.2012, the levy and
computation of property tax on capital value would be available G
and possible on and with effect from 20.3.2012 and not with any
retrospective operation – Challenge raised by the Corporation fails
– Challenges raised by the original writ petitioners on various
grounds including the grounds of legislative competence; validity
of certain provisions and basis of alleged violation of Article 14 of
H
679
680 SUPREME COURT REPORTS [2022] 14 S.C.R.

A the Constitution, were considered by the High Court in extenso – No
reason to take a different view – Therefore, the said view is affirmed.
Constitution of India – Article 243Y, 243X – Mumbai
Municipal Corporation Act, 1888 – Plea that any proposal for
change or modification in the methodology adopted for levy of
B property tax ought to have been initiated through the Finance
Commission alone – Held: It is the Legislature of the State which
will ultimately take an appropriate action with respect to the
recommendations made by the Finance Commission and the papers
placed before it – If the Legislature itself has taken into account
certain prevailing situation, which according to the Legislature is
C causing some prejudice to the financial health and condition of the
municipalities and, therefore, the method of imposition of property
tax ought to be changed, then it cannot be said that the matter must
necessarily and ought to have emanated from the Finance
Commission or that in the absence of such recommendations by the
D Finance Commission, no steps could have been taken by the
Legislature – In the instant case, the exercise undertaken by the
Legislature is completely consistent with the empowerment relatable
to Article 243X and does not in any way go counter to said
empowerment.
E Dismissing the appeals, the Court
HELD: 1.1 Article 243Y of the Constitution deals with
constitution of Finance Commission whose principal duty is to
review the financial position of the municipalities and to make
recommendations to the Governor as to the relevant principles
F which should govern distribution of the net proceeds of the taxes
and the measures needed to improve the financial position of the
municipalities. It is true that certain functions are entrusted to
the Finance Commission and the recommendations made by the
Finance Commission must carry great weightage. However, the
matter has to be seen from the perspective: whether any
G “measures needed to improve the financial position of the
municipalities” must necessarily emanate from the
recommendations of the Finance Commission. Sub-Article (2)
contemplates that the recommendations made by the Finance
Commission along with the explanatory memorandum as to the
H action taken thereon must be laid before the Legislature of the
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 681
OWNERS’ ASSOCIATION

State. Thus, it is the Legislature of the State which will ultimately A
take an appropriate action with respect to the recommendations
made by the Finance Commission and the papers placed before
it. If the Legislature itself has taken into account certain prevailing
situation, which according to the Legislature is causing some
prejudice to the financial health and condition of the municipalities
B
and, therefore, the method of imposition of property tax ought to
be changed, it cannot then be said that the matter must necessarily
and ought to have emanated from the Finance Commission or
that in the absence of such recommendations by the Finance
Commission, no steps could have been taken by the Legislature.
Article 243X of the Constitution states that the Legislature of a C
State may by law authorize a municipality to levy, collect and
appropriate such taxes etc. in accordance with such procedure
and subject to such limits as may be specified in law. The exercise
undertaken by the Legislature in the instant case is completely
consistent with the empowerment relatable to Article 243X of
D
the Constitution and does not in any way go counter to said
empowerment. [Paras 25-27][738-H; 739-A-B, E-H; 740-A-B]
1.2 Coming to the effect and scope of the statutory
provisions, it must be stated that Sections 123 to 128 of the MMC
Act deal with accounts and annual budget estimates. With the
fixed parameters and scope of taxation, as well as, the elements E
that can be covered by levy of such taxes, depending upon the
annual budget estimates, the rates of municipal taxes, fares and
charges can certainly be fixed in terms of Section 128 of the MMC
Act. In such cases, the width of the tax regime is already decided
and the rates of taxes would be dependent upon the annual F
estimates. What the present amendments seek to achieve is to
change the methodology on the basis of which property tax can
be levied. Instead of rateable value, the property tax can now be
levied going by the capital value. Such exercise could not have
been undertaken through the process of annual estimates and in
terms of Sections 120, 123, 125 and 128 of the MMC Act. All G
that could be done under these provisions would be to vary or
change the rates and not the very basis of taxation. The
submission in that behalf, therefore, does not merit acceptance.
[Para 28][740-C-E]
H
682 SUPREME COURT REPORTS [2022] 14 S.C.R.

A 1.3 Section 154(1A) of the MMC Act is the crucial provision
for the present discussion. The opening part of subsection (1A)
states that in order to fix the capital value of any building or land
assessable to property tax, regard shall be had to the value of
any building or land as indicated in the SDRR for the time being
in force. The value so indicated in SDRR is to be the base value
B
to which certain factors delineated in clauses (a) to (e) of
subsection (1A) are to be applied while fixing the capital value.
Clauses (a) to (d) are physical features or attributes of the land
or building which are in existence when the value is to be
reckoned. In essence these attributes are situations “in
C praesenti”. The buildable potential of the land in future is not an
attribute “in praesenti” but is in the nature of likelihood of user
or exploitation of the asset “in futuro”. The crucial question is:
whether such potential of the land or the likelihood of exploitation
in future can also be taken into consideration while fixing the
capital value in terms of sub- Section (1A), especially when none
D
of the factors delineated in clauses (a), (b), (c) and (d) speaks of
future prospects or such likelihood? [Para 30, 31][741-C-F]
1.4 Both the decisions in Patel Gordhandas and Polychem
Ltd. were rendered in the regime when the property tax could be
levied on rateable value. In the first decision, it was found that
E fixing of the rate at a percentage of the capital value was not a
modality permitted by the Act and, therefore, Rules 350-A read
with Rule 243, which permitted such exercise, were struck down.
Therefore, to the extent the rules went beyond the statutory
import and extent, the transgression was not accepted by this
F Court. In the second decision, it was held that so long as the
building was not completed and ready for occupation, the land in
question for the purposes of rating must be 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
G and until the building was ready to be occupied, the land must be
treated as vacant land. Notably, the second decision was premised
on the methodology where the rateable value was the determining
criteria. Therefore, so long as the building could not be let out in
open market, the land would continue to be treated as “vacant
H
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 683
OWNERS’ ASSOCIATION

land”. However, after the amendments, the emphasis has now A
changed and the basis for taxation is now to be capital value of
land 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
B
(d), is about actual status and user as on the date the capital value
is to be reckoned or considered. These clauses clearly show that
the features contemplated therein must be in existence as on
such date and not what would be the projection in future. 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 can be read C
ejusdem generis along with sub-clauses (a) to (d), in which event
the scope of any rules to be made in terms of power granted by
sub-clause (e) read with sub-Section (1B), would be relatable to
the factors actually in existence and not as something
contemplated in future. On the other hand, if the clause is read
D
independently, there is nothing in clause (e) or in the language of
sub-Section (1B) that the future prospects of the land in question
could be reckoned or noted for arriving at the capital 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 imagination
contemplate taking into account the future prospects of the land E
in question. Therefore, the empowerment in terms of clauses (a)
to (e) read with subsection (1B) or the conferral of rule making
power would not permit the Corporation to determine the capital
value beyond the scope of said clauses (a) to (e). Thus, for the
purpose of determining capital value, only the present physical
F
attributes and status of the land and building can be considered
and not the future prospects of the land. [Paras 33-36][743-H;
744-A-H; 745-A]
Patel Gordhandas Hargovindas & Ors. v. Municipal
Commissioner, Ahmedabad & Anr. AIR 1963 SC 1742
: [ 1964] 2 SCR 608; The Municipal Corporation of G
Greater 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 of
2010 and the Capital Value Rules of 2015 empower the
Commissioner to consider the capability of the open land of H
684 SUPREME COURT REPORTS [2022] 14 S.C.R.

A utilizing more than 1 floor space index (FSI) or any transfer of
development right (TDR), would go well beyond the permissible
scope delineated by the provisions of Section 154 of the MMC
Act. The High Court, was, therefore, right in concluding that Rule
20 of the Capital Value Rules of 2010 and the Capital Value Rules
of 2015 would be ultra vires the provisions of subsections (1A)
B
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 Capital
Value Rules of 2010. The factual narration relied upon by the
learned counsel for the Corporation does show that the
preparatory steps were being undertaken since 2010 with the
C appointment 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 levy
property tax based on capital value, the concerned rules had to
be in force. There being no empowerment to compute and/or
D levy property tax with retrospective effect by the statute itself,
the rule making power, in any view of the matter, could not have
created a liability pertaining to the period well before the Rules
came into effect. The first ground as set out in paragraph 15 was,
therefore, rightly answered by the High Court against the
Corporation. Logically, the Rules having come into force on
E 20.3.2012, the levy and computation of property tax on capital
value would be available and possible on and with effect from
20.3.2012 and not with any retrospective operation. [Para
39][745-F-H; 746-A]
1.7 The question then arises as to what would be the scope
F and extent of the present property tax regime. It is quite clear
that with the amendment to Section 154 and other provisions, the
property tax can be levied 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 when Patel Gordhandas and
G Polychem Ltd. were decided by this Court. Now, the statute
certainly empowers and contemplates imposition of property tax
on the capital value. However, the capital value must be one which
answers the postulates in sub-clauses (a) to (e) of sub-Section
(1A) read with sub-Section (1B) of Section 154. Since the statutory
provisions do not contemplate any likelihood of exploitation of
H capacity in future, the capital value of the land and building must
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 685
OWNERS’ ASSOCIATION

be based on situation “in presenti”. It must be clarified here that A
in projects which are in progress, the value addition to the
property would be ongoing feature. However, considering clauses
(a) to (d), it would mean that the governing principle must be the
actual use and not the intended use in future. The challenge raised
by the Corporation must fail and the appeal preferred by the
B
Corporation is dismissed. Challenges raised by the original writ
petitioners on various grounds as detailed hereinabove including
the grounds of legislative competence; validity of certain
provisions and basis of alleged violation of Article 14 of the
Constitution, were considered by the High Court in extenso. No
reason or room to take a different view. Therefore, the view is C
affirmed and the challenge is dismissed. [Paras 40, 41][746-B-F]
Marathwada University v. Seshrao Balwant Rao
Chavan (1989) 3 SCC 132 : [1989] 2 SCR 454; Delhi
Race Club Limited v. Union of India & Ors. (2012) 8
SCC 680 : [2012] 8 SCR 1; Devi Das Gopal Krishnan D
etc. v. State of Punjab & Ors. AIR 1967 SC 1895 :
[1967] 3 SCR 557; Avinder Singh &Ors. v. State of
Punjab & Ors. (1979) 1 SCC 137 : [1979] 1 SCR 845;
State of Uttar Pradesh & Ors. v. Systematic Conscom
Ltd. (2014) 13 SCC 627; State of Himachal Pradesh &
Ors. v. Nurpur Private Bus Operators’ Union & Ors. E
(1999) 9 SCC 559 : [1999] 3 Suppl. SCR 430 –
referred to.
Campaign for People Participation in Development
Planning v. Lieutenant Governor of NCT of Delhi &
Ors. (2016) SCC Online Del 80 – referred to. F

Case Law Reference
[1964] 2 SCR 608 referred to Para 23
[1989] 2 SCR 454 referred to Para 23
G
[2012] 8 SCR 1 referred to Para 23
[1967] 3 SCR 557 referred to Para 23
[1979] 1 SCR 845 referred to Para 23
[1974] 3 SCR 687 referred to Para 23
H
686 SUPREME COURT REPORTS [2022] 14 S.C.R.

A (2014) 13 SCC 627 referred to Para 23
[1999] 3 Suppl. SCR 430 referred to Para 23
(2016) SCC Online Del 80 relied on Para 25
CIVIL APPELLATE JURISDICTION : Civil Appeal No.8239
of 2022.
B From the Judgment and Order dated 24.04.2019 of the High Court
of Judicature at Bombay in Writ Petition No.2592 of 2013.
With
Civil Appeal Nos.8240, 8241, 8242, 8243, 8244 of 2022 And
Contempt Petition (C) No.38 Of 2021 In Special Leave Petition (C)
C No.17009 of 2019.
Neeraj Kishan Kaul, Huzefa Ahmadi, Sreedharan, Dr. Milind
Sathe, Shekhar Naphade, H.L. Tiku, Sr. Advs., Akshay Arora, Praval
Arora, Ms. Chesta Mehta Arora, Jappanpreet Hora, A. Karthik, Y.P.
Dandiwala, R.K. Satpalkar, Dhruv V. Sharma, Toshiv Goyal, Ms.
D 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, Jayom
Mahesh Shah, Ashish Wad, Ms. Tamali Wad, Ms. Aruna Savla, Pimple
Sharad, Sidharth Mahajan, Ms. Sukriti Jaggi, Ajeyo Sharma, M/s. J S
E
Wad & Co, Kunal Vajani, Sanjay Kadam, Chirag M. Shroff, Mahesh
Agarwal, Ankur Saigal, Anshuman Srivastava, Shaishir Divatia, Sunil
Mittal, 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,
F Geo Joseph, Shikhil Suri, Ms. Madhu Suri, T. R. B. Sivakumar, Aman
Raj Gandhi, Abhishek Sharma, Udayaditya Banerjee, Adbhut Pathak,
Advs. for the appearing parties.
The Judgment of the Court was delivered by
UDAY UMESH LALIT, CJI
G 1. Leave granted in all Special Leave Petitions.
2. These appeals are challenging the common judgment and order
dated 24.4.2019 passed by the Division Bench of the High Court of
Judicature at Bombay in Writ Petition No. 2592/2013 and connected
matters. Contempt Petition (Civil) No. 38/2021has been filed against the
H alleged contemnor for disobedience of orders dated 29.7.2019,
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 687
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

21.10.2019 and 22.11.2019 passed by this Court in the appeal arising out A
of said SLP(C) No. 17009 of 2019. For the present purposes, said
Contempt Petition is segregated with a direction to list the same before
an appropriate Court after six weeks.
3. The Mumbai Municipal Corporation Act, 18881 has been enacted
by the State Government to consolidate and amend various Municipal B
Acts which were in force relating to the Municipal administration of the
city of Mumbai. The Municipal Corporation of Greater Mumbai (“the
Corporation” for short)has been established and discharging its duties
under the MMC Act.
4. The MMC Act authorizes the Corporation to impose property C
tax on lands and buildings. Importantly, property tax is one of the main
sources of revenue for the Corporation, specifically after abolition of
Octroi. The MMC Act earlier provided for levy of property tax on the
basis of certain percentage of rateable value of the buildings or lands.
The basis of determination of rateable value as provided in the MMC
Act was the annual rent for which such buildings or lands might reasonably D
be 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 of
levy of property tax and to suggest alternative system for such levy.
TISS submitted a detailed report recommending that capital value-based E
system of assessment be adopted in place of annual rental system. After
detailed discussions with stake holders and based on the recommendations
of TISS, the MMC Act was amended by the Maharashtra Act No. XI
of 2009. The amendment incorporated an option and empowered the
Corporation to levy property tax on the basis of capital value as an F
alternative to the earlier method of levying property tax on the basis of
rateable value.
6. The Statement of Objects forming part of the Bill which led to
the passing of the Maharashtra Act No. XI of 2009 was as under: -
“STATEMENT OF OBJECTS AND REASONS G
Section 139 of the Mumbai Municipal Corporation Act (Bom.III
of 1888) provides for imposition of taxes by the Municipal
Corporation of Brihan Mumbai. The taxes to be so imposed provide
1
“MMC Act”, for short
H
688 SUPREME COURT REPORTS [2022] 14 S.C.R.

