CUTTACK: In a significant judgement, the Orissa High Court has held that any attempt by the Bhubaneswar Municipal Corporation (BMC) to enhance holding tax is not sustainable in law.
The Court said the holding tax cannot be enhanced till the State legislature passes a law specifically authorising the municipal corporation to levy and collect taxes.
The BMC had admittedly raised the holding tax by following the procedure envisaged under the Orissa Municipal (OM) Act, 1950 for enhancing the rate of holding tax in the light of the transitional provision contained in the Orissa Municipal Corporation (OMC) Act, 2003.
The division bench of Chief Justice S Muralidhar and Justice BP Routray ruled that the transitional provision, Section 694 (3) of the OMC Act cannot be invoked by BMC to justify either the raising of the rate of holding tax or to continue to levy and collect it for a period subsequent to the repeal of the OM Act.
“The question of BMC resorting to the procedure under the OM Act, after its repeal, is to no avail since under the OMC Act, there is no concept of holding tax at all. So the question of legitimising such demand by following the procedure under the OM Act, after its repeal by the OMC Act, does not arise,” the bench observed.
Enhancement of holding tax by BMC ‘is unsustainable in law’ as it seeks to collect the holding tax for a period after the commencement of the OMC Act, and at a rate higher than that prevalent when the OM Act was in force, the HC ruled while disposing of a petition on Thursday. Kalyani Maternity Hospital Pvt Ltd had filed the petition in 2012.
“The legislative intent, engrafted in the OMC Act, was only to preserve the right of BMC to collect tax which were leviable immediately before commencement of the OMC Act and which were being imposed. It by no means permits BMC to raise the rate of a tax that was leviable for a period prior to the coming into force of the Act," the bench further ruled.