3 metro contractors asked to pay ₹300 cr for using govt land

BMC slaps ₹300 crore property tax bill on Mumbai Metro contractors for using land at Wadala Truck Terminal, contractors plan to challenge the order.

MUMBAI: The BMC has slapped a property tax bill of approximately ₹300 crore on three Mumbai Metro Rail Corporation Ltd (MMRCL) contractors for utilising a plot of land for a casting yard at Wadala Truck Terminal.

The three Mumbai Metro Rail Corporation Ltd contractors took over a plot of land for a casting yard at Wadala Truck Terminal. Representational Image. (Photo by Bachchan Kumar/ HT PHOTO) (HT PHOTO)

While Dogus Soma JV is liable to pay property tax of ₹66.64 crore with a penalty of ₹27.75 crore, HCC MMS JV was sent a bill of ₹72.85 crore with a ₹26.08-crore penalty. CEC-ITD (Continental ITD Cementation Tata Projects JV) has been slapped with a bill of ₹67.41 crore and a penalty of ₹28.18 crore.

Additional municipal commissioner (city) Ashwini Joshi, who is the investigating officer in the case, passed speaking orders on March 27 that the contractors were liable to pay the tax. Advocate Prerak Choudhary, who is representing the contractors, is seeking an exemption of the tax.

Choudhary, when contacted, said, the demands of the corporation were not sustainable in the face of Section 184 of the Railways Act, 1989, which exempted “railways” from the ambit of local body taxation. “Contractors who undertake construction of public projects cannot be made to pay property taxes,” he said. “The MMRCL itself has, in its letter to the corporation, sought exemption under Section 184. Therefore, the orders of the corporation are perverse and we shall be challenging them.”

In her order, Joshi stated that she had gone through the objections raised by the complainants and heard Choudhary’s oral arguments, in which he had submitted that the assessment of the property was not correct, and required to be corrected as per the rules. “The advocate… referred to... the Railways Act 1989,” says the order. “(He) stated that, as per Clause 31 (d) of the Act, they are exempted from payment of property tax, as the plot of land is assessed for a casting yard. However, a casting yard is not covered in the said Clause 31 (d) of the Railways Act.”

Joshi further stated in her order, ‘As per Section 146 (1) of the MMC Act 1888, the actual occupier is liable for the payment of property tax. Moreover, Clause No 7 of the letter of terms & conditions dated January 9,2017 between MMRCL and the contractors, it is mentioned that any charges to be paid to BMC, like property tax etc shall be paid by the contractor. MMRDA has also mentioned in the letter dated February 2, 2010, that property tax is to be recovered from the contractors.”

Joshi added that she did not agree with the complainants’ contention that they were a part of the Railways. She stated that the contractors were “private companies” and the actual occupier of the government land under the agreement, hence the provision of Sec 146(1) of the MMC Act was applicable. “The casting yard is not expressly covered under the definition of ‘Railway’. MMRCL has been approved as a Special Purpose Vehicle (SPV) company and not a ‘Railway’ by a government notification. Also, MMRCL has insisted that the contractor pay the BMC property tax,’ she concluded.

The order states that the property in question belongs to the Maharashtra government, which had been leased out to MMRDA and further leased out to MMRCL. The complainants were the contractors of MMRCL, and being sub-lessees and occupiers of the property were liable to pay property tax for the period ending March 31, 2024.

The BMC has filed caveats before the small causes court on Monday (to claim a right to be heard before admission of an appeal). “The case was pending before the corporation for four years. The companies are still deliberating what action is to be taken to challenge the orders,” said Choudhary.

The demand for property tax was raised in 2020, which was challenged before the BMC under Section 163 of the MMC Act, and the orders were finally passed after four years on March 27, 2024. The companies are now contemplating a writ petition or other measures to challenge the order.