SEZ Must pay Property Tax

SEZ units must pay property tax, says HC

TNN, Jul 31, 2010, 12.26am IST

CHENNAI: Private entrepreneurs having their units in the Special Economic Zone (SEZ) cannot seek exemption from property tax unless specific exemptions are given by the state government and the local body concerned, the Madras high court has ruled. 

“There is no provision under the Special Economic Zones Act either exempting the Municipalities Act or directing the state government to grant appropriate exemption,” said Justice K Chandru on Friday. He was passing orders after dismissing a batch of petitions filed by 100 per cent export-oriented units located inside the Madras Export Processing Zone (MEPZ) at Tambaram. 

The petitioners wanted the court to restrain the authorities from levying, assessing and recovering property tax from the factories on the land. As land for the MEPZ was acquired by the Centre, no property tax can be levied on the buildings put up by the unit owners, they said. 

Rejecting the arguments, Justice Chandru said: “The petitioners are not even remotely connected to the central government. They are private entrepreneurs enjoying various concessions available in the SEZ.” The immunity enjoyed by Central government undertakings would not apply to private units which are merely built on a land owned by the Centre, he added. 

The judge ruled that the Tambaram municipality did not lack any legislative competence in demanding property tax, the judge said the Supreme Court had held that the exemption granted under Article 285 does not extend to assessees who are separate entities and distinct from the Union government. 

Whether the petitioners had put up structures on their own land or on the lease lands, they are certainly owners of the buildings and are liable to pay property tax under Section 81 of the Tamil Nadu District Municipalities Act. Rejecting the contention that Article 265 forbids the municipality from demanding property tax, Justice Chandru said property tax was liable to be levied by municipalities under the Act, both before and after the Constitution was enacted. 

He then dismissed the writ petitions, and imposed a cost of Rs 5,000 on the petitioners for having dragged Tambaram municipality to court and enjoyed a partial stay order which helped them delay paying up tax dues to the municipality. “It defeated public interest for over several years,” he observed.


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