A inter alia property taxes on buildings or lands. The property taxes
include water tax, water benefit tax, sewerage tax, sewerage
benefit tax, general tax, education cess and street tax, which are
leviable on the basis of certain percentage of rateable value of
the buildings or lands.
B 2. Section 154 of the Act provides the method of fixing rateable
value of any buildings or lands assessable to property tax. The
basis to determine the rateable value is the annual rent for which
such buildings or lands might reasonably be expected to let from
year to year, less 10 per centum of the said annual rent and the
said deduction is in lieu of all allowances for repairs or on any
C other account whatever.
3. The determination or fixation of the rateable value under
different Municipal Acts or Municipal Corporation Acts throughout
India for the purpose of levy of property taxes under these Acts
has resulted in ceaseless dispute. There has been a catena of
D decisions rendered by various High Courts and the Supreme Court
in respect of the matter of fixation of rateable value particularly
because of the provisions of Rent Control Legislation in various
States including the State of Maharashtra. On account of these
decisions the annual rent to be taken into account for fixation of
E rateable value of any buildings or lands has been pegged down to
the standard rent of any buildings or lands according to the
provisions of the Rent Control Acts. In so far as the area of the
Municipal Corporation of Brihan Mumbai is concerned, the Rent
Control Act, which provided for standard rent for the first time,
was the Bombay Rent Restriction Act. 1939 (Bom. XVI of 1939).
F This Act was repealed by the Bombay Rents, Hotel Rates and
Lodging House Rates (Control) Act, 1944 (Bom.VII of 1944),
which had been replaced by the Bombay Rents, Hotel and Lodging
House Rates Control Act, 1947 (Bom. LVII of 1947), which has
also been now repealed by the Maharashtra Rent Control Act,
G 1999 (Mah. XVIII of 2000) which came into force on the 31st day
of March 2000 and is at present in operation. Thus the Rent Control
Act has been in operation in the Mumbai Municipal Corporation
area for over 65 years. In effect, therefore, the property tax has
to be determined on the basis of rateable value fixed considering
the annual rent, being the fair rent (standard rent) alone, regardless
H
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 689
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of the actual rent received. Fair rent very often means the rent A
prevailing prior for the year 1940 with some marginal modifications
and additions. Because of the limitations or restrictions brought
into play by the provisions of the Maharashtra Rent Control Act,
1999 and the various judgements of the Court in respect of fixation
of rateable value for the purpose of levy of property taxes a lot of
B
subjectivity has crept into the system by which the rent of buildings
or lands is determined. Apart from this, it has also resulted in lack
of transparency, equity and rationality in the system of assessment
of property taxes. Property tax is one of the main sources of
revenue to the Corporation. Due to such restrictions or limitations
the income of the Corporation from property tax has remained C
static. To continue to compel the Corporation to levy and collect
the property tax on the basis of fair rent or standard rent alone,
while at the same time under Section 61 in Chapter III and other
provisions of the Mumbai Municipal Corporation Act making it
incumbent on the Corporation to make adequate provisions to
D
perform all its obligatory and discretionary functions laid down by
the Act may be to ask for the impossible. The cost of maintaining
and laying roads, drains, water supply lines and providing other
essential civic services and amenities, the salaries of staff and
wages of employee and all other types of expenditure have gone
up steeply over the last more than 65 years. E
4. With a view to exploring the possibility of reforming the
property tax system, so as to augment the revenue of the
Corporation, the Tata Institute of Social Sciences (TISS), Mumbai
were entrusted by the Corporation with the job to study the present
system of levy of property taxes and to suggest any alternative F
system for such levy. After studying various systems available
for assessment of property taxes within and without India, they
have recommended that Capital Value Based System of
Assessment in place of the Annual Rental System may be adopted,
as according to them the trend in property tax practices in
developing countries is to move away from the Annual Rental G
Value base to Capital Value base. The capital value based system
of assessment has the following merits:-
(1) Formula based assessment is possible with simplicity,
(2) Self-assessment is possible, H
690 SUPREME COURT REPORTS [2022] 14 S.C.R.

A (3) Greater flexibility in tax administration which provides control
over revenue,
(4) Subjectivity is eliminated to the extent possible,
(5) There is transparency and easy to understand,
B (6) Tax revenue can keep pace with inflation and cost of living.
5.The highlights of the system recommended by the Tata
Institute of Social Sciences is the shift from Annual Rental Value
to Capital Value as the base for the purpose of levy of property
taxes at a certain rate which may be determined by the Corporation
C and such value is proposed to be adopted as the value of any
buildings or lands as is indicated in the Stamp Duty Ready
Reckoner for the time being in force as prepared under the Bombay
Stamp (Determination of True Market Value of Property) Rules,
1995 and the capital value of the property could then be computed
by applying thereto factors such as location, carpet area, type of
D construction, age of property and user thereof. In this system
properties which are old or of semi-permanent structures including
chawls, will be given due consideration and concession. Care is
also taken to provide for an appropriate cap on the increase on
property tax on account of switching over to the capital value
E base of levy.
6. It is a modest attempt to enable the Corporation to augment
its revenue so as to meet the ever-rising expenditure in providing
appropriate an adequate infrastructure for rendering civic services
in the City like Mumbai and its suburbs. Having regard to the
F status thereof as a financial capital of India, the Mumbai City
requires a special attention.
7. The amendments to the Mumbai Municipal Corporation Act
(Bom. III of 1888) proposed in this Bill are intended to achieve
the above-mentioned objectives.”
G 7. The MMC Act was, thereafter, amended by successive
amendments as a result of which newly introduced Section 154(1A) and
(1B) MMC Act now authorizes Municipal Commissioner to fix the Capital
Value of land and building with the approval of the Standing Committee.
Accordingly, the Commissioner formulated Factors and Categories of
Users of Buildings or Lands (Assignment of Weightages by Multiplication)
H
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 691
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

Fixation of Capital Value Rules, 2010 (‘the Capital Value Rules of 2010’, A
for short) which came into force on and with effect from 20.03.2012,and
Factors and Categories of Users of Buildings or Lands (Assignment of
Weightage by Multiplication) Fixation of Capital Value Rules, 2015 (‘the
Capital Values Rules of 2015’, for short), which came into force on
01.04.2015.
B
8. It must be stated here that on 20.01.2010 a resolution was
passed appointing an expert committee comprising of Dr. D.M.
Sukthankar, Dr. D.N. Choudhary and Dr. Roshan Namavati to make
recommendations on the Capital Value System. The draft rules prepared
by the Committee were published in various newspapers on 18.10.2010
inviting objections. The last date for submissions and objections after C
due extension expired on 30.11.2010, whereafter final report was
submitted. After obtaining the sanction of the Standing Committee, the
Capital 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 matters D
in issue are extracted here for ready reference:
“120.Constitution of Fines Fund. Fines collected under section
83 shall be credited to a separate fund to be called “the Fines
Fund” the proceeds of which shall be expended in promoting the
well-being of municipal officers and servants other than those E
appointed under the provisions of Chapter XVIA of this Act, and
for the payment of compassionate allowances to the widows of
such officers and servants who die while in municipal service and
to such other relation of the officers and servants as the corporation
may from time to time determine. F
xxx xxx xxx
123.Accounts to be kept in forms prescribed by Standing
Committee. Subject to the provisions of Chapter XVI-A of this
Act accounts of the receipts and expenditure of the corporation
shall be kept in such manner and in such forms as the Standing G
Committee shall from time to time prescribe:
Provided that, the accounts of the Water and Sewage Fund and
the Consolidated Water Supply and Sewage Disposal Loan Fund
shall be maintained on the accrual basis, unless otherwise
prescribed by the Standing Committee. H
692 SUPREME COURT REPORTS [2022] 14 S.C.R.

A xxx xxx xxx
125. Estimates of expenditure and income to be prepared
annually by Commissioner.
The Commissioner shall on or before eachfifth day of February,
have prepared and lay before the Standing Committee, in such
B form as the said Committee shall from time to time approve, —
(1) (a) an estimate of the expenditure which must or should, in his
opinion be incurred by the corporation in the next ensuing Official
Year, other than—

C *****
(ii) expenditure to be incurred by reason of the obligations
imposed on the corporation arising out of the transfer to the
corporation of the powers, duties, assets and liabilities of
the Board of Trustees for the improvement of the City of
D Bombay constituted under the City of Bombay Improvement
Trust Transfer Act, 1925 13or for any of the purposes of
Chapter XII-A; and
(iii) expenditure to be incurred on account of the Brihan
Mumbai Electric Supply and Transport Undertaking;
E (iv) expenditure to be incurred for the purposes of clause
(q) of section 61;
(v) expenditure to be incurred for the purposes of Chapters
IX and X;
(b) an estimate of the balances, if any (other than balances) shown
F in the accounts maintained under sections 123A and 123C which
will be available for re-appropriation or expenditure at the
commencement of the next ensuing official year;
(c) an estimate of the corporation’s receipts and income for the
next ensuing official year other than from taxation and from the
G Brihan Mumbai Electric Supply and Transport Undertaking and
other than that referred to in clause (c) of sub-section (2) and in
clause (d) of section 126C and in section 126E;
(cc) an estimate of the amount due to be transferred during the
next ensuing official year to the municipal fund under the provisions
H of sections 460KK and 460LL;
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 693
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

(d)a statement of proposals as to the taxation which it will, in his A
opinion, be necessary or expedient to impose under the provisions
of this Act in the next ensuing official year;
(2) (a) an estimate of the expenditure which must or should, in his
opinion, be incurred by the corporation in the next ensuing official
year by reason of the obligations imposed upon the corporation B
arising out of the transfer to the corporation of the powers, duties,
assets and liabilities of the Board of Trustees for the Improvement
of the City of Bombay constituted under the City of Bombay
Improvement Trust Transfer Act, 1925 or for any of the purposes
of Chapter XII-A;
C
(b)an estimate of all balances, if any in the account maintained
under section 122A, which will be available for re-appropriation
or expenditure at the commencement of the next ensuing official
year;
(c) an estimate of the corporation’s receipts and income for the D
next ensuing official year—
(i) arising from sales, leases and otherdispositions of
immovable property vesting in the corporation by reason of
the enactment of the City of Bombay Municipal
(Amendment) Act, 1933 or acquired by the Corporation for E
any of the purposes of Chapter XII-A; and
(ii) being payments of interest on and repayments in whole
or part of the capital of loans granted by the corporation
and secured on the aforesaid immovable property;
(d) an estimate of three times the amount of the net estimated F
realisations of the corporation in the then current financial year
under the head of general tax (including arrears and payments in
advance) divided by the rate fixed for general tax for the then
current financial year;
xxx xxx xxx G
Provided 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, other
than receipts and income referred to in other clauses of this sub- H
694 SUPREME COURT REPORTS [2022] 14 S.C.R.

A section arising from or relating to, transaction connected with the
obligations imposed upon the Corporation by the transfer to the
Corporation of the powers, duties, assets and liabilities of the said
Board of Trustees or with the exercise of the powers and duties
conferred or imposed upon the Corporation by Chapter XII-A
including grants from the State Government.
B
xxx xxx xxx
128. Fixing rates, of municipal taxes and of fares and charges
of “Brihan Mumbai Electric Supply and Transport
Undertaking”
C (1) The Corporation shall, on or before the twentieth day of
March after considering the Standing Committee’s proposals
in this behalf,—
(a) determine, subject to the limitations and conditions
prescribed in Chapter VIII, the rates at which municipal
D taxes shall be levied, and the articles on which octroi shall
be levied, in the next ensuing official year:
Provided that, the Corporation may determine different rates
of property taxes for different categories of users of a
building or land or part thereof; and
E
(b) approve, subject to the limitations and conditions which
may have been prescribed by or under any of the enactments
or any licence referred to in clause (i-a) of sub-section (2)
of section 126B, the rates at which the fares and charges
in respect of the Brihan Mumbai Electric Supply and
F Transport Undertaking shall be levied.
(2) Except under sections 134,196, 460H and 460I, the rates
so fixed and the articles so appointed shall not be subsequently
altered for the year for which they have been fixed.
(3) Notwithstanding anything contained in sub-sections (1) and
G (2), the Corporation may, at any time during the official years
2010-2011, 2011-2012 and 2012-2013 determine, separately for
each of the said three years, the rates of property taxes for
different categories of users of a building or land or part thereof.
The rates of property taxes so determined shall be effective
H and shall be deemed to have been effective from the 1st of
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 695
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

April of those three years and the taxes for the said three A
years shall be leviable and payable at the rates so determined.
xxx xxx xxx

139.Taxes to be imposed under this Act. For the purpose of B
this Act, taxations shall be imposed as follows, namely:-
(1) property taxes;
(2) a tax on dogs: and
(3) a theatre tax;
C
139A. Property taxes what to consist.
(1) Property taxes leviable on buildings and lands in Brihan Mumbai
under this Act shall include water tax, water benefit tax, sewerage
tax, sewerage benefit tax, general tax, education cess, street tax
and betterment charges. D
(2) For the purposes of levy of property taxes, the expression
“Building” includes -a flat, a gala, a unit or any portion of the
building.
(3) All or any of the property taxes may be imposed on agraduated
scale. E

(4) Save as otherwise provided in this Act, it shall be lawful - for
the Corporation to levy all property taxes on the rateable value of
buildings and lands until the Corporation adopts levy of any or all
the property taxes on such buildings and lands on the capital value
thereof under section 140A. F
140. Property taxes leviable on rateable value, or capital
value as the case may be, and at what rate. (1) The following
property taxes shall be levied on building and lands in Brihan
Mumbai, namely: -
G
(a) (i) the water tax of so many per centum of their rateable
value, or their capital value, as the case may be, as the Standing
Committee may consider necessary for providing water supply;
(ii) an additional water tax which shall be called ‘the water benefit
tax’ of so many per centum of their rateable value, or their capital
H
696 SUPREME COURT REPORTS [2022] 14 S.C.R.

