/2022 INSC 0960/
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION 
CIVIL APPEAL NO………….. OF 2022
(arising out of SLP (C) No. 17009 of 2019)
MUNICIPAL CORPORATION OF 
GREATER MUMBAI & ORS.           ...APPELLANT(S)
VERSUS
PROPERTY OWNERS’ ASSOCIATION & ORS.  …RESPONDENT(S)
with
CIVIL APPEAL NO………….. OF 2022
(arising out of SLP (C) No. 25689 of 2019)
CIVIL APPEAL NO………….. OF 2022
(arising out of SLP (C) No. 22138 of 2019)
CIVIL APPEAL NO………….. OF 2022
(arising out of SLP (C) No. 24126 of 2019)
CIVIL APPEAL NO………….. OF 2022
(arising out of SLP (C) No. 25686 of 2019)
CIVIL APPEAL NO………….. OF 2022
(arising out of SLP (C) No. 25687 of 2019)
and
CONTEMPT PETITION (C) NO. 38 OF 2021
in
SPECIAL LEAVE PETITION (C) NO. 17009 OF 2019

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J U D G M E N T
Uday Umesh Lalit, CJI
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.   38/2021
has been filed against the alleged contemnor for disobedience of
orders   dated   29.7.2019,   21.10.2019   and   22.11.2019   passed   by
this Court in the appeal arising out 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,   1888 1
  has   been
enacted   by   the   State   Government   to   consolidate   and   amend
1  “MMC Act”, for short

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various   Municipal   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   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 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 value­based 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

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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   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
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 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.  
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   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   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

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decisions   the   annual   rent   to   be   taken   into   account   for
fixation of 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).     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,   1999   (Mah.   XVIII   of   2000)   which   came   into
force   on   the   31 st
  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 of the actual rent received.  Fair rent
very often means the rent 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 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   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 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.  
4. With a view to exploring  the possibility of reforming the
property   tax   system,   so   as   to   augment   the   revenue   of   the

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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   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   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) Self­assessment is possible,
(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,
(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   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 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 base of
levy.  
6. It   is   a   modest   attempt   to   enable   the   Corporation   to
augment   its   revenue   so   as   to   meet   the   ever­rising
expenditure   in   providing   appropriate   an   adequate
infrastructure   for   rendering   civic   services   in   the   City   like

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Mumbai   and   its   suburbs.     Having   regard   to   the   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 above­mentioned objectives.”
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)
Fixation of Capital Value Rules, 2010 (‘the Capital Value Rules of
2010’,   for   short)   which   came   into   force   on   and   with   effect   from
20.03.2012, 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.
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

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rules   prepared   by   the   Committee   were   published   in   various
newspapers on 18.10.2010 inviting objections.  The last date for
submissions   and   objections   after   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 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   well­being   of   municipal
officers   and   servants   other   than   those   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.
xxx xxx xxx
123.   Accounts   to   be   kept   in   forms   prescribed   by
Standing   Committee .   Subject   to   the   provisions   of
Chapter   XVI­A   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   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.
xxx xxx xxx

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125.   Estimates   of   expenditure   and   income   to   be
prepared annually by Commissioner .
The   Commissioner   shall   on   or   before   each   fifth   day   of
February,   have   prepared   and   lay   before   the   Standing
Committee,   in   such   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— 
*****
(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   Bombay
constituted   under   the   City   of   Bombay
Improvement   Trust   Transfer   Act,   1925   13
or   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; 
(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 in the accounts maintained under
sections 123A and 123C which will be available for
re­appropriation   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   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   of
sections 460KK and 460LL; 

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(d)   a   statement   of   proposals   as   to   the   taxation
which   it   will,   in   his   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   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 XII­A; 
(b)   an   estimate   of   all   balances,   if   any   in   the
account   maintained   under   section   122A,   which
will   be   available   for   re­appropriation   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— 
(i)     arising   from   sales,   leases   and   other
dispositions   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   any   of   the   purposes   of
Chapter XII­A; 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   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
Provided   further   that,   with   effect   from   the
financial   year   1974­75,   this   subclause   shall   have

