The Madras High Court has upheld a property tax increase in Chennai and Coimbatore.

CHENNAI: The increased property tax regime in Chennai and Coimbatore corporations is unavoidable. The Madras high court upheld the legal implications of a government order rising it in the two cities on Tuesday.

Despite dismissing a slew of petitions challenging the councils’ resolutions and the subsequent GO raising the property tax, Justice Anita Sumanth reserved property tax general revision notices for 2022-23, beginning in the second half. The court ordered that the amendments take effect in the first half of 2023-24, or on April 1, 2023.

“As courts have decided over the years, tax rate increases cannot be retroactive because any increase in tax rates and tax burden would be detrimental to the parties.” “Even at the limit, this court creates quite clearly that the citation to the first half of 2022-23 in the GO is erroneous and illegal,” the judge noted.

Both corporations have been directed to ensure that their websites remain functional and that grievance mechanisms are in place to allow all property tax assesses to seek clarification on any aspect of their property tax assessments.

The issue concerns the move to raise property tax rates in response to a need for additional funds, as well as the mandate issued by the 15th Central Finance Commission for obtaining grants and establishing entry-level conditions for accepting money under various central government schemes.

A notification was issued for the implementation of the general revision of real estate taxes within the boundaries of Chennai and Coimbatore Corporations, with effect from the first half of 2022-23, based on the recommendations of a committee formed by the state.

Aggrieved, the petitioners approached the court, arguing that it is not for the Central Finance Commission to impose such a mandate on the state because it is contrary to the Constitutional provision and the federal structure enshrined therein. “Because the requirement is derived from the Centre’s diktat, the GO is susceptible to being quashed solely on this basis,” they claimed.

They went on to say that state intervention is fatal to the revision because the respective statutes do not envision the state playing any role in matters relating to the determination of property tax in corporations. Refusing to concur, the judge upheld the GO’s legality and dismissed the petitions.