A value, as the case may be, as the Standing Committee may consider
necessary for meeting the whole or part of the expenditure incurred
or to be incurred on capital works for making and improving the
facilities of water-supply and for maintaining and operating such
works;
B Provided that all or any of the property taxes may be imposed
on a graduated scale.
(b) (i) the sewerage tax of so many per centum of their rateable
value, or their capital value, as the case may be, as the Standing
Committee may consider necessary for collection, removal and
C disposal of human waste and other wastes;
(ii) an additional sewerage tax which shall be called the “sewerage
benefit tax” of so many per centum of their rateable value, or
their capital value, as the case may be, as the Standing Committee
may consider necessary for meeting the whole or a part of the
D expenditure incurred or likely to be incurred on capital work - for
making and improving facilities for the collection, removal and
disposal of human waste and other wastes and for maintaining
and operating such works;
General tax
E (c) a general tax of not less than eight and not more than fifty per
centum of their rateable value, or of not less than 0.1 and not
more 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 per
centum of their rateable value or not less than 0.01 and not more
F than 0.2 per centum of their capital value, as the case may be,
added thereto in order to provide for the expense necessary for
fulfilling the duties of the corporation arising under clause (k) of
section 61 and Chapter XIV;
Education cess
G (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 tax
H or a halalkhor tax shall after the commencement of the Bombay
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 697
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

Municipal Corporation (Amendment) Ordinance, 1973, be A
construed as a reference to the water tax or the water benefit tax
or both or the sewerage tax or the sewerage benefit tax, or both
as the context may require;
140A.Property taxes to be levied on capital value and the
rate thereof. (1) Notwithstanding anything contained in section B
140 or any other provision of this Act, the Corporation may pass a
resolution to adopt levy of property tax on buildings and lands in
Brihan Mumbai on the basis of capital value of the buildings and
lands on and from such date, and at such rates, as the Corporation
may determine in accordance with the provisions of section 128:
C
Provided that, for the period of five years from the date on
and from which such property tax is levied on capital value, the
tax shall not:
(a) exceed, -
(i) in respect of building used for residential purposes, two D
times, and
(ii) in respect of building or land used for non-residential
purposes, three times, and
(b) where the tax so levied on any building or land, whether
E
used for residential or for non-residential purposes, gets reduced,
be less than half of the amount of the property tax leviable in
respect thereof in the year immediately preceding such date:
shall not exceed,-
(i) in respect of building used for residential purposes, two F
times, and
(ii) in respect of building or land used for non-residential
purposes, three times,
the amount of the property tax leviable in respect thereof in the
year immediately preceding such date: G

Provided further that, where the property taxes levied in
respect of any residential or non-residential building or portion
thereof were on the basis of annual letting value arrived at
considering the leave and licence charges, by whatever name
called, then for the purposes of the first proviso it shall be lawful H
698 SUPREME COURT REPORTS [2022] 14 S.C.R.

A for the Commissioner to ascertain such tax leviable during such
immediately preceding year, as if such building or portion thereof
were self-occupied and had been so entered in the assessment
book:
Provided also that, the property tax levied on the basis of
B capital value of any building or land on revision made under sub
section (1C) of section 154 shall not in any case exceed 40 per
centum of the amount of the property tax payable in the year
immediately preceding the year of such revision:
Provided also that, for the period of five years commencing
C from the year of adoption of capital value as the base, for levy of
property tax under section 140A, the amount of property tax
leviable in respect of a residential building or residential tenement,
having carpet area of 46.45 sq. meter (500 sq. feet) or less, shall
not exceed the amount of property tax levied and payable in the
year immediately preceding the year of such adoption of capital
D value as the basis.
Provided also that, for a period of five years commencing
onthe 1st April 2015, the amount of property tax leviable in respect
of a residential building or residential tenement, having carpet area
of 46.45 sq. meter (500 sq. feet) or less, shall not exceed the
E amount of property tax which is being levied and payable in respect
of such residential building or tenement as on the 31st March
2015.
Provided also that, for the financial year 2019-20, the
provisions of the preceding proviso shall apply as if the general
F tax leviable under clause (c) of sub-section (1) of section 140 do
not form part of the property tax leviable under that section.
(2) Notwithstanding anything contained in sub-section (4) of section
139A or any other provisions of this Act or Resolution, if any,
passed by the Corporation for adopting the levy of property tax
G on the basis of capital value but subject to the provisions of section
154A, buildings and lands in respect of which the process of fixing
capital value is in progress on the 26th August 2010, being the
date of coming into force of section 3 of the Maharashtra Municipal
Corporations and Municipal Councils (Third Amendment) Act,
2010, until it is so fixed, the tax leviable and payable in respect of
H
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 699
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

such buildings and lands shall provisionally be equal to the amount A
of tax leviable and payable in the preceding year, that is to say, for
the year commencing on the first day of April 2009 and ending on
the thirty-first day of March 2010 and such provisional tax shall
be leviable and payable for each of the years 2010-2011, 2011-
2012 and 2012-2013, according to the provisional bills which may
B
be issued separately for each such year; so, however, that on
fixation of capital value of the respective buildings and lands, final
bill of assessment of property taxes on the basis of capital value
may then be issued for each such year as aforesaid. After such
final assessment, if it is found that the assessee has paid excess
amount, such excess shall, notwithstanding anything contained in C
section 179, be refunded within three months from the date of
issuing the final bill, along with interest from such date as provided
in the first proviso to sub-section (5) of section 217, or after
obtaining the consent of the assessee, shall be adjusted towards
payment of property tax due, if any, for the subsequent years; and
D
if the amount of taxes on final assessment is more than the amount
of tax already paid by the assessee, the difference shall be
recovered 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 the E
1st April 2010, shall provisionally be equal to the amount of tax, as
if such buildings and lands are liable to be assessed in the year
2009-2010; and on ascertainment of the capital value of such
‘buildings and lands, the corporation may issue a final bill in respect
of the years for which they are liable to be assessed, on the basis F
of capital value thereof and accordingly it shall be the duty of the
owner and occupier of such buildings and lands to pay such tax
within the period specified in the final bill issued as aforesaid.
(3) Notwithstanding anything contained in section 163 or 217 or
any other provisions of this Act and having regard to the fact that G
the property tax bill has been issued in accordance with the
provisions of sub-section (2), not being a final bill, such bill shall
not be questioned before any forum; and no complaint or appeal
shall lie against such bill merely on the ground that capital value in
respect of the property which is subject matter of the bill is not
H
700 SUPREME COURT REPORTS [2022] 14 S.C.R.

A yet fixed, or that the amount of tax leviable and payable at the
rate of property tax determined by the Corporation is not yet finally
ascertained, or on any other ground whatever.
Explanation.- For the purposes of this section, after the Corporation
adopts the Capital Value as the basis of levy of property tax, the
B property tax in respect of any taxable building shall be revised
after every five years and on each such revision, such amount of
property tax, shall not in any case exceed the forty per cent of the
amount of the property tax levied and payable in the year
immediately preceding the year of the revision.
C xxx xxx xxx
154.Rateable value or capital value how to be
determined. (1) In order to fix the rateable value of any building
or land assessable to a property-tax, there shall be deducted from
the amount of the annual rent for which such land or building
D might reasonably be expected to let from year to year as unequal
to ten per centum of the said annual rent and the said deduction
shall be in lieu of all allowances for repairs or on any other account
whatever.
(1A) In order to fix the capital value of any building or land
E assessable to a property tax the Commissioner shall have regard
to the value of any building or land as indicated in the Stamp Duty
Ready Reckoner for the time being in force as prepared under
the Bombay Stamp (Determination of True Market Value of
Property) Rules, 1995, framed under the provisions of the Bombay
F Stamp Act, 1958, as a base value2or where the Stamp Duty Ready
Reckoner does not indicate Value of any properties in any particular
area wherein a building or land in respect of which capital value is
required to be determined is situate, or in case such Stamp Duty
Ready Reckoner does not exist, then the Commissioner may fix
the capital value of any building or land taking into consideration
G the market value of such building or land, as a base value. The
Commissioner while fixing the capital value as aforesaid, shall
have regard3 to the following factors, namely: -
2
and
3
The expressions were added / substituted by 2010 Amendment. The erstwhile sub-
section (1A) introduced by Maharashtra Act No. XI of 2009 was : -
H
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 701
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

(a) the nature and type of the land and structure of the building,- A
(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 and
factories, (viii) school and college building or building used for B
educational purposes, (ix) malls and (x) any other building or
landnot covered by any of the above categories,
(d) age of the building, or
(e) such other factors as may be specified by rules made under C
subsection (1B).
(1B) The Commissioner shall with the approval of the Standing
Committee, frame such rules as respects the details of categories
of building or land and the weightage by multiplication to be
assigned to various such factors and categories for the purpose D
of 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 be
recorded in writing, revise the capital value of any building or land E

“”(1A) In order to fix the capital value of any building or land assessable to
a property tax the Commissioner shall have regard to the value of any building or land
as indicated in the Stamp Duty Ready Reckoner for the time being in force as prepared
under the Bombay Stamp (Determination of True Market Value of Property) Rules,
1995, framed under the provisions of the Bombay Stamp Act, 1958, or where the
Stamp Duty Ready Reckoner does not indicate value of any properties in any particular F
area wherein a building or land in respect of which capital value is required to be
determined is situate, or in case such Stamp Duty Ready Reckoner does not exist, then
the Commissioner may fix the capital value of any building or land taking into
consideration the market value of such building or land, as a base value; and also have
regard to the following factors, namely: -
(a) the nature and type of the land and structure of the building,
G
(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
and 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, or
such other factors as may be specified by rules made under subsection (1B).”” H
702 SUPREME COURT REPORTS [2022] 14 S.C.R.

A any time during the said period of five years and shall accordingly
amend the assessment book in relation to such building or land
under section 167.
(1D) (a) Notwithstanding anything contained in sub-section (1C),-
(i) due to the spread of COVID-19 pandemic, the capital value
B of any building or land fixed under sub-section (1A) shall not
be revised in the year 2020-21 and the year 2021-22;
(ii) for the year 2020-21 and the year 2021-22, the property
tax bill for any building or land shall be the same as is for the
year 2019-20;
C
(iii) the capital value of any building or land fixed under sub-
section (1A) shall be revised in the year 2022-23, as if the
clause (i) is not applicable for the year 2020-21 and the year
2021-22.

D (b) Subject to the proviso to sub-section (1C), the next
revision shall be in the year 2025-26, and, thereafter, the revision
of capital value of any building or land, shall be in accordance
with the provisions of sub-section (1C).
(2) The value of any machinery contained or situate in or upon
any building or land shall not be included in the rateable value or
E
the 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 rateable
value of any building or land or part thereof, for the official year
2009-2010, shall be the provisional capital value of such building
F
and lands in respect of the official years 2010-2011, 2011-2012
and 2012-2013, and such provisional capital value shall be deemed
to be the capital value validly and legally fixed under the provisions
of this Act, pending fixing the capital value thereof, and it shall be
lawful for the Commissioner to treat it as such for the purposes of
G assessment book kept under the provisions of this Act, and the bill
for property taxes issued under sub-section (2) of section 140A
shall be deemed to have been validly and legally issued under the
provisions of this Act.
Provided that, in respect of the buildings and lands which are
H liable to be assessed for the first time on or after the 1st April
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 703
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

2010, the capital value of such buildings and lands shall, until the A
final capital value is determined under this section, be provisionally
equal to the amount of rateable value worked out on the basis of
the prescribed letting rates by the corporation in respect of the
official year 2009-2010.
155. Commissioner may call for information or returns from B
owner or occupier or enter and inspect assessable premises.
(1) To enable him to determine the rateable value or the capital
value, as the case may be, of any building or land and the person
primarily liable for the payment of any property tax leviable in
respect thereof the Commissioner may require the owner or
occupier of such building or land, or of any portion thereof, to C
furnish him, within such reasonable period as the Commissioner
prescribes in this behalf, with information or with a written return
signed 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 D

(b) as to the details in respect of any or all the items as
enumerated in clauses (a) to (e) of sub-section (1A) of section
154 in relation to such building or land or any portion thereof.
(2) Every owner or occupier on whom any such requisition is E
made shall be bound to comply with the same and to give true
information or to make a true return to the best of his knowledge
or belief.
(3) The Commissioner may also for the purpose aforesaid make
an inspection of any such building or land. F
156. Assessment book what to contain.
The Commissioner shall keep a book, in such form and manner as
he may, with the approval of the Standing Committee, determine,
and such book shall be called “the assessment book” in which
shall be entered every official year- G
(a) a list of all buildings and lands in Brihan Mumbai
distinguishing each either by name or number, as he shall think
fit;
(b) the rateable value or the capital value, as the case may be,
H
704 SUPREME COURT REPORTS [2022] 14 S.C.R.