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effect   as   if   for   the   words   “three­times”   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 sub­section 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   XII­A   including   grants   from   the   State
Government.
xxx xxx xxx
128.   Fixing rates, of municipal taxes and of fares and
charges   of   “Brihan   Mumbai   Electric   Supply   and
Transport Undertaking ”
(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   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
(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   (i­a)   of   sub­
section   (2)   of   section   126B,   the   rates   at
which   the   fares   and   charges   in   respect   of
the   Brihan   Mumbai   Electric   Supply   and
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   (2),   the   Corporation   may,   at   any

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time   during   the   official   years   2010­2011,   2011­
2012   and   2012­2013   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   and   shall   be
deemed to have been effective from the 1st of April
of   those   three   years   and   the   taxes   for   the   said
three   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 this Act, taxations shall be imposed as follows,
namely:­
(1) property taxes;
(2) a tax on dogs: and
(3) a theatre tax;
139A.   Property taxes what to consist.
(1)   Property   taxes   leviable   on   buildings   and   lands   in
Brihan   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.
(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 a
graduated scale. 
(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.
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: ­
(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;

13
(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   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   water­supply   and   for   maintaining   and
operating such works; 
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   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   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
(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
one­eight   and   not   more   than   five   per   centum   of   their
rateable   value   or   not   less   than   0.01   and   not   more   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
(ca)   the   education   cess   leviable   under   section   195E;
(cb)   the   street   tax   leviable   under   section   195G;
(d)   betterment charges leviable under Chapter XII­A.

14
(2)   Any   reference   in   this   Act   or   in   any   instrument   to   a
water   tax   or   a   halalkhor   tax   shall   after   the
commencement   of   the   Bombay   Municipal   Corporation
(Amendment)   Ordinance,   1973,   be   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   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:
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 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   used   for   residential   or   for   non­residential
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 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: 
Provided   further   that,   where   the   property   taxes
levied   in   respect   of   any   residential   or   non­residential
building   or   portion   thereof   were   on   the   basis   of   annual
letting   value   arrived   at   considering  the   leave   and   licence

15
charges, by whatever name called, then for the purposes
of the first proviso it shall be lawful for the Commissioner
to   ascertain   such   tax   leviable   during   such   immediately
preceding year, as if such building or portion thereof were
self­occupied and had been so entered in the assessment
book: 
Provided   also   that,   the   property   tax   levied   on   the
basis of  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 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 value as the basis. 
Provided   also   that,   for   a   period   of   five   years
commencing   on   the   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 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   2019­20,
the   provisions   of   the   preceding   proviso   shall   apply   as   if
the general tax leviable under clause (c) of sub­section (1)
of   section   140   do   not   form   part   of   the   property   tax
leviable under that section.
(2) Notwithstanding anything contained in sub­section (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  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

16
leviable   and   payable   in   respect   of   such   buildings   and
lands   shall   provisionally   be   equal   to   the   amount   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   thirty­first   day   of   March   2010   and
such   provisional   tax   shall   be   leviable   and   payable   for
each of the years 2010­2011, 2011­2012 and 2012­2013,
according   to   the   provisional   bills   which   may   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   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   sub­section   (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   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   sub­section
(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   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
2009­2010;  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   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   the   property   tax   bill   has   been   issued   in
accordance   with   the   provisions   of   sub­section   (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   yet   fixed,   or   that   the   amount   of   tax   leviable   and

17
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 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.
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   property­tax,   there   shall
be deducted from the amount of the annual rent for which
such land or building 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 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,   as   a   base   value 2
  or   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 the
market   value   of   such   building   or   land,   as   a   base   value.
The   Commissioner   while   fixing   the   capital   value   as
2   and

18
aforesaid,   shall   have   regard 3
  to   the   following   factors,
namely: ­
               
