Karnataka High Court Quashes BBMP Demand Notice Against B M Habitat

Karnataka High Court Quashes BBMP Demand Notice Against B M Habitat

Clarifies that the Corporation acted without verifying the status and necessary documentation on record

The Karnataka High Court has quashed a demand notice issued by the Bruhat Bengaluru Mahanagara Palike (BBMP) for the payment of backdated property tax from 2008 on the ground that the building was completed even when the Occupancy Certificate (OC) was issued on 25 April 2011.

A single-judge bench of Justice Suraj Govindaraj allowed the petition filed by B M Habitat and quashed the 15 February 2018 order of the corporation. It directed the latter to receive the property tax commencing on 25 April 2011.

The petitioner contended that he completed the construction in July 2010 on account of NOC to be issued by the Deputy Commissioner for running a multiplex. Since the fire clearance was delayed, the application for grant of the OC was made on 05 July 2010. Since it was not considered, the petitioner submitted another application on 02 December 2010.

Thereafter, inspection was carried out and on 25 April 2011, the OC was issued.

The petitioner contended that the delay on the respondent’s part in considering the application could not be the liability of the petitioner, as he had not made use of the building for his personal purpose or for renting it out.

He argued that the building was to be used only after the OC was issued, therefore, the property tax should be calculated from the date of occupancy certificate and not prior to it.

On the other hand, the corporation argued that the completion date of the building was wrongly mentioned by the petitioner. It was to be completed on 17 January 2008 according to the sanctioned plan, therefore, the property tax was liable to be paid from that date.

The delay by the Deputy Commissioner and the fire services issuing a No-Objection Certificate (NOC) could not deprive the corporation of its valid and due tax.

However, the bench rejected the contention of the corporation. It held that if the submissions were accepted, it would mean that between 03 May 2007 and 17 January 2008 (less than eight months), about 2,20,860 sq. ft. of over four floors were constructed.

Justice Govindaraj stated that though the plan was valid up to 17 January 2008, the Corporation could not contend that since the plan expired on a particular date, the construction was completed. It was done without verifying the status and necessary documentation on record that the building was constructed and was in use.

The bench noted that the NOC was issued in 2010, and until then, the petitioner could not have used the property for any purpose, whether it was a multiplex or a mall. The NOC was received on 01 February 2010, and after carrying out the finishing works, the petitioner filed an application on 05 July 2010 for issuance of the OC.

However, nothing transpired. The Corporation did not inspect the property to ascertain whether the construction was done and was in accordance with the sanctioned plan. The petitioner submitted another application on 02 December 2010 and on 25 April 2011, the OC was issued. Thus, there was considerable delay on the part of the Corporation in inspecting the property and issuing the OC. It cannot be used by the Corporation to shift the date of the building’s construction or occupancy.

Thus, while allowing the petition and finding the actions of the corporation unjustified, the court stated there was no document on record to show that the petitioner occupied or used the property before the OC. The property was used post the OC. It held that the building became eligible for tax since the application of the property tax was on the building once completed. Until then, the property tax would only be on the vacant land.