A of each such building and land determined in accordance with
the foregoing provisions of this Act;
(c) the name of the person primarily liable for the payment of
the property taxes, if any, leviable on each such building or
land;
B (d) if any such building or land is not liable to be assessed to
the general tax or is exempt from payment of property tax
either in whole or in part, as the case may be, the reason of
such non-liability or exemption, as the case may be;
(e) when the rates of the property taxes to be levied for the
C year have been duly fixed by the corporation and the period
fixed by public notice, as hereinafter provided, for the receipt
of complaints against the amount of rateable value or the capital
value, as the case may be, entered in any portion of the
assessment book, has expired, and in the case of any such
D entry which is complained against, when such complaint has
been disposed of in accordance with the provisions hereinafter
contained, the amount at which each building or land entered
in such portion of the assessment book is assessed to each of
the property taxes, if any, leviable thereon;

E (f) if under section 169, a charge is made for water supplied to
any buildings or land by measurement or the water taxes or
charges for water by measurement are compounded for, or if,
under section 170, the sewerage taxes or sewerage charges
for any building or land are fixed at a special rate, the particulars
and amount of such charges composition or rates;
F
(g) such other details, if any, as the Commissioner from time to
time thinks fit to direct.”
10. The relevant portion of the Capital Value Rules, 2010 is as
under:-
G “No. AC/NTC/1310/2011-22 dated 20.03.2012. In exercise of the
powers conferred by clause (e)s of sub-section (1A) and sub-
section (1B) of section 154 of the Mumbai Municipal Corporation
Act (Act No. Bom.III of 1888), and of all other powers enabling
him in this behalf, the Commissioner, after having obtained the
approval of the Standing Committee, as required under the said
H
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 705
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

sub-section (1B), hereby makes the following rules to provide for A
the factors and categories of users of buildings or lands and the
weightage by multiplication to be assigned to various such factors
and categories for the purpose of fixing the capital value of buildings
and lands in Brihan Mumbai, namely:-
1. Short title and commencement: - (i) These rules may be called B
for the Factors and Categories of Users of Buildings or Lands
(Assignment of Weightages by Multiplication) Fixation of Capital
Value Rules, 2010.
(ii) They shall come into force forthwith.
xxx xxx xxx C

3. Capital of open land :- Save otherwise provided in these rules,
where, within the precincts of a building there is vacant land other
than the land appurtenant to the building, such land shall be treated
as open land and the capital value thereof shall be fixed
accordingly, as provided for in rule 21. D
4. User categories of open land and weightages by multiplication
to be assigned thereto:- User categories of open land shall be as
specified in column (2) of Part 1 of schedule ‘A’ and the weightages
by multiplication to base value, to be respectively assigned thereto
the purpose of fixing capital value, shall be as shown in column E
(3) of the said Part I of schedule ‘A’.
5. User categories of buildings or part thereof and weightages by
multiplication to be assigned thereto:- User categories of buildings
part thereof shall be as specified column (2) of each of Parts II,
III and IV of schedule ‘A’ and the weightages by multiplication to F
the relative base value, to be respectively assigned thereto for the
purpose of fixing capital value, shall be as in column (3) of each
of the said Parts II, III and IV of schedule ‘A’.
6. The nature and type of building and the weightage by
multiplication to be assigned thereto:- The nature and type of a G
building shall be as specified in column (2) of schedule ‘B’ and
the weightages my multiplication to be assigned thereto for the
purpose of fixing capital value, shall be shown in column (3) of
the said schedule ‘B’.
H
706 SUPREME COURT REPORTS [2022] 14 S.C.R.

A 7. The weightage by multiplication to be assigned to a building on
account of the age thereof: - The weightage by multiplication to
be assigned to a building on account of age factor, for the purpose
of fixing capital value, shall be according to the age of the building
as shown in column (2) of schedule ‘C’ and the weightage by
multiplication be assigned thereto shall be as shown in column (3)
B
of the said schedule ‘C’.
8. The weightage by multiplication on account of floor factor to
be assigned to RCC building with lift: - Weightage by multiplication
on account of floor factor to be assigned to a RCC building with
lift, for the purpose of fixing capital value, shall be according to
C the number of floors as shown in column (2) of schedule ‘D’ and
the weightage by multiplication to be assigned thereto shall be as
shown in column (3) of the said schedule ‘D’.
9. Area of hoarding or tower for the purpose of fixing capital
value: -Area of hoarding or tower for the purpose of fixing capital
D value thereof shall mean, -
(a) in the case of a hoarding, the area of the square of the
extremities of the poles on which the hoarding is erected plus the
area of the hoarding; and
(b) in the case of a tower, the area covered by the extremities of
E the foundation of the tower.
10. Built-up area of a flat or a building: (1) The total carpet area
of a flat shall be reckoned by including the area of the following
items, namely: (i) terrace in exclusive possession, (ii) mezzanine
floor, (iii) loft (excluding loft in residential flat) or attic, (iv) dry
F balcony and (v) niches; and
(2) The total built-up area of a building shall be reckoned by
including the areas of the following items, namely: - (i) total area
of the flats in the building computed in accordance with sub rule
(1), (ii) basement, (iii) stilt, (iv)porch, (v) podium, (vi) service floor,
G (vii) refuge area, (viii) entrance lobby, (ix) lounge, (x) air-
conditioning plant room, (xi) air handling room, (xii) the structure
for an effluent treatment plant and (xiii) watchman cabin
(3) The built-up area of any of the following items shall not be
reckoned while computing the carpet area of a building or part
H thereof, namely: -
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 707
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

(i) lift room above topmost storey, (ii) lift well, (iii) stair-case A
and passage thereto including staircase room, (iv) chimney and
elevated tank, (v) meter room, (vi) pump room, (vii) underground
and 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 on B
the record of the Corporation and the total built-up area thereof,
computed in the manner as aforesaid in sub-rule (1), or, as the
case may be, sub-rule (2), is not available on such record, then
the total built-up area of the flat or, as the case may be, of a
building shall be arrived at in the following manner, namely :-
C
Built-up area = 1.2 x carpet area as available on
the record of the Corporation + the built-uparea
of the items specified in sub-rule(1),or, as the
case may be, sub-rule (2), unless already
reckoned in such carpet area.
D
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 any
one or more of the relevant items specified in sub-rule (1) of rule
10, as fixed in accordance with the provisions of rules 14,15, or
sub-rule(1) of rule 16, as the case may be, shall be added to the
capital value of the flat. E
(2) While fixing the capital value of a building or part thereof, the
capital value of any of the one or more of the relevant items
specified in sub-rule (2) of rule 10 as fixed in accordance with the
provisions 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. F
12. Fixation of capital value of a building where there are tenants:
- The capital value of a building or part thereof which is occupied
by a tenant shall be fixed at 75% of the capital value of such
building or part thereof; fixed in accordance with the provisions
of sub-rule (1), or, as the case may be, sub-rule (2) of rule 11. G
Explanation. - For the removal of doubts, it is hereby declared
that the provisions of this rule shall not apply to a building or part
thereof if, -
(1) it is occupied by a licensee to whom it is given on leave
and licence; H
708 SUPREME COURT REPORTS [2022] 14 S.C.R.

A s(2) it is occupied by an office bearer or officer or an
employee of the landlord.
13. Fixation of capital value of religious buildings :- The capital
value of a religious building which is a temple, math, gurudwara,
mosque, takth, church, durgah, synagogue, or agiary or the like,
B and is used or intended to be used for the purpose of religious
worship or offering prayers or performance of any religious rites
or rituals by a person of, or belonging to, the relevant religion,
creed, or sect, shall be fixed at the rate of base value applicable to
a residential building as indicated in the Ready Reckoner; and by
applying the relevant weightages by multiplication provided for in
C these rules.
14. Fixation of capital value of open terrace: - If an open terrace
in exclusive possession is attached to a flat, the capital value of
such terrace of a non-residential flat shall be fixed at 40% of the
relative rate of base value of such flat, and of residential flat at
D 10% of the relative rate of base value of such flat; and by applying
the relevant weightages by multiplication provided for in these
rules.
15. Fixation of capital value of mezzanine floor, loft and attic floor:
-
E
(a) the capital value of mezzanine floor shall be fixed at
70% of the relative rate of base value of the flat beneath the
mezzanine floor; and by applying the relevant weightages by
multiplication provided for in these rules;

F (b) the capital value of loft or attic floor shall be fixed at
50% 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 relevant
weightages by multiplication provided for in these rules;
Provided that, where the rate of base value applicable to
the mezzanine floor, loft or attic floor having regard to its user is
G
higher or, as the case may be, lower than the rate of base value
applicable to the flat beneath such mezzanine floor, loft or attic
floor, the capital value of such mezzanine floor, loft or attic floor
shall be fixed at 70% or 50%, as the case may be, of such higher
or lower rate of base value; and by applying the relevant weightages
H by multiplication provided for in these rules.
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 709
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

16. Fixation of capital value of certain other items which are part A
of a flat or a building or part thereto,- (1) The capital value of dry
balcony and niches shall be fixed at 25% of the relative rate of
base value of the flat, if any one of these items are part of the flat;
and by applying the relevant weightages by multiplication provided
for in these rules.
B
(2) The capital value of any one or more of the following items,
namely:- (i)porch, (ii) air-conditioning plant room, (iii) air-handling
room, (iv) structure for an effluent plant, (v) watchman cabin and
(vi) refuge area, shall be fixed at 25% of the relative rate of base
value of the building or part thereof, if any one or more of these
items are part of the building or part thereof; and by applying the C
relevant 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, shall
be fixed at the relative rate of base value of the building or part
thereof, if any of these items are part of the building or part thereof; D
and by applying the relevant weightages by multiplication provided
for in these rules.
17. Fixation of capital value in respect of demolished building :-
(1) Where a building is fully demolished, or has fully collapsed, E
the land beneath it shall be deemed to be open land and the capital
value thereof shall be fixed accordingly, as provided for in rule 21.
Explanation –For the purpose of this rule, it is hereby declared
that where a building is, or is being, demolished, or has collapsed,
resulting in the land on which it stood or stands being rendered F
open land, or only walls or the like are standing but there is no
structure as such which can be occupied, and on such demolition,
or collapse, debris or any remains of the demolished or collapsed
building are not yet removed, the land beneath such building shall
be deemed to be open land.
G
(2) Where only part of a building is demolished or has partly
collapsed and the remaining part is yet occupied by occupiers,
land beneath the portion of the building which is demolished or
has collapsed shall be deemed to be open land and the portion of
the structure which is occupied shall be treated as a building, for
the purpose of fixing the capital value thereof. H
710 SUPREME COURT REPORTS [2022] 14 S.C.R.

A (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 is
demolished or collapsed shall be deemed to be open land and the
capital value thereof shall be fixed as open land and assigning
thereto a weightage by multiplication of 0.30 of the base value of
B
open land.
18. The capital value of storage tank .-The capital value of storage
tank shall be fixed in the following manner, namely : –
(1) storage tank above the ground level :-
C (a) land - at the rate of open land in the Ready Reckoner
and weightage by multiplication to be assigned thereto shall be
1.25,
(b) storage tank - capacity of storage tank in litres multiplied
by the rate of Rs.40 per litre, with weightage by multiplication to
D be 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 :-
E (a) land - at the rate of open land in the Ready Reckoner
and weightage by multiplication to be assigned thereto shall be
1.25,
(b) storage tank - capacity of storage tank in litres multiplied
by the rate of Rs.50 per litre, with weightage by multiplication to
F be 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 be
separately fixed again.- Where the capital value of a luxurious
G RCC building is fixed under these rules, then no capital value of
the amenities specified in the definition of the expression ‘luxurious
RCC building’ shall be separately fixed for the purpose of levy of
property tax.
20. Valuation of open land capable of utilising more than 1 floor
H space index (F.S.I) or transfer of development right (T.D.R.) -As
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 711
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

the Ready Reckoner provides for the rate of base value of open A
land with 1 floor space index, open land which is capable of utilizing
more than 1 floor space index or any transfer of development
right shall be valued at an increased rate in proportion to the higher
floor space index or transfer of development right proposed to be
utilized and approved under the building plan submitted to the
B
Corporation for approval.
21. Capital value of open land or building or part thereof.-Capital
value of open land or building shall be fixed under the provisions
of the Act and these rules in the following manner, namely:
(1) Capital value (CV) of open land C
Rate of base value (BV) of a open land according to Ready
Reckoner X weightage by multiplication as per user category
(UC) (Part I of schedule ‘A’) X permissible or approved floor
space index (FSI) X area of land (AL).
CV = BV x UC x FSI x AL D
(2) Capital value (CV) of a building --–
Relative rate of base value (BV) of a building according to
Ready Reckoner X weightage by multiplication as per user
category (UC) (Parts II, III, or as the case may be, IV of
E
schedule ‘A’) X weightage by multiplication as per the nature
and type of building (NTB) (schedule ‘B’) X weightage by
multiplication 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). F
CV = BV x UC x NTB x AF x FF x CA
Examples: - Some examples based and worked out on the formulae
as aforesaid are shown in the Appendix.
22. Non-application of Guidelines of Stamp Duty Valuation. - G
Notwithstanding anything contained in the “Important Guidelines
of Stamp Duty Valuation” as specified in the Ready Reckoner,
the provisions made in these rules shall have primacy over those
guidelines and none of those guidelines shall apply for fixing capital
value under the Act and these rules.”
H
712 SUPREME COURT REPORTS [2022] 14 S.C.R.

A 11. The relevant portion of Capital Value Rules of 2015 is as under:-
“No.AC/NTC/1147/2014-15. In exercise of the powers conferred
by 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 him
B in this behalf, the Commissioner, after having obtained the approval
of the Standing Committee, as required under the said sub-section
(1B), hereby makes the following rules to provide for the factors
and categories of users of lands and buildings and the weightage
by multiplication to be assigned to various such factors and
categories for the purpose of fixing the capital value of lands and
C buildings in Brihan Mumbai, namely: -
1. Short title and commencement: -(1) These rules may be called
the Factors and Categories of Users of Buildings or Lands
(Assignment of Weightages by Multiplication) Fixation of Capital
Value Rules, 2015.
D
(2) They shall come into force from 1st April 2015.
2. Definitions – In these rules, unless the context otherwise
requires:-
xxx xxx xxx
E
(c) “hoarding” includes boards used to display advertisements,
erected on poles, on the ground or on a building;
xxx xxx xxx
(g) “open land” includes land not built upon or land being built
F upon, 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) of
section 154 of the Act;
xxx xxx xxx
G
3. Capital value of open land :- Save otherwise provided in these
rules, where, within the precincts of a building there is vacant
land other than the land appurtenant to the building, such land
shall be treated as open land and the capital value thereof shall be
fixed accordingly, as provided for in rule 21.
H
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 713
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

4. User categories of open land and weightages by multiplication A
to be assigned thereto:- User categories of open land shall be as
specified in column (2) of Part 1 of schedule ‘A’ and the weightages
by multiplication to base value, to be respectively assigned thereto
the purpose of fixing capital value, shall be as shown in column
(3) of the said Part I of schedule ‘A’.
B
5. User categories of buildings or part thereof and weightages by
multiplication to be assigned thereto:- User categories of buildings
or part thereof shall be as specified column (2) of each of Parts
II, III and IV of schedule ‘A’ and the weightages by multiplication
to the relative base value, to be respectively assigned thereto for
the purpose of fixing capital value, shall be as in column (3) of C
each of the said Parts II, III and Iv of schedule ‘A’.
6. The nature and type of building and the weightage by
multiplication to be assigned thereto:- The nature and type of a
building and type of building shall be as specified in column (2) of
schedule “B” and the weightages assigned thereto for the purpose
D
of fixing capital value, shall be shown in column (3) of the said
schedule ‘B’.
7. The weightage by multiplication to be assigned to a building on
account of the age thereof: - The weightage by multiplication to
be assigned to a building on account of age factor, for the purpose
of fixing capital value, shall be according to the age of the building E
as shown in column (2) of schedule ‘C’ and the weightage by
multiplication 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 to
be assigned to RCC building with lift: - Weightage by multiplication F
on account of floor factor to be assigned to a RCC building with
lift, for the purpose of fixing capital value, shall be according to
the number of floors as shown in column (2) of schedule ‘D’ and
the weightage by multiplication to be assigned thereto shall be as
shown in column (3) of the said schedule ‘D’.
9. Area of hoarding or tower for the purpose of fixing capital G
value: -Area of hoarding or tower for the purpose of fixing capital
value thereof shall mean, -
(a) in the case of a hoarding, the area of the square of the
extremities of the poles on which the hoarding is erected plus the
area of the hoarding; and H
714 SUPREME COURT REPORTS [2022] 14 S.C.R.