(a) the nature and type of the land and structure
of the building, ­ 
 (b) area of land or carpet area of building,
  (c) user category, that is to say, (i) residential, (ii)
commercial   (shops   or   the   like),   (iii)   offices,   (iv)
hotels   (upto   4   stars),   (v)   hotels   (more   than   4
stars),   (vi)   banks,   (vii)   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
(e) such other factors as may be specified by rules
made under 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 of fixing  the capital value under
sub­section (1A).
(1C)   The   capital   value   of   any   building   or   land   fixed   under
sub­section (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
3
The   expressions   were   added   /   substituted   by   2010   Amendment.     The   erstwhile   sub­
section (1A) introduced by Maharashtra Act No. XI of 2009 was : ­
  ““(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   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,
(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).””

19
building   or   land   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   COVID­19   pandemic,   the
capital   value   of   any   building   or   land   fixed   under
sub­section   (1A)   shall   not   be   revised   in   the   year
2020­21 and the year 2021­22;
(ii) for the year 2020­21 and the year 2021­22, the
property tax bill for any building or land shall be
the same as is for the year 2019­20;
(iii) the capital value of any building or land fixed
under   sub­section   (1A)   shall   be   revised   in   the
year 2022­23, as if the clause (i) is not applicable
for the year 2020­21 and the year 2021­22.
(b) Subject   to   the   proviso   to   sub­section   (1C),   the
next   revision   shall   be   in   the   year   2025­26,   and,
thereafter,   the   revision   of   capital   value   of   any
building   or  land, shall be  in accordance with  the
provisions of sub­section (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   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   2009­2010,   shall   be   the   provisional
capital   value   of   such   building   and   lands   in   respect   of   the
official   years   2010­2011,   2011­2012   and   2012­2013,   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 assessment book kept under the provisions
of   this   Act,   and   the   bill   for   property   taxes   issued   under
sub­section   (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 liable to be assessed for the first time on or after the 1st
April   2010,   the   capital   value   of   such   buildings   and   lands

20
shall, until the 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 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 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
(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 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.
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
(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,   of   each   such   building   and   land   determined
in   accordance   with   the   foregoing   provisions   of   this
Act;

21
(c)     the   name   of   the   person   primarily   liable   for   the
payment   of   the   property   taxes,   if   any,   leviable   on
each such building or land;
(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   non­liability   or
exemption, as the case may be;
(e)   when   the   rates   of   the   property   taxes   to   be   levied
for   the   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   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;
(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;
(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: ­
“No.   AC/NTC/1310/2011­22   dated   20.03.2012.     In
exercise of the powers conferred by clause (e)s of sub­
section (1A) and sub­section (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   sub­section   (1B),   hereby   makes   the
following   rules   to   provide   for   the   factors   and
categories   of   users   of   buildings   or   lands   and   the

22
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   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
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.
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 (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
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 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’.
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

23
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)   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
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 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 the foundation of the tower.
10. Built­up 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
balcony and (v) niches; and 
(2)   The   total   built­up   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, (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   built­up   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)   stair­case   and   passage   thereto   including
staircase   room,   (iv)   chimney   and   elevated
tank,   (v)   meter   room,   (vi)   pump   room,   (vii)

