MIDC property tax exemption applies while MIDC provides civic amenities; NMMC can levy property tax after services are handed over.

Held: The Supreme Court held that the Trans Thane Creek MIDC Industrial Area falls within the territorial jurisdiction of the Navi Mumbai Municipal Corporation, and that NMMC alone has statutory power under the Maharashtra Municipal Corporation Act to levy and collect property tax. The Court clarified that MIDC’s power under the Maharashtra Industrial Development Act is limited to levying fee or service charges for amenities such as roads, drainage, water supply and related services, and such charges are not “tax” because they are linked to services rendered. However, the Court further held that Clause 7(1) of the First Schedule to the Maharashtra Regional and Town Planning Act exempts MIDC land and buildings, including those occupied by industrial unit or plot holders, from payment of property tax to the local authority so long as MIDC itself provides the civic amenities which the local authority would otherwise provide.

Summary: The dispute arose when NMMC demanded property tax from industrial units situated in the TTC MIDC Industrial Area. The industrial units contended that TTC MIDC was outside NMMC’s municipal limits and that, in any case, since MIDC was providing infrastructure and amenities and collecting service charges, NMMC could not levy property tax. NMMC argued that the 1991 notification constituting NMMC included the relevant villages and boundaries covering TTC MIDC, and that only a municipal corporation had statutory power to levy property tax. The Supreme Court held that TTC MIDC was geographically and legally within NMMC’s municipal limits, as vesting of land in MIDC did not remove it from the revenue villages included in the NMMC notification. The Court also held that MIDC’s charges were fees or service charges, not taxes, because they had a direct link with services rendered. On exemption, the Court disagreed with the High Court’s narrow view and held that Clause 7(1) of the First Schedule to the MRTP Act protects not only MIDC itself but also buildings and lands vested in MIDC and occupied by unit or plot holders, otherwise the exemption would become meaningless. The exemption, however, continues only till MIDC provides the relevant amenities.

Decision: The Supreme Court partly allowed the appeals and held that TTC MIDC falls within the jurisdiction of NMMC; that NMMC has the statutory power to levy property tax; and that MIDC is entitled to levy only service charges or fees for amenities actually provided by it. The Court further held that MIDC and its unit or plot holders were exempt from property tax under Clause 7(1) of the First Schedule to the MRTP Act only till the amenities and infrastructure were handed over to NMMC under the agreement dated December 1, 2005, or from the date of area-wise transfer where such transfer occurred in phases. After such handover, NMMC is entitled to levy and recover property tax without exemption. No order as to costs was passed.