A (b) in the case of a tower, the area covered by the extremities of
the foundation of the tower.
10. Carpet Area area of a flat or a building: (1) The total carpet
area of a flat shall be reckoned by including the area of the
following items, namely: (i) terrace in exclusive possession, (ii)
B 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 by
including the areas of the following items, namely:- (i) total area
of the flats in the building computed in accordance with sub rule
C (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 structure
for an effluent treatment plant room and (xiii) watchman cabin
(xix)sewerage treatment plant room (xv) water treatment plant
room
D
(3) The carpet area of any of the following items shall not be
reckoned while computing the carpet area of a building or part
thereof, namely:
(i) lift room above topmost storey, (ii) lift well, (iii) stair-case
E and passage thereto including staircase room, (iv) chimney and
elevated tank, (v) meter room, (vi) pump room, (vii) underground
and overhead water tank, (viii) septic tank, (ix)flower-bed and
(x) loft in residential flat, (xi) entrance lobby of residential building
(4) “deleted”
F 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 any
one or more of the relevant items specified in sub-rule (1) of rule
10, as fixed in accordance with the provisions of rules 14,15, or
sub-rule(1) of rule 16, as the case may be, shall be added to the
capital value of the flat.
G
(2) While fixing the capital value of a building or part thereof, the
capital value of any of the one or more of the relevant items
specified in sub-rule (2) of rule 10 as fixed in accordance with the
provisions 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.
H
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 715
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

12. “deleted” A
13. Fixation of capital value of religious buildings :- The capital
value 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 religious
worship or offering prayers or performance of any religious rites B
or rituals by a person of, or belonging to, the relevant religion,
creed, or sect, shall be fixed at the rate of base value applicable to
a residential building as indicated in the Ready Reckoner; and by
applying the relevant weightages by multiplication provided for in
these rules.
C
14. Fixation of capital value of open terrace: - If an open terrace
in exclusive possession is attached to a flat, the capital value of
such terrace of a non-residential flat shall be fixed at 50% of the
relative rate of base value of such flat, and of residential flat at
20% of the relative rate of base value of such flat; and by applying
the relevant weightages by multiplication provided for in these D
rules.
15. Fixation of capital value of mezzanine floor, loft and attic floor:-
(a) the capital value of mezzanine floor shall be fixed at
70% of the relative rate of base value of the flat beneath the E
mezzanine floor; and by applying the relevant weightages by
multiplication provided for in these rules;
(b) the capital value of loft or attic floor shall be fixed at
50% 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 relevant F
weightages by multiplication provided for in these rules;
Provided that, where the rate of base value applicable to
the mezzanine floor, loft or attic floor having regard to its user is
higher or, as the case may be, lower than the rate of base value
applicable to the flat beneath such mezzanine floor, loft or attic
G
floor, the capital value of such mezzanine floor, loft or attic floor
shall be fixed at 70% or 50%, as the case may be, of such higher
or lower rate of base value; and by applying the relevant weightages
by multiplication provided for in these rules.
16.”deleted”
H
716 SUPREME COURT REPORTS [2022] 14 S.C.R.

A 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 capital
value thereof shall be fixed accordingly, as provided for in rule 21.
Explanation - “deleted”
B (2) Where only part of a building is demolished or has partly
collapsed and the remaining part is yet occupied by occupiers,
land beneath the portion of the building which is demolished or
has collapsed shall be deemed to be open land and the portion of
the structure which is occupied shall be treated as a building, for
C the purpose of fixing the capital value thereof.
(3) “deleted”
18, “deleted”
19. “deleted”.
19 A Assessment of Amenities in Luxurious RCC bldg
D Where Property tax in respect of amenities of luxurious
RCC building was not levied since 1st April 2010 as per Rule
19, while determining the property tax leviable from 1st April
2015, subject to capping as provided for in section 140A such
tax shall be considered which would have been continued to
E levy from 1st April 2010.
20. Valuation of open land capable of utilising more than 1 floor
space index (F.S.I) or transfer of development right (T.D.R.) -As
the Ready Reckoner provides for the rate of base value of open
land with 1 floor space index, open land which is capable of utilizing
more than 1 floor space index or any transfer of development
F right shall be valued at an increased rate in proportion to the higher
floor space index or transfer of development right proposed to be
utilized and approved under the building plan submitted to the
Corporation for approval.
21. Capital value of open land or building or part thereof.-Capital
G value of open land or building shall be fixed under the provisions
of the Act and these rules in the following manner, namely:
(1) Capital value (CV) of open land
Rate of base value (BV) of a open land according to Ready
Reckoner X weightage by multiplication as per user category (UC)
H (Part I of schedule ‘A’) X permissible or approved floor space
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 717
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

index (FSI) X area of land (AL). A
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 to
Ready Reckoner X weightage by multiplication as per user B
category(UC) (Parts II, III, or as the case may be, IV of schedule
‘A’) X weightage by multiplication as per the nature and type of
building (NTB) (schedule ‘B’) X weightage by multiplication 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). C

CV = BV x UC x NTB x AF x FF x CA
22. Non-application of Guidelines of Stamp Duty Valuation. -
Notwithstanding anything contained in the “Important Guidelines
of Stamp Duty Valuation” as specified in the Ready Reckoner, D
the provisions made in these rules shall have primacy over those
guidelines and none of those guidelines shall apply for fixing capital
value under the Act and these rules.”
12. In Appendix II of Capital Value Rules of 2010, 13 examples
are provided. Examples12 and 13 from said appendix are as under:
E
“(12) OPEN LAND WHERE RESIDENTIAL BUILDING
PLAN WITH HIGHER F.S.I. HAS BEEN APPROVED

Weightage

Rate of base value Rs.36,400 not applicable F

User Category Open Land (Resi) 1.00

Nature and Type of not applicable not applicable
Building
G
Age of Building not applicable not applicable

F.S.I. Factor 2.50 2.50

Land Area 80 sq. mtr. not applicable
H
718 SUPREME COURT REPORTS [2022] 14 S.C.R.

A 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
B
Weightage

Rate of base value Rs.33,200 not applicable

User Category Residential 1.00
C
Nature and Type of not applicable not applicable
Building

Age of Building not applicable not applicable

F.S.I. Factor 1.00 1.00
D
Land Area 80 sq. mtr. not applicable

E 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 of
computation and levy ofproperty tax based on capital value system. The
F
petitions also challenged the vires of Capital Value Rules of 2010 and
Capital Value Rules of 2015. Some of the petitions also challenged the
amendment effected to the MMC Act pertaining to the implementation
of the Capital Value System for computing and assessing property tax.
During the pendency of these matters before the High Court interim
G orders were passed by the High Court on or about 29.01.2014 which
were thereafter modified by subsequent order dated 24.02.2014. The
operative part of the order dated 24.02.2014 was as under: -
“5.In the meantime the petitioners shall pay municipal taxes at the
pre-amended rates and also the additional tax at the rate of 50%
H of the differential tax between the tax payable under the old regime
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 719
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

and now payable on the basis of capital value of the property. The A
petitioners will pay such amounts and the Municipal Corporation
shall accept the amounts within prejudice to rights and contentions
of parties.”
After exchange of pleadings,all the matters were taken up for
hearing with Writ Petition No. 2492 of 2014 filed by the Property
B
Owners’Association and others as the lead matter. Having considered
the rival submissions, the High Court rejected the challenge as to the
validity of various provisions of the MMC Act. It, however, held Rules
20, 21 and 22 of the Capital Value Rules 2010 and 2015 to be ultra vires
the provisions of the MMC Act.
14. Before considering the challenge raised on various grounds, C
at the outset the High Courtdealt with the approach to be adopted by a
Court while dealing with the challenge to the validity of tax laws, and
concluded that in case of taxing statute, more latitude would be required
to be given to the legislature and that the burden on the petitioners
challenging the validity would be more onerous. Thereafter the challenge
was considered under following heads: - D
(a) The argument on legislative competence.
The submission that the tax in terms of the instant legislation
would be one covered by Entry 86 of List I of the Seventh Schedule
to the Constitution, was not accepted and the challenge in that
behalf was rejected with following conclusions: - E
“155.The legislation providing for the levy of property tax by a
municipality on the basis capital value will be covered by Entry
49 of List-II. Now coming to the impugned provisions, we find
that capital value of lands and buildings is adopted only as a
measure to determine the tax on lands and buildings. There is F
no attempt to levy a tax on capital value of assets. Therefore,
the conclusion which can be drawn is that the State Legislature
was competent to enact provisions regarding property tax based
on capital value under Entry-49 of List-II of Seventh Schedule.
The argument that the impugned amended provisions of the
BMC Act impinge upon the powers of the Central Legislature G
covered by Entry-86 of List-I of Seventh Schedule deserves
to be rejected. The adoption of capital value as a basis or
measure of tax on land and building will not attract Entry-86 of
List-I of Seventh Schedule.
….”
H
720 SUPREME COURT REPORTS [2022] 14 S.C.R.

A (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. …..
B A tax is a compulsory exaction as a part of common burden
without promise of any special advantages to classes of
taxpayers, whereas a fee is a payment for services
rendered, benefit provided or privilege conferred. Coming
back to sub-sections (1)(a) and (1)(b) of section 140, the
same provide for levy of such water tax as the Standing
C Committee may consider necessary for providing water
supply. The imposition of this tax does not depend on
whether the water is being supplied to the premises or
property in respect of which water tax is demanded.
Similarly, in case of additional water tax, the expenditure
D incurred or to be incurred for capital works for making or
improving the facilities of water supply may not be for a
direct benefit to the premises or property subject matter of
levy of tax. The Municipal Corporation may not be providing
water supply to a particular premises or land at a particular
point of time but it may be providing it to other properties in
E the city. Similarly, in respect of sewerage tax or additional
sewerage tax, in case of an open land there may not be any
requirement for collection or removal and disposal of human
and other wastes or for doing capital works for making and
improving the facilities for collection and removal of waste.
F Thus, in case of these four taxes, it is a compulsory exaction
as part of a common burden without promise of any special
advantages or promise to the tax payers. The said taxes
are imposed to generate revenue. Even assuming that in
the levy of tax under these four heads, an element of quid
pro quo exists, that by itself does not mean that the levy
G ceases to be in the nature of tax. We, therefore, reject the
argument that these four taxes cannot be levied in respect
of vacant land or a land under construction which is not
enjoying any service such as water supply or collection of
sewerage or waste.
H
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 721
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

159. Where the facilities of water supply or sewerage A
collection are provided to a land or building, as per the Rules
framed under sections 169 and 170 of the BMC Act, the
water charges or sewerage charges, as the case may be,
by way of fees can be recovered which would have direct
nexus with the quality and quantity of services provided.
B
Where charge is collected, taxes covered by the above four
heads cannot be levied. Therefore, we do not agree that
the aforesaid four taxes are not in substance a tax but the
same are in the nature of fees.”
(c) Challenge to the validity of sub-Section (1)(c)(a) of
Section 140 regarding levy of Education Cess. C

The submissions were rejectedthus:-
“160. …..
On plain reading of sub-section (1) of section 195E, itis
clear that this section provides for levy of additional tax on D
buildings and lands which is called as education cess of so
many per centum not exceeding 12 per centum of their
rateable value or so many per centum of their capital value,
as the case may be, as may be determined by the
Corporation. Sub-section (1) of section 195E provides that E
levy of said additional tax is for the purposes of clause (q)
of section 61. Under clause (q) of section 61, it is an
obligation of the BMC to maintain and aid schools of primary
education. Therefore, as in the case of the aforesaid four
taxes which we have discussed above, this tax is a
compulsory exaction as a part of a common burden. We, F
therefore, do not see any merit in the submission that the
aforesaid provisions are ultra vires the provisions of the
Constitution of India. The argument whether education cess
can be levied on the basis of capital value is dealt with
separately.” G
(d) Similarly, the argument with regard to sub-Section (1)(d) of
Section 140 dealing with levy of Betterment Charges was rejected
with following observations: -
“162. In none of the Petitions in this group, it is demonstrated
that a demand is made from the petitioners for payment H
722 SUPREME COURT REPORTS [2022] 14 S.C.R.

A Betterment Charge. Elaborate procedure for determination
thereof is laid down. The Authority which has power to
determine the charge is the Improvement Committee. As
per section 49B of the BMC Act, the said Committee
consists of 26 elected councilors of BMC. Moreover, the
betterment charge is not payable on the basis of the capital
B
value. Hence, the main ground of attack in these petitions
about the levy of property taxes based on capital value has
no relevance to levy of Betterment charges.”
(e) Consideration of challenge on the basis of violation of
provisions of Chapter IXA and in particular, Article 243-X
C of the Constitution of India.
The substratum of the challenge was that the levy and collection
as provided in clauses (a) and (b) of Article 243-X of the
Constitution must be by the Corporation consisting of the elected
and nominated councillors and not by any other authority under
D Section 4 of the MMC Act. The submissions in that behalf were
rejected as under:-
“173.`We, firstly, deal with the argument that as the power
to levy and collect property taxes has been assigned to the
Municipality i.e. the Corporation, the power must be
E exercised by the Corporation consisting of elected and
nominated councilors and not by any other municipal
authority. If the said argument is accepted, it will lead to
absurdity for the reason that the exercise of fixing the capital
value of all properties, fixing the rate of tax at a particular
F percentage of capital value, imposition, levy and collection
will have to be done by the Corporation which consists of
the elected councillors and nominated councillors and by
no other municipal authority. It will be impossible for the
Corporation to do so.”