24
underground   and   overhead   water   tank,   (viii)
septic   tank,   (ix)flower­bed   and   (x)   loft   in
residential flat
(4)  Where  only  the  carpet  area  of  a flat  or  building  is
available   on   the   record   of   the   Corporation   and   the
total   built­up   area   thereof,   computed   in   the   manner
as   aforesaid   in   sub­rule   (1),   or,   as   the   case   may   be,
sub­rule (2), is not available on such record, then the
total built­up  area  of the  flat  or, as the case may  be,
of   a   building   shall   be   arrived   at   in   the   following
manner, namely :­ 
Built­up area = 1.2 x carpet area as available on 
the   record   of   the   Corporation   +
the   built­up   area   of   the   items
specified   in   sub­rule(1),or,   as
the   case   may   be,   sub­rule   (2),
unless already reckoned in such
carpet area.
11.   Fixation   of   capital   value   of   a   flat   or   building   or
part thereof.­   (1)   While   fixing   the   capital   value   of
a   flat,   the   capital   value   of   any   one   or   more   of   the
relevant   items   specified   in   sub­rule   (1)   of   rule   10,   as
fixed in accordance with the provisions of rules 14,15,
or sub­rule(1) of rule 16, as the case may be, shall be
added to the capital value of the flat.
(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  sub­rule (2)  of  rule  10
as fixed in accordance with the provisions of sub­rule
(2)   or,   as   the   case   may   be,   (3)   of   rule   16,   shall   be
added   to   the   capital   value   of   the   building   or   part
thereof.
12. Fixation   of   capital   value   of   a   building   where
there are tenants: ­ The capital value of a building or
part   thereof   which   is   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 sub­rule (1), or, as the case may be, sub­rule (2) of
rule 11. 
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; 

25
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, 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 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  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: ­ 
(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; 
(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 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   by   multiplication
provided for in these rules.

26
16.   Fixation   of   capital   value   of   certain   other   items
which are part 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. 
(2)   The   capital   value   of   any   one   or   more   of   the
following items, namely:­ (i)porch, (ii) air­conditioning
plant   room,   (iii)   air­handling   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   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;   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,   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 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.
(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

27
building,   for   the   purpose   of   fixing   the   capital   value
thereof.
(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 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 :­ 
(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 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 :­ 
(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 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   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   space   index   (F.S.I)   or   transfer   of

28
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   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   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)   (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
(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   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).
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.   Non­application   of   Guidelines   of   Stamp   Duty
Valuation.   ­   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.”

29
11. The   relevant   portion   of   Capital   Value   Rules   of   2015   is   as
under: ­
“ No.AC/NTC/1147/2014­15.     In   exercise   of   the   powers
conferred   by   clause   (e)   of   sub­section   (1A),   sub­section
(1B)   and   sub­section   (1C)   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   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 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.
        (2) They shall come into force from 1 st
 April 2015.
2. Definitions   –   In   these   rules,   unless   the   context
otherwise requires:­
  xxx xxx xxx
(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 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
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

30
the   capital   value   thereof   shall   be   fixed   accordingly,   as
provided for in rule 21.
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   (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   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 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   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  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   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  value: ­Area of hoarding  or  tower  for  the  purpose
of fixing capital value thereof shall mean, ­

31
(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 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)   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 (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
(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)
stair­case   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"
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 sub­rule (1) of rule 10, as fixed in accordance
with   the   provisions   of   rules   14,15,   or   sub­rule(1)   of   rule
16,   as   the   case   may   be,   shall   be   added   to   the   capital
value of the flat.
(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 sub­rule (2) of rule 10 as fixed
in   accordance   with   the   provisions   of   sub­rule   (2)   or,   as

32
the   case   may   be,   (3)   of   rule   16,   shall   be   added   to   the
capital value of the building or part thereof.
12. "deleted"
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 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.
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 non­residential 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 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   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   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 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"

33
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" 
(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.
(3) "deleted"
18, "deleted"
19. "deleted".
19 A Assessment of Amenities in Luxurious RCC bldg 
Where   Property   tax   in   respect   of   amenities   of
luxurious   RCC   building   was   not   levied   since   1 st
  April
2010   as   per   Rule   19,   while   determining   the   property
tax   leviable   from   1 st
  April   2015,   subject   to   capping   as
provided   for   in   section   140A   such   tax   shall   be
considered   which   would   have   been   continued   to   levy
from 1 st
 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 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   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

34
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
(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   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).
CV = BV x UC x NTB x AF x FF x CA
22.   Non­application   of   Guidelines   of   Stamp   Duty
Valuation.   ­   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.”
12. In Appendix II of Capital Value Rules of 2010, 13 examples
are   provided.     Examples   12   and   13   from   said   appendix   are   as
under:
“(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
User Category Open Land (Resi) 1.00
Nature   and   Type
of Building not applicable not applicable
Age of Building not applicable not applicable
F.S.I. Factor 2.50 2.50
Land Area 80 sq. mtr. not applicable
   

