Karnataka High Court seeks response from State govt, BBMP in plea against tax on unused/ shut buildings during COVID-19 lockdown

The Karnataka High Court recently sought the response of the State government and Bruhat Bengaluru Mahanagara Palike (BBMP) on a petition challenging the levy of property tax on unused/ shut buildings during the COVID-19 lockdown..Justice M Nagaprasanna of the High Court said that in the event any coercive action is taken by BBMP vis-a-vis subject matter of the petition, the petitioners’ counsel can move the Court for relief.The Court was hearing a petition filed by GT Cinemas Private Limited, which owns a shopping mall in the city. It was the petitioner's contention that municipal tax on dormant land and buildings during compulsory shutdown is not tax on their “use”. .The petitioner contended that their shopping mall was closed for several days during the lockdown in the financial years 2019-20, 2020-21 and 2021-22. The petitioner further submitted that the food court and the cinema theatre that get the majority of footfall at the mall was put under extended lockdown..“The levy of a municipal tax on that property even for the period of the lockdown would be a tax that is essentially confiscatory in nature as the return from that property during the period of the lockdown would have halted completely,” the petition stated.It was further submitted that the petitioner would still incur numerous charges and expenses even when the shopping mall was shuttered during the lockdown..It was the petitioner's argument that levying tax on the petitioner's dormant building by the BBMP or the State Government would essentially amount to encroaching upon the power of the Parliament to authorise a levy on the capital value of assets. ."Should the BBMP claim that it is entitled to levy property tax upon the Petitioners’ dormant land and building even during the period of lockdown notwithstanding that the Petitioners’ land and building was forbidden for use by the Central and the State Government during the lockdown, it would have essentially sought to tax the capital value or wealth represented by the Petitioners’ land and building rather than tax the use of the land and building in pursuance of a freedom to use that land and building. Such a stance on the part of the BBMP or the State Government would essentially amount to it encroaching upon the power of the Parliament to authorise a levy on the capital value of assets (Entry 86, List I to Schedule VII of the Constitution)," the petition said..Therefore, petitioner sought a declaration that the that tax on land and building belonging to the petitioners during the period of lockdown imposed to curb Covid is arbitrary and violative of Article 14. As interim relief, the plea sought to restrain BBMP from taking any coercive action in respect of the liability towards the payment of property tax..The matter will be next heard on August 27.