G xxx xxx xxx
“181. To conclude, the BMC Act has been already amended
in terms of Article 243-ZF. Perusal of various provisions of
Part-IXA of the Constitution of India shows that the
constitutional provisions itself provide for the State
Legislature enacting law providing for constitution of
H
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 723
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

committees and conferring them with powers and authority. A
We have already referred to the various provisions including
clause (b) of Article 243-W. Therefore, the provision of
section 4 of the BMC Act is consistent with the provision
of Part-IXA. Clauses (a) and (b) of Article 243-X cannot
be read in isolation and merely because Legislature
B
authorizes the Standing Committee to fix the rates of property
taxes and to approve rules framed by the Commissioner in
accordance with sub-section (1B) of section 154, the
relevant provisions of the BMC Act cannot be said to be
ultra vires Article 243-X. The powers under the charging
sections in Chapter VIII are conferred on the Corporation C
itself including the power to exercise option of taking
recourse to capital value regime for the levy of property
taxes. Moreover, we have pointed out that certain provisions
of Chapter VIII are machinery provisions. As required by
law, the decision adopting Capital Value System has been
D
taken by the Corporation consisting of 227 elected and
nominated councillors. This power cannot be said to be
unguided power only because sub-section (1) of section
140A does not expressly lay down any specific conditions
for exercise of the option. The provisions which confer
power on the Standing Committee to fix the rates of taxes E
contain sufficient guidelines. Even the provision of sub-
section (1A) of section 154 which confer power on the
Commissioner to determine capital value contains more than
sufficient guidelines. We see no violation of Article 243-X
or any other provisions of Part-IX-A.
F
182. If we accept the submissions canvassed across the
bar by the petitioners, not only the decision to adopt capital
value system but the job of fixing rates in case of all
categories of property taxes, determination of capital value
of all properties liable to taxes, process of serving notices
under section 162, giving hearing on complaints and deciding G
the complaints will have to be done by the Corporation
consisting of elected councillors and nominated councillors
and by no one else. Such interpretation put to clauses (a)
and (b) of Article 243-X will lead to absurdity and the
provisions will become unworkable. Such interpretation will H
724 SUPREME COURT REPORTS [2022] 14 S.C.R.

A defeat the object of 74th Amendment to the Constitution
and, therefore, the challenge on the ground of violation of
Article 243-X must fail.”
(f) Submissions on the ground of excessive delegation.
While observing that the power conferred in sub-Section (1A)
B of Section 154 of the MMC Act on the Commissioner to fix capital
value, was not at all an unguided power and that sufficient guidelines
were set out, it was concluded thus: -
“185. …. There are sufficient guidelines and safeguards.
Moreover, in case of taxes where power to fix rates is given
C to the Standing Committee, the same will always form part
of proposals of the Standing Committee which will be
considered by the Corporation in accordance with clause
(e) of subsection (1) of Section 128 for determination of
rates. The BMC Act does not provide for delegation of
D essential functions of the Corporation. Conferment of
powers on the Standing Committee and Improvement
Committee and other municipal authorities is within the four
corners of Part-IXA of the Constitution. Therefore, the
argument of excessive delegation has no merit and deserves
to be rejected.”
E
(g) Submission based on violation of Article 14 of the
Constitution of India.
The submission that there was manifest arbitrariness in the
impugned provisions and that the provisions were confiscatory in
F nature, were rejected by the High Court. It was observed thus: -
“189. …. There is an argument canvassed that there is a
disparity of tax payable in respect of residential and hotel
properties. An argument is canvassed that there is disparity
between five star hotel properties and other hotel properties.
On first principle, the submissions cannot be accepted. The
G
user of residential properties, 5-Star hotel properties and
other hotel properties is different. These properties form
part of distinct classes and by itsvary nature cannot be
treated as equal. Therefore, it is very difficult to sustain an
argument that there is manifest arbitrariness in the impugned
H
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 725
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

provisions. As the provisions do not lead to confiscatory A
nature of taxes, violation of Article 14 is not attracted.”
(h) Challenge to the notification issued under the
Maharashtra Education Cess Act, 1962
The submissions in that behalf were also negatived with
observation that by adopting capital value system, only the B
computation of property tax was altered.
(i) The ground of retrospective operation of the impugned
provisions of the BMC Act.
The contentions advanced in that behalf were rejected by the C
High Court after making following observations: -
“205. The liability to pay property taxes was always
provided in the BMC Act. By the impugned amendments,
only the basis of computing property taxes has undergone
a change. Assuming that there is any retrospective operation, D
it is no facilitate transition form one regime to another. As
per the amendments, the final assessment for the years
2010-11, 2011-12 and 2012-13 can be made after expiry of
the respective years. But provisional assessment has to be
made during the respective three years. The impugned
provisions do not take away or affect any vested right as E
only the procedure/method of computing the property taxes
has undergone a change. By virtue of the impugned
amendments, a property in respect of which taxes were
not payable earlier does not become subject to taxes. It
cannot be said that by the impugned amendment, from an F
earlier date, any new obligation or disability has been
attached in respect of any earlier transactions. The
impugned amendments will affect the properties which even
under the unamended Act, were subject to payment of
property tax. The impugned provisions do not bring about
any unreasonable or arbitrary consequences. Thus, there G
is no merit in the contention based on retrospective
operation.”
Thus, the majority of submissions advanced on behalf of the writ
petitioners were rejected by the High Court.
H
726 SUPREME COURT REPORTS [2022] 14 S.C.R.

A 15. The High Court however accepted the challenge on three
grounds, namely: -
(i) Challenge to the Capital Value Rules of 2010 on
retrospective operation,
(ii) Challenge to the Capital Value Rules of2010and 2015, on
B the ground that the rule making power did not permit the
Commissioner to determine capital value.
(iii) Rule 20 of the Capital Value Rules of 2010 was held to be
ultra vires theprovisions of sub-Section (1A) and (1B) of
Section 154 of the MMC Act.
C
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 MMC
Act conferred powers to frame rules with retrospective effect. The
Capital Value Rules of 2010, which came into effect from 20.3.2012,
were, therefore, held to be applicable prospectively and that said Rules
D could not be applied from 1st April, 2010.
17. With regard to the second issue, it was observed that there
was no provision in the MMC Act regarding consideration of development
potential of vacant land for determining its capital value. The conclusion
arrived at by the High Court in that behalf was as under: -
E
“211. Now we turn to the Capital Value Rules of 2010. As stated
earlier, there is no provision which enables the Commissioner to
frame rules for laying down guidelines for determining capital
value. Rule 2 contains definition. Rule 3 provides that where within
the precincts of the building there is a vacant land other than the
F land appurtenant to the building, such land shall be treated as open
land and capital value thereof shall be fixed as provided in Rule
21. As observed earlier, the rule making power is confined to the
three aspects mentioned above. As Rule 3 refers to Rule 21, we
will have to consider the provision of Rule 21. Perusal of Rule 21
and, particularly clause (1) thereof shows that it lays down how
G
the capital value of the open land is to be determined. It provides
for a formula. It provides that the capital value of open land will
be equal to rate of base value of open land according to SDRR
multiplied by weightage by multiplication as per user category.
The said weightage is provided in Part-I under heading “Open
H Land” multiplied by permissible or approved FSI multiplied by
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 727
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

area of the land. Once the base value is determined as per SDRR, A
it is obvious that the said value is fixed taking into consideration
potential of the land. The rates in SDRR are fixed after taking
into consideration all the aspects of market value. The capital
value has to be decided in accordance with the base value which
has to be taken as per SDRR. Clause (1) of Rule 21 provides for
B
weightage by multiplication as per user category. It also provides
that the rate of base value shall be multiplied by permissible FSI
for determining the capital value of the land. There is no provision
under the BMC Act to take into consideration development
potential of vacant land for determining its capital value. When
the substantive provision i.e sub-section (1A) of Section 154 lays C
down that the base value has to be in terms of SDRR rates, the
subordinate legislation cannot provide for adding additional value
to SDRR rates on account of availability of FSI. Thus, the provision
of multiplying base value with permissible or approved FSI is ultra
vires the provisions of the BMC Act. Moreover, the rule making
D
power does not permit the Commissioner to frame the rules for
determining what is the capital value. The rule making power is
confined to three aspects which are pointed out earlier. Clause
(1) of Rule 21 which provides for taking into consideration the
potential FSI is not covered by any of the three categories. Under
sub-section (1B) of section 154 of the BMC Act, the rules can be E
framed providing for details of categories of buildings or land and
the weightage by multiplication to be assigned to various such
categories. Under clause (e) of sub-section (1A) of section 154,
factors which are to be taken into consideration for determining
base value can be subject matter of rules. The factors referred in
F
clause (e) will have to be considered ejusdem generis. The other
factors provided are nature of the land, type of land and structure,
areas of land or building, user category such as residential or
commercial and the age of the building. Under clause (e) of sub-
section (1A) of section 154, rules cannot be framed to decide
how the capital value should be determined. In fact, framing rules G
for laying down the method of calculating the capital value is itself
ultra vires the statutory rule making power.”
18. Rule 20 of the Capital Value Rules of 2010 was struck down
by the High Court on the reasoning that the effect of said rule would be
that the value higher than what was provided for in Stamp Duty Ready H
728 SUPREME COURT REPORTS [2022] 14 S.C.R.

A Reckoner would be taken into consideration while computing the property
tax. The High Court observed as under: -
“216. Rule 20 of Capital Value Rules, 2010 deals with valuation of
open land capable of utilizing more than 1.0 FSI or transfer of
development right (TDR). It provides that as the Ready Reckoner
B provides 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 any
TDR shall be valued at an increased rate in proportion to the
higher FSI or TDR proposed to be utilized and approved under
the building plan submitted to the Corporation for approval. Thus,
the effect of rule 20 is that while fixing capital value of open land,
C its potential for development by using additional FSI or TDR has
to be considered. Thus, a value higher than what is provided in
SDRR should be taken into consideration.”
It was further observed thus: -

D “218. Rule 20 provides for taking into consideration potential of
construction on the vacant land for making valuation. For the
purpose of property taxes, not only a vacant land but even a land
under construction will have to be treated as a vacant land.
Wherever SDRR is applicable, in view of sub-section (1A) of
section 154, the base value has to be as per SDRR rate for vacant
E land. Rule 20 provides for taking into consideration potential for
development. It is completely contrary to the provisions of the
BMC Act as interpreted in the case of Polychem Limited (supra)
which requires even the land under construction to be treated as
a vacant land. Moreover, rule 20 purports to lay down how valuation
F of the land has to be made. The rule making power under sub-
section (1B) or clause (e) of sub-section (1A) of section 154 does
not confer any such power. Moreover, if rule 20 is implemented,
capital value which is higher than SDRR rate will have to be fixed
which will be in violation of sub-section (1A) of section 154 which
mandates that the Commissioner will take into consideration SDRR
G rate while finalizing capital value. Thus, rule 20 is ultra vires the
provisions of sub-sections (1A) and (1B) of section 154 of the
BMC Act. There is no difference in Rule 20 of the Capital Value
Rules of 2010 and 2015.”
19. In the end, the conclusions arrived at and the directions issued
H by the High Court were as under: -
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 729
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

“229. Our conclusions can be summarized as under: A
(i) We uphold the constitutional validity of the sprovision of
the BMC Act which are under challenge;
(ii) The Capital Value Rules of 2010 shall apply prospectively
from the date on which the same were made;
B
(iii) We strike down rules 20, 21 and 22 of Capital Value
Rules of 2010 and 2015. As far as rules 3 and 17 are
concerned, we hold that as rule 21 has been struck down,
the capital value of properties covered by the said rules
shall not be fixed in accordance with rule 21. As a result
of striking down of rules 20, 21 and 22, in those cases C
where the capital value has been finally fixed either by
issuing notice under section 162 of the BMC Act or by
issuing final bills, the Commissioner or the officer
empowered to exercise delegated powers will have to
re-determine the capital value in accordance with sub- D
section (1A) of section 154 and serve a fresh special
assessment notice. We hold that if a complaint is filed
after service of special assessment notice, the same shall
be disposed of only after giving an opportunity of being
heard to the assessee filing such complaint. Only after
the complaint is disposed of in such a fashion, a final bill E
can be served.
(iv) As the Municipal Commissioner will require a reasonable
time to do the tasks as aforesaid, the interim orders which
are operating in these petitions will have to be continued
till the service of final bills. We also make it clear that F
though we are setting aside the final bills issued, no party
will be entitled to claim refund of the amounts paid under
the interim orders and till the final bills are served, the
petitioners will have to pay the amounts as per the interim
orders. G
(v) This judgment will apply only to the properties subject
matter of the petitions in this group except Writ Petition
No. 2592 of 2013 and PIL 46 OF 2014. We make it
clear that only those special assessment notices and final
bills which are specifically challenged will stand set aside.
H
730 SUPREME COURT REPORTS [2022] 14 S.C.R.

A In Writ Petition No. 2592 of 2013, the fresh exercise
will have to be undertaken only in relation to the
properties in respect of which there is a specific prayer
for quashing the notices and bills based on final
assessment. The details of properties held by 610
members in the lead petition are not set out. Hence, no
B
relief can be extended to the properties of the said
members save and except the properties subject matter
of bills and notices which are expressly challenged.
(vi) This judgment will not affect the final bills which are
accepted by the concerned owners.
C 230. We record our appreciation for the valuable assistance
rendered 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 constitutional
D validity of various provisions of the Mumbai Municipal
Corporation Act, 1888 as prayed in the writ petition/PIL.
We hold that Rules 20, 21 and 22 of the Capital Value Rules
of the years 2010 and 2015 are ultra vires the provisions
of the Mumbai Municipal Corporation Act, 1888 and,
E therefore, the same are struck down;
(ii) We quash and set aside the special assessment notices and
final bills based on final capital value fixed which are
specifically the subject matter of challenge in this group of
petitions. The demand of provisional taxes is not disturbed.
The orders specifically impugned which are passed on the
F
complaints do not survive. We direct the Mumbai Municipal
Corporation to re-fix the capital value in respect of the
properties subject matter of the notices/final bills which are
set aside in the light of the findings recorded earlier. After
re-determination of capital value, special assessment notices
G be issued to the persons primarily liable to pay propertytaxes
in respect of subject properties. Thereafter, further steps
shall be taken by the Municipal Corporation in accordance
with law;
(iii) We hold that the complaints filed objecting to the special
H assessment notices issued under sub-section (2) of section
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 731
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

162 shall be disposed of only after giving an opportunity of A
being heard to the complainants.
(iv) Till the expiry of a period of 21 days from the date on which
fresh special assessment notices are served in accordance
with clause (ii) above, the ad-interim/interim orders which
are operating in these petitions till today shall continue to B
operate subject to compliance of requirement of deposit of
amounts by the petitioners as set out in those orders. In
those cases where the complaints are lawfully filed within
stipulated time pursuant to the special assessment notices,
the ad-interim/interim reliefs will continue to operate on the
same conditions till the date of service of fresh final bills; C
(v) Rule is made partly absolute on the above terms;
(vi) All pending chamber summonses and notices of motion stand
disposed of.”
20. The Corporation being aggrieved by the decision of the High
Court on three issues as stated above,approached this Court by filing D
Special Leave Petition (Civil) No. 17009 of 2019. While issuing notice in
the matter on 29.7.2019, by way of interim relief, it was directed:
“Pending further consideration, the relationship between the
parties shall be governed by interim order dated 24.2.2014 passed
by the High Court and more particularly by para 5 as quoted E
above.
We are conscious of the fact that there were more than 150
petitions before the High Court but special leave petition has been
filed only in one matter. However, since the issues in question are
common to all the matters and go to the root of the controversy, F
we direct that this interim order shall apply in every single petition
which was considered by the High Court.”
Various interim applications have since then been preferred by
certain parties seeking impleadment and projecting their view points. At
the same time, some of the parties who were aggrieved by the rejection
G
of their submissions challenging the validity of the various provisions of
MMC Act and other issues which were answered against them also
preferred Special Leave Petitions.
21. Mr. K.K. Venugopal, learned Attorney General for India and
Mr. V. Sreedharan, learned Senior Advocate appearing on behalf of the
Corporation initially advanced submissions on the issueswhich were H
732 SUPREME COURT REPORTS [2022] 14 S.C.R.