35
                   CV = BV X UC X FSI X LA
           = 36400 X 1.00 X 2.50 X 80
                  C.V.= Rs.72,80,000
(13) OPEN LAND IN SUBURBAN AREA
Weightage
Rate of base value Rs.33,200 not applicable
User Category Residential 1.00
Nature   and   Type
of Building not applicable not applicable
Age of Building not applicable not applicable
F.S.I. Factor 1.00 1.00
Land Area 80 sq. mtr. not applicable
        CV = BV X UC X FSI X LA
              = 33200 X 1.00 X 1.00 X 80
      C.V. = Rs.26,56,000 ”
13. Number   of   petitions   were   filed   challenging   the   validity   of
computation   and   levy   of   property   tax   based   on   capital   value
system.   The 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 orders
were   passed   by   the   High   Court   on   or   about   29.01.2014   which

36
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   pre­amended   rates   and   also   the   additional
tax at the rate of 50% of the differential tax between the
tax   payable   under   the   old   regime   and   now   payable   on
the   basis   of   capital   value   of   the   property.     The
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
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,
at   the   outset   the   High   Court   dealt   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

37
would   be   more   onerous.     Thereafter   the   challenge   was
considered under following heads: ­
(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: ­
“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   List­II.   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   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   Entry­49   of   List­II   of
Seventh Schedule. The argument that the impugned
amended   provisions   of   the   BMC   Act   impinge   upon
the   powers   of   the   Central   Legislature   covered   by
Entry­86 of List­I 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
Entry­86 of List­I of Seventh Schedule.
….”
(b) Challenge   to   the   validity   of   sub­Sections   (1)(a)   and
(1)(b)   of   Section   140   regarding   water   tax   and
sewerage tax .

38
The   submissions   were   rejected   with   following
observations: ­
“158. …..
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  sub­sections  (1)(a)  and  (1)
(b)   of   section   140,   the   same   provide   for   levy   of   such
water   tax   as   the   Standing   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   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   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.   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  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.
159.   Where   the   facilities   of   water   supply   or   sewerage
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

39
the   case   may   be,   by   way   of   fees   can   be   recovered
which   would   have   direct   nexus   with   the   quality   and
quantity   of   services   provided.   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 sub­Section (1) (c) (a) of
Section 140 regarding levy of Education Cess .
The submissions were rejected thus:­
“160. …..
On plain reading of sub­section (1) of section 195E, it
is clear that this section provides for levy of additional
tax   on   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.   Sub­section
(1)   of   section   195E   provides   that   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,  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.”  
(d) Similarly, the argument with regard to sub­Section (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 Betterment Charge. Elaborate

40
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
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 243­X 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 243­X
of the Constitution must be by the Corporation consisting of
the elected and nominated councillors and not by any other
authority   under   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   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
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.”
xxx xxx xxx

41
“181.   To   conclude,   the   BMC   Act   has   been   already
amended   in   terms   of   Article   243­ZF.   Perusal   of
various   provisions   of   Part­IXA   of   the   Constitution   of
India   shows   that   the   constitutional   provisions   itself
provide   for   the   State   Legislature   enacting   law
providing   for   constitution   of   committees   and
conferring   them   with   powers   and   authority.   We   have
already   referred   to   the   various   provisions   including
clause (b) of Article 243­W. Therefore, the provision of
section   4   of   the   BMC   Act   is   consistent   with   the
provision   of   Part­IXA.   Clauses   (a)   and   (b)   of   Article
243­X cannot be read in isolation and merely because
Legislature   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
243­X.   The   powers   under   the   charging   sections   in
Chapter   VIII   are   conferred   on   the   Corporation   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   taken   by   the
Corporation  consisting   of   227   elected   and  nominated
councillors. This power cannot be said to be unguided
power   only   because   sub­section   (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 contain sufficient guidelines. Even the provision
of sub­section (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   243­X   or   any   other   provisions   of
Part­IX­A.
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   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 243­X will lead to

