Published On: Wed, Aug 12th, 2009

Builders have to pay property tax on unoccupied areas

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ResidenceAntilia1Builders have to pay property tax on unoccupied areas
By Rahul Virkar

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In a recent judgement delivered by the High Court of Judicature at Bombay Ordinary Original Civil Jurisdiction, it has stated that from now onwards the builders who fail to transfer the conveyance deed in the co-operative housing society’s name will be liable to pay property tax only for the area unoccupied by the members of the society. The area unoccupied excludes the carpet area of the flat and includes the unoccupied open space of the staircases, passages and surrounding area of the playground and garden if any. The property tax for this area will be recovered by the Municipal Corporation from the builders.

The writ petition no.438 of 1998 was filed by Anjana Building v/s Municipal Corporation of Greater Bombay and Others and it is clearly stated in the judgment that “ with regard to the Property Tax in respect of the open space and other premises not occupied by the members of the petitioners, it would be open to the Respondent – Corporation to recover it from the owner/builder or any other person liable for the same”. It is pertinent to note here that there is a clause under the BMC which says that if the builder fails to pay the property tax, the whole of the property can be autioned off but if the flat owners pay the property tax regularly then there are safe.The new owner has very limited rights in these respect. As per the ruling, the co-operative housing societies will be the major gainers in the whole bargain with regards to two major aspects firstly, the co-operative housing societies having extra premises around the society structure in the form of gardens, playgrounds can save a considerable amount by way of property tax, which prior to this judgement they had to shell out and secondly, when the burden will be shifted on the shoulders of the builders, it will make them think twice on withholding the transfer of conveyance deed in favour of the society.

But, to avail of the benefit the co-operative housing societies have to apply to the local ward offices. The application should be to pay the consolidated property tax of the total carpet area occupied by the society members. It is reliably known from the Municipal Corporation that many societies have applied for the same. Another indirect impact will be on the claiming of the additional FSI. If the builder transfers the conveyance deed in the name of the co-operative housing society to do away with the payment of the property tax then the society can claim the additional FSI.

So all in all the judgement is a good medication for the patients i.e. the co-operative housing societies who have till now failed in their bid to get the conveyance deed transferred and will help them make their recovery good and fast.

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