A answered against the Corporation. However, after the submissions were
advanced on behalf of various impleading applicants and other parties
including substantive petitions challenging the correctness of the decision
of the High Court, submissions were also advanced in response.
22. The factual aspects regarding framing of the Capital Value
B Rules of 2010 and 2015, as well as the background for some of the
amendments effected to the MMC Act, have been dealt with in the
written submissions of the Corporation, as under:
“2.The amendment to the MMC Act introducing the capital value
system was brought about inf 2009 (Act No. XI of 2009 on Pg
24-39 in Compilation of Corporation – Vol 4). Pursuant to the
C
same, the Corporation passed resolution dated 27.01.2010 for
adoption of capital value with effect from 01.04.2010 (Pg 6 of
consolidated counter affidavit on behalf of Respondents 2 to 4).
Accordingly, the section was already enacted by State Legislature
providing for levy of tax on capital value basis from 01.04.2010.
D 3. In January 2010, the Corporation appointed an expert committee
composing of Appointment of expert committee comprising of
Shri D.M. Sukthankar, Ex Chief Secretary of the State of
Maharashtra, Shri D.N. Chaudhri, Ex Chairman of Maharashtra
Law Commission and Dr. Roshan Namavati, expert on valuation
E to make recommendation on the introduction and smooth
implementation of capital value system. (Para 13, Pg 9 of
consolidated counter affidavit on behalf of Respondents 2 to 4)
4. On 08.10.2010, the expert committee published draft rules in
various newspapers for comments of public at large (Pg 79 to 94
F in Compilation of Corporation – Vol 4). The committee received
254 objections and suggestions all of which were considered and
scrutinized by the committee. Thereafter, certain benevolent
changes were made by the committee and draft rules were
recommended to the Corporation on 29.12.2010. (Para 14, Pg 10
of consolidated counter affidavit)
G
5. After the rules were published, the Corporation appointed a
chartered accountant firm to suggest a revenue neutral rate.
Revenue neutral rate means such rate as would yield the same
amount of property tax as being levied by the Corporation before
introduction of capital value system. (Para 39, Pg 22 of consolidated
H counter affidavit)
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 733
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

6. Evidently, the rates can be determined only after capital value A
of all properties are calculated on memorandum basis. The work
of fixing the capital value of land and buildings across Greater
Mumbai took time. The scale of the work involved was very large
and extremely time consuming. The data of the old rateable value
system which was in physical form had to be digitized for the
B
purposes of the new capital value system. This voluminous data
covered approximately 2.75 lakh properties (or 27.5 lakh individual
units). In some cases however, the data was not complete and
the carpet area was not available. In these cases the property
owners were given notices under Section 155 of the MMC Act to
furnish the details in the prescribed format. The response was C
however very limited and the officers of the MCGM had to
physically ascertain the required information. (Para 31, Pg 19 of
consolidated counter affidavit on behalf of Respondents 2 to 4)
7. In light of the same, the State Legislature stepped in and
introduced L.A. Bill No. LXXIV of 2010 whereby inserting sub- D
section (2) in Section 140A to enable the Corporation to issue
provisional bills for the year 2010-11 and treat the rateable value
of the building or land as provisional capital value. (Statement of
object and reasons on Pg 48 and 49 in Compilation of Corporation
– Vol 4). The said bill culminated into Act No. XXVII of 2010 (Pg
51 to 58 in Compilation of Corporation – Vol 4). E

8. The amendments to the MMC Act provided that once the capital
value was fixed, final bills would be issued. If the final bill was
lower than the provisional bill, the MCGM would refund the excess
payment made with interest at the rate of 6.25% p.a., or with the
consent of the tax payer, adjust the excess amount against future F
bills (Section 140A(2). (Para 32, Pg 19 of consolidated counter
affidavit on behalf of Respondents 2 to 4)
9. Pursuant to the same, the Corporation started implementation
of the capital value system by issuing provisional property tax
bills. G
10. In March 2011, the State Legislature observed that the process
of fixing the capital value which had started in August, 2010 is
bound to stretch beyond 31st March 2011. This is so because there
are more than 3 lakh properties of which capital value has to be
fixed for the purposes of such levy of property tax thereon, but H
734 SUPREME COURT REPORTS [2022] 14 S.C.R.

A the volume of work of fixing the capital value of all these properties
being so large that it may not be possible for the Corporation to
complete the fixation of capital value of all these properties before
31st March 2011. As a result of this, the work of fixing capital
value would continue during the year 2011-2012 also. Unless the
capital value of all the properties is fixed and the total extent thereof
B
is ascertained, it may not also be feasible.
11. Accordingly, by Maharashtra Ordinance No. X of 2011, the
State Legislature expanded the scope of certain transitory
provisions as contained in sections 128, 140A, 154A and 219A of
the Mumbai Municipal Corporation Act, so as to enable the
C Corporation to separately issue the provisional bills on the basis of
rateable value treating it as provisional capital value for the years
2010-11 and 2011-12. Further, with a view to prevent loss of
revenue in respect of tax on properties which have escaped from
assessment, a new section 216B has also been inserted in the Act
D to enable the Corporation to assess such properties at any time
within six years from the date on which such properties should
have been assessed. (Statement of object and reasons on Pg 141
and 142 in Compilation of Corporation – Vol 4). The said ordinance
culminated into Act No. XI of 2011 (Pg 143 to 148 in Compilation
of Corporation – Vol 4).
E
12. In March 2012, the State Legislature observed that the process
of fixing the capital value which had started in August, 2010 is
bound to stretch beyond 31st March 2012. This is to because the
proposal submitted to the Standing Committee of the Corporation
for rules and rates have not yet received the approval. The general
F election of the Corporation is due in February, 2012 and new
Standing Committee will be operative only from the end of March,
2012.
13. Accordingly, the bill proposed to expand the scope of transitory
provisions so as to enable the Corporation to separately issue the
G provisional bills on the basis of rateable value treating it as
provisional capital value for the years 2012-13, as was done for
the period 2010-11 and 2011-12. (Statement of object and reasons
on Pg 155 and 156 in Compilation of Corporation – Vol 4). The
said ordinance culminated into Act No. VI of 2012 (Pg 157 to 162
H in Compilation of Corporation – Vol 4).
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 735
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

14. It is submitted that, in present case there is no retrospective A
levy of tax. The section for imposition of tax on capital value was
already in force from 01.04.2010. Draft rules were already
published in October, 2010. The levy is broadly speaking on
assesses who were paying tax under earlier regime also.
15. The statute provided for transitionary arrangement pursuant B
to which provisional bills were issued as per Section 140A(2) read
with 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 values
are fixed.
C
16. It is submitted that, time taken in assessment can never make
the levy retrospective when the section imposing a tax is already
in force. In case contention raised by assesses is accepted, it
would amount to imposition of tax on rateable value even when
the statute provides for imposition of tax on capital value w.e.f.
01.04.2010. D

Law laid down in ChhotabhaiJethabhai Patel and Co. v. Union of
India AIR 1962 SC 1006. The same notes and proves the practice
in USA of levying taxes from the beginning of year even when
the law is made during the year.”
E
23. In response, the submissions advanced by various learned
counsel, in the order that they appeared, were as under:
(A) Mr. Neeraj Kishan Kaul, learned Senior Advocate appearing
for Indian Hotels Company Limited which has intervened
in the proceedings as well as filed substantial challenge in F
the form of Special leave Petition (Civil) No.2568 of 2019
submitted that the property tax as a percentage of value
was confiscatory and exorbitant.On facts it was stated that
initially for a property situated in the city a property tax
was to the tune of Rs.6.29 crores per annum which had
now risen to Rs.17.78 crores showing an increase of 275 G
%. Reliance was placed on paragraph 34 of the decision of
this Court in Patel GordhandasHargovindas&Ors. vs.
Municipal Commissioner, Ahmedabad &Anr.4. It was
further submitted that the impugned provisions suffered
4
AIR 1963 SC 1742. H
736 SUPREME COURT REPORTS [2022] 14 S.C.R.

A from excessive delegation which was without any guidelines
and in any case could not be retrospective in operation. In
support of the submission, reliance was placed on the
decisions of this Court in Marathwada University vs.
Seshrao Balwant Rao Chavan 5, Delhi Race Club
Limited v. Union of India &Ors. 6, Devi Das Gopal
B
Krishnan etc. vs. State of Punjab &Ors.7and Avinder
Singh &Ors. vs. State of Punjab &Ors.8.
Learned Senior counsel then submitted that the tax
could be levied by the body constituted of elected
representatives and not by the Standing Committee and that
C the power to tax could not be delegated. It was further
submitted that since a new method of levying and computing
property tax was revised, it was rightly denied retrospective
application.
On facts, it was also submitted that certain areas of the
D properties of the entity which housed pump rooms and other
facilities ought to be excluded while arriving at the
determination.
(B) Dr. Milind Sathe, learned Senior Advocate appeared for
certain entities in IA Nos.110990 of 2019, 163118 of 2019
E and 160953 of 2019 and submitted that Rules 20, 21 and 22
of the Capital Value Rules, 2010 and 2015 were rightly
struck down by the High Court. Relying on the decision of
this Court in The Municipal Corporation of Greater
Bombay v. Polychem Ltd.9, it was submitted that till the
F potential of the property was translated into a habitable
building, the land must be treated and taxed only as land
and not going by its buildable potential. It was further
submitted that the process of fixing and/or changing the
value, must be done in the same financial year.

G (C) Mr. Shekhar Naphade, learned Senior Advocate appearing
for intervenors in IA Nos.110998 and 158888 of 2019
5
(1989) 3 SCC 132.
6
(2012) 8 SCC 680.
7
AIR 1967 SC 1895.
8
(1979) 1 SCC 137.
H 9
(1974) 2 SCC 198
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 737
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

submitted that the existing buildings having been demolished, A
the property could be taxed only as land and not going by
the projected or contemplated developments as a shopping
centre or a mall.
(D) Mr. H. Devarajan, learned Advocate who appeared for the
Property Owners Association submitted that in terms of B
Article 243Y(1)(b) of the Constitution the matter ought to
have come through the suggestions of the Finance
Commission. But the entire process was initiated as a result
of the suggestions made by the TISS.
It was also submitted that the exercise adopted in the C
instant case was in violation of Article 243-X of the
Constitution. Reliance was placed on the decision of this
Court in State of Uttar Pradesh & Ors. v. Systematic
Conscom Ltd.10 to submit that the four components of
incidence of tax as explained in Paragraphs 17 and 18 of
said decision were not satisfied. The learned counsel further D
submitted that Sections 125 to 128 of the MMC Act deal
with budget, but by virtue of amendments to the MMC Act,
the rates were now being fixed without a budget. According
to the learned counsel, the element of property tax under
the new regime would be almost twenty times the rent and E
thus would be confiscatory.
It was submitted that tax on lands and buildings must be
directly on the land as a unit and must have a definite
relationship with the land. The learned counsel further
submitted that the unit for calculation according to SDRR F
and the Capital Value Rules, was not the same. In one case,
the reckonable unit was the built-up area while under the
second, the reckonable unit was the carpet area.
(E) Mr. Darius Khambata, learned Senior Advocate who
appeared in I.A. No.157014 of 2014 submitted that Rules G
20, 21, 22 of the Capital Value Rules of 2010 and 2015
were rightly held to be ultra vires. It was further submitted
that the factors delineated in sub-clause (a) to (d) of Section
154 (A) of the MMC Act would be matters “in presenti”
10
(2014) 13 SCC 627. H
738 SUPREME COURT REPORTS [2022] 14 S.C.R.