42
absurdity and the provisions will become unworkable.
Such   interpretation   will   defeat   the   object   of   74th
Amendment   to   the   Constitution   and,   therefore,   the
challenge   on   the   ground   of   violation   of   Article   243­X
must fail.”
(f) Submissions on the ground of excessive delegation .
While   observing   that   the   power   conferred   in   sub­
Section   (1A)   of   Section   154   of   the   MMC   Act   on   the
Commissioner   to   fix   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 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
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   Part­IXA   of   the   Constitution.
Therefore,   the   argument   of   excessive   delegation   has
no merit and deserves to be rejected.”
(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  nature, were  rejected by   the  High  Court.   It
was observed thus: ­

43
“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   user   of
residential   properties,   5­Star   hotel   properties   and
other   hotel   properties   is   different.     These   properties
form   part   of   distinct   classes   and   by   its   vary   nature
cannot   be   treated   as   equal.     Therefore,   it   is   very
difficult to sustain an argument that there is manifest
arbitrariness   in   the   impugned   provisions.     As   the
provisions do not lead to confiscatory 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 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 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,   it   is   no   facilitate
transition   form   one   regime   to   another.   As   per   the
amendments,   the   final   assessment   for   the   years
2010­11,   2011­12   and   2012­13   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   only   the

44
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 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
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.
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 of 2010 and 2015,
on   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  the provisions of sub­Section (1A) and (1B)
of Section 154 of the MMC Act.

45
16. On   the   first   issue,   the   High   Court   observed   that   neither
clause (e) of sub­Section (1A) nor sub­Section (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 could not be applied
from             1 st
 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: ­
“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 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   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   Part­I   under   heading   "Open   Land"

46
multiplied   by   permissible   or   approved   FSI   multiplied
by area of the land. Once the base value is determined
as  per   SDRR,  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   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
sub­section (1A) of Section 154 lays 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   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 sub­section (1B) of section 154 of the
BMC Act, the rules can be 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   sub­section   (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   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  sub­section  (1A) of
section 154, rules cannot be framed to decide how the
capital   value   should   be   determined.   In   fact,   framing
rules   for   laying   down   the   method   of   calculating   the
capital   value   is   itself   ultra   vires   the   statutory   rule
making power.”

47
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   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   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,   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: ­
“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   sub­section   (1A)   of   section   154,
the   base   value   has   to   be   as   per   SDRR   rate   for   vacant
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 of
the land has to be made. The rule making power under
sub­section   (1B)   or   clause   (e)   of   sub­section   (1A)   of

48
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   sub­section   (1A)   of   section   154   which
mandates   that   the   Commissioner   will   take   into
consideration   SDRR   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 by the High Court were as under: ­
“229. Our conclusions can be summarized as under:
(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;
(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   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   sub­section   (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

49
the   complaint   is   disposed   of   in   such   a
fashion, a final bill 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 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.
(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.   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   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.
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 validity  of  various  provisions  of  the
Mumbai   Municipal   Corporation   Act,   1888   as

50
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,   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
complaints  do not  survive.  We direct  the  Mumbai
Municipal   Corporation   to   re­fix   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 be issued to the persons primarily liable to
pay   property   taxes   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   assessment   notices   issued   under   sub­
section (2) of section 162 shall be disposed of only
after   giving   an   opportunity   of   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
ad­interim/interim   orders   which   are   operating   in
these petitions till today shall continue to 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;
(v) Rule is made partly absolute on the above terms;
(vi) All   pending   chamber   summonses   and   notices   of
motion stand disposed of.”

