Tata Motors on Monday moved the Supreme Court challenging a civic body?s decision to fix the annual letting value (ALV) at a flat rate of 8% of the cost of construction for the purposes of charging higher rate of property tax on its factory premises in Mumbai.
A Bench headed by Justice S H Kapadia has asked the company to file an additional affidavit giving details of a report filed by its valuer indicating the method to be adopted for fixing ratable value for calculating ALV and the property tax. Challenging the Bombay High Court?s judgment that upheld the Pimpri Chinchwad Muncipal Corporation?s decision to fix ALV at a flat rate of 8%, Tata Motors said that its campus must be assessed differently as they were used for different purposes. Tata Motors whose factory premises, including a factory, residential flats for employees, hostel for apprentices, open yards fall within the muncipal limits of the Corporation were assessed at a flat rate of 8% on the basis of the annual rental value of Rs 83.56 lakh on the total cost of construction allegedly as per the Bombay Provincial Muncipal Corporations Act, 1949. According to the petition, the structures which house the factory premises cannot be equated with the hostel in which rent free accommodation was provided to the trainees nor with the residential flats allotted to the employees. Stating that the entire area was self occupied and, therefore, rent free, the company said that the question of determining what a hypothetical tenant would pay for the premises does not arise. Senior counsel FS Nariman and Nandini Gore said that the method of determining ALV at the rate of 8% was incorrect, arbitrary and excessive as no civic amenities had been provided for the company?s property.
The value of the civic amenities which the company had provided for itself must be discounted while determining ALV, the petition said, adding the property tax is a compensatory tax and, therefore, akin to a fee While Tata Motors accepted that the cost of construction method was an approved method of valuation, it said there was no inflexible rule that 8% of the construction alone can lead to an ascertainment of a fair rate.