A and not with regard to future prospects and that no reliance
could be placed on sub-clause (e) to introduce the concept
of something “in futuro” i.e., the potential in the market or
capital value.It was further submitted that there could be
no retrospectivity to any delegated legislation when the
parent Act did not give any indication in that behalf and that
B
the final assessment could have altered the basis in the same
financial year and not otherwise.
(F) Mr. Abhishek Bharti, learned counsel relied upon the decision
of this Court in State of Himachal Pradesh &Ors. vs.
Nurpur Private Bus Operators’ Union &Ors. 11, Mr.
C Shikhil Suri, learned counsel who appeared for National
Centre for Performing Arts and Tata Power Company
Limited adopted the submissions of Dr. Milind Sathe and
Mr. Darius Khambata, learned senior counsel. Mr. Bhushan
Deshmukh who appeared for the petitioner in SLP(C) No.
D 25689/2019, also adopted the submissions of Dr. Sathe and
Mr. Khambata, learned senior counsel. Mr. Satish Muley,
learned counsel appearing for a subsequent purchaser, also
adopted the submissions of Dr. Sathe and Mr. Khambata,
learned senior counsel.
E 24. Mr. V. Sreedharan, learned senior counsel for the Corporation
made submissions in rejoinder. He also submitted that the overall tax
demand of the Corporation under the capital value assessment actually
decreased by 12% to Rs.2908 crores as compared to Rs.3308 crores
under the Relatable Value System. The tax demand for residential units
got reduced from Rs.1030 crores to Rs.949 crores while that for the
F Offices and Banks was reduced from Rs.979 crores to Rs.65 crores
and from Rs.342 crores to Rs.222 crores respectively. Thus, according
to the Corporation, under the new system only 32.20% units suffered an
increase while 21.95 % of the units actually got benefitted as a result of
reduction in the property taxes.
G 25. We will first deal with the submission that any proposal for
change or modification in the methodology adopted for levy of property
tax ought to have been initiated through the Finance Commission alone.
Article 243Y of the Constitution deals with constitution of Finance
11
(1999) 9 SCC 559.
H
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 739
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

Commission whose principal duty is to review the financial position of A
the municipalities and to make recommendations to the Governor as to
the relevant principles which should govern distribution of the net proceeds
of the taxes and the measures needed to improve the financial position
of the municipalities. In Campaign for People Participation in
Development Planning vs. Lieutenant Governor of NCT of Delhi
B
&Ors.12, a Division Bench of the High Court of Delhi had the occasion
to consider the scope of Article 243Y of the Constitution. It was
observed:-
“14. Article 243I of the Constitution of India mandates constitution
of a Finance Commission by the Governors of the States at the
expiration of every 5th year. Article 243Y further mandates that C
the Finance Commission constituted under Article 243I shall also
review the financial position of the municipalities and make
recommendations to the Governors as to the various aspects
specified therein. As per Clause (2) of Article 243Y, the Governor
shall cause every recommendation made by the Finance D
Commission under the said Article together with an explanatory
memorandum as to the action taken thereon to be laid before the
legislature of the State.”
26. It is true that certain functions are entrusted to the Finance
Commission and the recommendations made by the Finance Commission E
must carry great weightage. However, the matter has to be seen from
the perspective: whether any “measures needed to improve the financial
position of the municipalities” must necessarily emanate from the
recommendations of the Finance Commission. Sub-Article (2)
contemplates that the recommendations made by the Finance
Commission along with the explanatory memorandum as to the action F
taken thereon must be laid before the Legislature of the State. Thus, it is
the Legislature of the State which will ultimately take an appropriate
action with respect to the recommendations made by the Finance
Commission and the papers placed before it. If the Legislature itself has
taken into account certain prevailing situation, which according to the G
Legislature is causing some prejudice to the financial health and condition
of the municipalities and, therefore, the method of imposition of property
tax ought to be changed, it cannot then be said that the matter must
necessarily and ought to have emanated from the Finance Commission
12
(2016) SCC Online Del 80
H
740 SUPREME COURT REPORTS [2022] 14 S.C.R.

A or that in the absence of such recommendations by the Finance
Commission, no steps could have been taken by the Legislature.
27. Article 243X of the Constitution states that the Legislature of
a State may by law authorize a municipality to levy, collect and appropriate
such taxes etc. in accordance with such procedure and subject to such
B limits as may be specified in law. The exercise undertaken by the
Legislature in the instant case is completely consistent with the
empowerment relatable to Article 243X of the Constitution and does not
in any way go counter to said empowerment.
28. Coming to the effect and scope of the statutory provisions, it
C must be stated that Sections 123 to 128 of the MMC Act deal with
accounts and annual budget estimates. With the fixed parameters and
scope of taxation, as well as, the elements that can be covered by levy
of such taxes, depending upon the annual budget estimates, the rates of
municipal taxes, fares and charges can certainly be fixed in terms of
Section 128 of the MMC Act. In such cases, the width of the tax regime
D is already decided and the rates of taxes would be dependent upon the
annual estimates. What the present amendments seek to achieve is to
change the methodology on the basis of which property tax can be levied.
Instead of rateable value, the property tax can now be levied going by
the capital value. Such exercise could not have been undertaken through
E the process of annual estimates and in terms of Sections 120, 123, 125
and 128 of the MMC Act. All that could be done under these provisions
would 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 is
F discernable from the provisions of the MMC Act. Section 139 deals
with taxes including property taxes that can be imposed.Section 139A
deals with the kinds of property taxes while Section 140 deals with the
per centum of their rateable value or the capital value as the case may
be. Section 140A enables the Corporation to adopt levy of property tax
on the basis of Capital Value of buildings and lands and puts a cap in the
G proviso to sub-section(1). Section 154 then deals with how rateable value
and capital value are to be determined. Sub-section (1) deals with rateable
value while sub-section (1A), (1B) and (1C) deal with capital value. The
first part of Section 154(IA) contemplates that the value indicated in the
Stamp Duty Ready Reckoner for the time being in force, would be the
H “base value.” According to the second part, if such ready reckoner value
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 741
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

is not available, the market value can be taken into account while arriving A
at 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 value
can 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 well
B
defined, sub-clause (e) refers to the factors as may be specified by rules
under sub-section (1B). Said sub-section (1B) in turn authorizes the
Commissioner, to frame such rules, with the approval of the Standing
Committee as respects details of categories of building or land and the
weightage by multiplication to be assigned to various such factors and
categories for the purpose of fixing the capital value. C
30. Section 154(1A) of the MMC Act is the crucial provision for
the present discussion. The opening part of sub-Section (1A) states that
in order to fix the capital value of any building or land assessable to
property tax, regard shall be had to the value of any building or land as
indicated in the SDRR for the time being in force. The value so indicated D
in SDRR is to be the base value to which certain factors delineated in
clauses (a) to (e) of sub-Section (1A) are to be applied while fixing the
capital value. Clauses (a) to (d) are physical features or attributes of the
land or building which are in existence when the value is to be reckoned.
In essence, as submitted by Mr. Khambata, learned senior counsel, these
attributes are situations “in praesenti”. The buildable potential of the E
land in future is not an attribute “in praesenti” but is in the nature of
likelihood of user or exploitation of the asset “in futuro”.
31. The crucial question is: whether such potential of the land or
the likelihood of exploitation in future can also be taken into consideration
while fixing the capital value in terms of sub-Section (1A), especially F
when none of the factors delineated in clauses (a), (b), (c) and (d) speaks
of future prospects or such likelihood?
32. At this stage, we may deal with two decisions of this Court
having bearing on the controversy before us.
G
(A) It was observed in Patel Gordhandas4 that the statutory
provision did not contemplate levying of the rates as a
percentage of capital value. The relevant portion of
Paragraph 34 of the decision was:
“34. ….
H
742 SUPREME COURT REPORTS [2022] 14 S.C.R.

A ..… We are therefore of opinion that though
mathematically it may be possible to arrive at the same
figure of the actual tax to be paid as a rate whether
based on capital value or based on annual value, the
levying of the rate as a percentage of capital value would
still be illegal for the reason that the law provides that it
B
should be levied on the annual value and not otherwise.
By levying it otherwise directly at a percentage of the
capital value, the real incidence of the rate is
camouflaged, and the electorate not knowing the true
incidence of the tax may possibly be subjected to such a
C heavy incidence as in some cases may amount to
confiscatory taxation. We are therefore of opinion that
fixing of the rate at a percentage of the capital value is
not permitted by the Act and therefore R. 350-A read
with R. 243 which permits this must be struck down,
even though mathematically it may be possible to arrive
D
at the same actual tax by varying percentages in the
case of capital value and in the case of annual value...”
(emphasis supplied)
9
(B) In Polychem Ltd. , a part of the land was being constructed
upon while the rest was lying vacant. The Assessor divided
E the plot notionally into two parts – one, which was being
built upon and the other which was lying vacant. One of
the questions was: whether during the period when the
construction was going on and was not completed, what
should be the approach? The following observations are
F noteworthy:
“12. The principles upon which lands are rated in this
country have been practically settled by the decisions
of this Court. But, no case was brought to our notice in
which an application of these principles to land upon
which a building was being constructed was involved.
G
In other words, no case was cited by any party in which
the doctrine of sterility, as indicated above, was invoked.
We will, however, glance at the cases cited before
deciding the question raised before us.
xxx xxx xxx
H
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 743
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

22. The abovementioned authorities of this Court, which A
were cited before us, enable us to hold that the mode of
assessment in every case must be directed towards finding
out the annual letting value of land which is the basis of
rating of land, and, by definition, “land” includes land which
is either being built upon or has been built upon. Nevertheless,
B
a reference to the provisions of the Act shows that, after a
building has been completed, the letting value of the building,
which becomes part of land, will be the primary or
determining factor in fixing the annual rent for which the
land which has been built upon “might reasonably be
expected to be let from year to year”. All that Section 154 C
seems to contemplate, by mentioning “land or building”, is
that land which is vacant or which has not been built upon
may be treated, for purposes of valuation, on a different
footing from land which has actually been built upon. But,
relevant provisions of the Act do not mention and seem to
D
take no account, for purposes of rating, of any building which
is only in the course of being constructed although Section
3(r) of the Act makes it clear that land which is being built
upon is also “land”. Hence, so long as a building is not
completed or constructed to such an extent that atleast a
partial completion notice can be given so that the completed E
portion can be occupied and let, the land can, for purposes
of rating, be equated with or treated as vacant land. It is
only when the building which is being put up is in such a
state that it is actually and legally capable of occupation
that the letting value of the building can enter into the
F
computation for rating “Rebus sic Stantibus”. Although, the
definition of land, which is rateable, covers three kinds of
“land”, yet, for the purposes of rating Section 154
recognises only two categories. Therefore, all “land” must
fall in one of these two categories for purposes of rating
and not outside.” G
(emphasis supplied)
33. Both the decisions were rendered in the regime when the
property tax could be levied on rateable value. In the first decision, it
was found that fixing of the rate at a percentage of the capital value was
not a modality permitted by the Act and, therefore, Rules 350-A read H
744 SUPREME COURT REPORTS [2022] 14 S.C.R.

A with Rule 243, which permitted such exercise, were struck down.
Therefore, to the extent the rules went beyond the statutory import and
extent, the transgression was not accepted by this Court. In the second
decision, it was held that so long as the building was not completed and
ready for occupation, the land in question for the purposes of rating must
be equated with and treated as “vacant land”. In the second decision,
B
the construction was actually going on but the building was not ready.
The conclusion from the second decision is quite clear that unless and
until the building was ready to be occupied, the land must be treated as
vacant land. Notably, the second decision was premised on the
methodology where the rateable value was the determining criteria.
C Therefore, so long as the building could not be let out in open market, the
land would continue to be treated as “vacant land”.
34. However, after the amendments, the emphasis has now
changed and the basis for taxation is now to be capital value of land and
building. Capital value again can have two dimensions. First, the value
D 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 value is to be reckoned or considered. These clauses
clearly show that the features contemplated therein must be in existence
as on such date and not what would be the projection in future.
E 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 can
be read ejusdem generis along with sub-clauses (a) to (d), in which
event the scope of any rules to be made in terms of power granted by
sub-clause (e) read with sub-Section (1B), would be relatable to the
F factors actually in existence and not as something contemplated in future.
On the other hand, if the clause is read independently, there is nothing in
clause (e) or in the language of sub-Section (1B) that the future prospects
of the land in question could be reckoned or noted for arriving at the
capital 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 imagination
G contemplate taking into account the future prospects of the land in
question.
36. Viewed thus, the conclusion arrived at by the High Court on
the second and third grounds, as stated in paragraph 15 (supra) are quite
correct. We, therefore, hold that the empowerment in terms of clauses
H (a) to (e) read with sub-Section (1B) or the conferral of rule-making
MUNICIPAL CORP. OF GREATER MUMBAI v. PROPERTY 745
OWNERS’ ASSOCIATION [UDAY UMESH LALIT, CJI]

power would not permit the Corporation to determine the capital value A
beyond the scope of said clauses (a) to (e). Thus, for the purpose of
determining capital value, only the present physical attributes and status
of the land and building can be considered and not the future prospects
of the land.
37. At this stage, we may consider the scope of Rule 20 of the B
Capital Value Rules of 2010 and the Capital Value Rules of 2015. The
said Rule refers to the Ready Reckoner which provides for the rate of
base value of open land with 1 (one) floor space index. However, the
open land in question may be capable of utilizing more than 1 (one) floor
space index, for instance in certain areas the floor space index may be
1.5 or 2. Such component i.e. the capability of the land in question in C
utilizing more then 1 (one) floor space index is a postulate which is sought
to be reckoned by Rule 20. The second component to be added in terms
of Rule 20 is the intended or proposed utilization of Transfer of
Development right which has been approved under the building plan
submitted for approval. Nonetheless, this component is the intended use D
or exploitation in future and not something which is available in presenti.
38. To the extent Rule 20 of the Capital Value Rules of 2010 and
the Capital Value Rules of 2015 empower the Commissioner to consider
the capability of the open land of utilizing more than 1 floor space index
(FSI) or any transfer of development right (TDR), would go well beyond
the permissible scope delineated by the provisions of Section 154 of the E
MMC Act. The High Court, in our view, was, therefore, right in
concluding that Rule 20 of the Capital Value Rules of 2010 and the
Capital 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 Capital F
Value Rules of 2010. The factual narration relied upon by the learned
counsel for the Corporation does show that the preparatory steps were
being undertaken since 2010 with the appointment 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
G
or levy property tax based on capital value, the concerned rules had to
be in force. There being no empowerment to compute and/or levy
property tax with retrospective effect by the statute itself, the rule making
power, in any view of the matter, could not have created a liability pertaining
to the period well before the Rules came into effect. The first ground as
set out in paragraph 15 (supra) was, therefore, rightly answered by the H
746 SUPREME COURT REPORTS [2022] 14 S.C.R.

A High Court against the Corporation. Logically, the Rules having come
into force on 20.3.2012, the levy and computation of property tax on
capital value would be available and possible on and with effect from
20.3.2012 and not with any retrospective operation.
40. The question then arises as to what would be the scope and
B extent of the present property tax regime. It is quite clear that with the
amendment to Section 154 and other provisions, the property tax can be
levied 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 when
Patel Gordhandas4 and PolychemLtd.9 were decided by this Court.
Now, the statute certainly empowers and contemplates imposition of
C property tax on the capital value. However, the capital value must be
one 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 any
likelihood of exploitation of capacity in future, the capital value of the
D land and building must be based on situation “in presenti”. It must be
clarified here that in projects which are in progress, the value addition to
the property would be ongoing feature. However, considering clauses
(a) to (d), it would mean that the governing principle must be the actual
use and not the intended use in future.
41. In the circumstances, the challenge raised by the Corporation
E must fail and we dismiss the appeal preferred by the Corporation.
42. We now turn to the challenges raised by the original writ
petitioners. Those challenges on various grounds as detailed hereinabove
including the grounds of legislative competence; validity of certain
provisions and basis of alleged violation of Article 14 of the Constitution,
F were considered by the High Court in extenso. We do not find any
reason or room to take a different view. We, therefore, affirm the view
and dismiss the challenge. Consequently, the appeals preferred by the
original writ petitioners are dismissed.
43. These appeals are disposed of in aforesaid terms without any
G order as to costs.

Divya Pandey Appeals dismissed.
(Assisted by : Shevali Monga, LCRA)

H