51
20. The Corporation being aggrieved by the decision of the High
Court on three issues as stated above, approached this Court by
filing   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 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,   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   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 issues
which   were   answered   against   the   Corporation.     However,   after

52
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
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   24­39   in   Compilation   of   Corporation   –
Vol   4).     Pursuant   to   the   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.
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   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 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

53
recommended   to   the   Corporation   on   29.12.2010.     (Para
14, Pg 10 of consolidated counter affidavit)
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
counter affidavit)
6.   Evidently,   the   rates   can   be   determined   only   after
capital   value   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 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 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   sub­section   (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).
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
bills   (Section   140A(2).     (Para   32,   Pg   19   of   consolidated
counter affidavit on behalf of Respondents 2 to 4)

54
9.   Pursuant   to   the   same,   the   Corporation   started
implementation   of   the   capital   value   system   by   issuing
provisional property tax bills.
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   31 st
  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   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   31 st
  March   2011.     As   a
result   of   this,   the   work   of   fixing   capital   value   would
continue   during   the   year   2011­2012   also.     Unless   the
capital   value   of   all   the   properties   is   fixed   and   the   total
extent thereof 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   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   2011­12.   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   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).
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   31 st
  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
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   provisional   bills   on   the   basis   of
rateable   value   treating   it   as   provisional   capital   value   for

55
the   years   2012­13,   as   was   done   for   the   period   2010­11
and   2011­12.     (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 in Compilation of Corporation – Vol 4).
14.     It   is   submitted   that,   in   present   case   there   is   no
retrospective 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   to   which   provisional   bills   were   issued   as   per
Section   140A(2)   read   with   Section   154A   of   the   MMC   Act
from   official   year   2010­2011   (under   the   capital   value
system),   2011­2012   and   till   2012­2013.     Refunds   are
granted, or shortfall recovered after the capital values are
fixed.
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.
Law laid down in Chhotabhai Jethabhai 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.”
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   the   form   of   Special   leave   Petition   (Civil)
No.2568   of   2019   submitted   that   the   property   tax   as   a

56
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   %.   Reliance   was   placed   on
paragraph   34   of   the   decision   of   this   Court   in   Patel
Gordhandas   Hargovindas   &   Ors.   vs.   Municipal
Commissioner,   Ahmedabad   &   Anr. 4
.   It   was   further
submitted   that   the   impugned   provisions   suffered   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
Krishnan   etc.   vs.   State   of   Punjab   &   Ors. 7
  and
Avinder Singh & Ors. vs. State of Punjab & Ors. 8
.
4   AIR 1963 SC 1742.
5   (1989) 3 SCC 132.
6   (2012) 8 SCC 680.
7   AIR 1967 SC 1895.
8   (1979) 1 SCC 137.

57
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   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   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 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 potential of the property was
translated   into   a   habitable   building,   the   land   must   be
9   (1974) 2 SCC 198

58
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. 
(C) Mr.   Shekhar   Naphade,   learned   Senior   Advocate
appearing   for   intervenors   in   IA   Nos.110998   and   158888
of   2019   submitted   that   the   existing   buildings   having
been   demolished,   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
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   instant   case   was   in   violation   of   Article   243­X   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
10  (2014) 13 SCC 627.

59
said   decision   were   not   satisfied.     The   learned   counsel
further   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 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 and the Capital Value Rules, was not the same.
In   one   case,   the   reckonable   unit   was   the   built­up   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
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 sub­clause (a) to
(d)   of   Section   154   (A)   of   the   MMC   Act   would   be   matters

60
“ in presenti ” and not with regard to future prospects and
that   no   reliance   could   be   placed   on   sub­clause   (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   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.   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. 25689/2019, also adopted the submissions
of Dr. Sathe and Mr. Khambata, learned senior  counsel.
Mr.   Satish   Muley,   learned   counsel   appearing   for   a
11  (1999) 9 SCC 559.

