Delhi HC Sends Khan Market Shop Owner’s ₹2.66-Crore Tax Challenge to Appeal, Orders NDMC to Itemise Demand Before Recovery Resumes

NDMC issued a notice under Section 72 of the New Delhi Municipal Council Act, 1994, proposing in September 2023 to increase the rateable value of the petitioner’s Khan Market shop from ₹1,62,400 to ₹1,42,91,100 with effect from 1 April 2023

In its December 2023 assessment order, NDMC fixed successive rateable values retrospectively from 25 July 2012 and directed billing on the revised values

NDMC later relied on a May 2022 assessment order that purported to fix a rateable value from 1 April 2012, while portal entries attributed to September 2022 showed different values for certain periods

Following the December 2023 assessment, NDMC issued a substantially increased bill and recovery notices; the petitioner challenged the assessment and demands, including their retrospective operation, and disputed the calculation and crediting of prior payments

The petitioner withdrew his constitutional challenge to the words “at any time” in Section 72 and his challenge to the 2017 assessment; those prayers were disposed of without a finding that the 2017 assessment had been modified or superseded

Section 72(1) of the New Delhi Municipal Council Act, 1994, as then in force, provided that an amendment could not make a person liable for tax or an increase in tax for a period before the commencement of the year in which notice under Section 72(2) was given; Section 72(2) required notice and consideration of objections

Section 115 provides an appeal to the District Judge against a tax levy or assessment, including questions of valuation and legality, while Sections 116 and 117 govern appeal conditions and condonation of delay

Article 226 jurisdiction is not ousted by an alternative statutory remedy, but that remedy should ordinarily be used; intervention may be warranted in recognized exceptional cases, including lack of jurisdiction or denial of natural justice, as explained in Radha Krishan Industries v. State of Himachal Pradesh, (2021) 6 SCC 771

Section 4 of the 2026 Amendment Act preserves remedies and proceedings concerning past acts and accrued liabilities, and Section 64H(3) may be invoked if its conditions are met

The statutory deposit requirement remains applicable, with the appellate court to consider the principles in Ved Marwah v. NDMC, 2018:DHC:2055-DB

The Court found that the December 2023 order expressly assigned historical rateable values and did not characterize them as having no effect on liability; therefore, the petitioner’s objection under the Section 72 proviso could not be dismissed as merely a valuation dispute

However, the May 2022 order, September 2022 portal entries, and December 2023 assessment left unresolved whether any part of the demand rested on an independently operative earlier assessment.

NDMC had not supplied a period-wise breakdown identifying the basis for each component, and resolving the connected issues would require examination of the municipal records, prior assessments, valuation, and payment credits

The Court therefore declined to determine the merits in writ jurisdiction and directed that the disputes be addressed through the statutory appeal.

It also held that a market-wide inquiry was unnecessary to determine the petitioner’s individual challenge

NDMC was directed to provide, within 15 days, a period-wise demand computation and copies of the assessment orders and notices relied upon, including the May 2022 order and records underlying the September 2022 portal entries

If the petitioner appeals within four weeks after receiving those materials, delay attributable to the writ proceedings and the ensuing four-week period is not to be a ground for rejection; any earlier delay remains subject to consideration under Section 117

Subject to compliance with the existing deposit condition, coercive recovery was stayed for the specified period and, if an appeal and interim-relief application are filed within that period, until the appellate court decides the interim application or appeal, whichever occurs first

The writ petition and pending applications were disposed of accordingly