61
subsequent   purchaser,   also   adopted   the   submissions   of
Dr. Sathe and Mr. Khambata, learned senior counsel.
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   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.
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   Commission   whose   principal   duty   is   to
review   the   financial   position   of   the   municipalities   and   to   make

62
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 & 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   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   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 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
12  (2016) SCC Online Del 80

63
recommendations   of   the   Finance   Commission.   Sub­Article   (2)
contemplates   that   the   recommendations   made   by   the   Finance
Commission along with the explanatory memorandum as to the
action   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
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  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 limits as may be specified in law.
The exercise undertaken by the Legislature in the instant case is

64
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 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 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 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

65
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
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   proviso   to
sub­section (1).   Section 154 then deals with how rateable value
and   capital   value   are   to   be   determined.   Sub­section   (1)   deals
with   rateable   value   while   sub­section   (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 “base value.” According to
the   second   part,   if   such   ready   reckoner   value   is   not   available,
the   market   value   can   be   taken   into   account   while   arriving   at   a
base   value.   According   to   the   provision,   while   fixing   the   capital
value,   the   Commissioner   “shall   have   regard”   to   the   factors
enumerated   in   sub­clauses   (a)   to   (e).     Thus,   the   factors   on   the

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basis   of   which   capital   value   can   be   arrived   at   are   delineated   in
sub­clauses   (a)   to   (e)   of   sub­section   (1A)   of   Section   154.     While
sub­clause   (a)   to   (d)   are   clear   and   well   defined,   sub­clause   (e)
refers   to   the   factors   as   may   be   specified   by   rules   under   sub­
section   (1B).     Said   sub­section   (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.   
30. 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   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,   as   submitted   by   Mr.   Khambata,   learned

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senior   counsel,   these   attributes   are   situations   “ in   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 ”.  
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   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. 
(A) It   was   observed   in   Patel   Gordhandas 4
  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. ….
..…   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

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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   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.  350­A
read   with   R.   243   which   permits   this   must   be
struck down , even though mathematically it may
be   possible   to   arrive   at   the   same   actual   tax   by
varying   percentages   in   the   case   of   capital   value
and in the case of annual value...”
(emphasis supplied)
(B) In   Polychem   Ltd. 9
,   a   part   of   the   land   was   being
constructed   upon   while   the   rest   was   lying   vacant.
The   Assessor   divided   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 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.   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.

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xxx xxx xxx
22.   The   abovementioned   authorities   of   this
Court,   which   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,   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 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
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   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
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.”
(emphasis supplied)

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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   350­A   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   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   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
land”.

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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   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.
35. There are two  ways in  which  sub­clause (e) of  sub­Section
(1A)   of   Section   154   can   be   construed.     In   the   first   case,   said
clause can be read e jusdem generis  along with sub­clauses (a) to
(d), in which event the scope of any rules to be made in terms of
power   granted   by   sub­clause   (e)   read   with   sub­Section   (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 independently, there is nothing in clause (e) or in
the language of sub­Section (1B) that the future prospects of the
land   in   question   could   be   reckoned   or   noted   for   arriving   at   the

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capital value.   The conclusion is thus quite clear that the width
of   clauses   (a)   to   (e)   read   with   sub­Section   (1B)   do   not   by   any
stretch   of   imagination   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 (a) to (e) read with sub­Section
(1B) or the conferral of rule­making 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.  
37. At this stage, we may consider the scope of Rule 20 of the
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

73
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
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 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 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 sub­Sections (1A) and
(1B) of Section 154 of the MMC Act.

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39. We   now   turn   to   the   issue   regarding   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
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
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   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   extent   of   the   present   property   tax   regime.     It   is   quite   clear
that   with   the   amendment   to   Section   154   and   other   provisions,

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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 4
and   Polychem   Ltd. 9
  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 sub­clauses (a) to
(e) of sub­Section (1A) read with sub­Section (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   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   must   fail   and   we   dismiss   the   appeal   preferred   by
the Corporation.

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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, 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 order as to costs.
……………………………..CJI.
[Uday Umesh Lalit]
………………………………..J.
[Ajay Rastogi]
New Delhi;
November 07, 2022.