### EXEMPTION FROM MUNICIPAL TAXATION UNDER THE MRTP ACT CEASES UPON TRANSFER OF AMENITIES TO LOCAL AUTHORITIES

The Appellants represent various industrial units located within the Trans Thane Creek (TTC) Industrial Area, which was developed by the Maharashtra Industrial Development Corporation (MIDC).

In 1991, the State of Maharashtra constituted the Navi Mumbai Municipal Corporation (NMMC) under the MMC Act, including 44 villages within its territorial limits.

A dispute arose when NMMC began claiming property tax from industrial units within the TTC MIDC area. The Appellants contended that since MIDC provided all municipal services (roads, water, sewage) and collected service charges under Section 17 of the MID Act, NMMC lacked jurisdiction to levy taxes.

They further argued that Clause 7(1) of the First Schedule of the MRTP Act granted them exemption.

In December 2005, an MoU was signed where MIDC transferred the maintenance of basic infrastructure in certain areas to NMMC.

The Bombay High Court dismissed the writ petitions, holding that NMMC had jurisdiction.

1. Whether the TTC MIDC industrial area falls within the territorial jurisdiction of the NMMC.

2. Whether NMMC has the authority to levy property tax on units within the MIDC area while MIDC simultaneously charges fees for services provided.

3. Whether the unit holders within the TTC MIDC area are exempt from property tax under Clause 7(1) of the First Schedule of the MRTP Act.

Section 3 of the Maharashtra Municipal Corporation (MMC) Act, which governs the constitution of municipal areas.

Sections 127 and 128A, which empower Corporations to levy property taxes.

Section 17 of the Maharashtra Industrial Development (MID) Act, which authorizes the levy of service charges for amenities but does not grant the power to tax.

Clause 7(1) of the First Schedule of the MRTP Act, which exempts a "relevant authority" (MIDC) from municipal taxes if it provides the amenities itself.

Distinction between "Tax" and "Fee" based on Article 366(28) and Article 265 of the Constitution, emphasizing the element of quid pro quo in fees.

Principle that ambiguities in beneficial tax exemptions should be construed in favor of the assessee as per Government of Kerala v. Mother Superior Adoration Convent.

The Court determined that the final notification of 1991, which defined NMMC's boundaries, geographically included the TTC MIDC area, rejecting the argument that "local area" excluded industrial zones.

Regarding taxation, the Court held that MIDC’s service charges are contractual "fees" for amenities and do not constitute "taxes," whereas NMMC has the exclusive statutory power to impose "property tax" under the MMC Act.

Applying Clause 7(1) of the First Schedule of the MRTP Act, the Court disagreed with the High Court’s narrow interpretation, ruling that the exemption extends not just to MIDC as an entity, but to all lands and buildings "vesting in" it, including those held by lessees.

The Court reasoned that this exemption is conditional: it only exists as long as the relevant authority (MIDC) actually provides the amenities.

Once MIDC transferred maintenance responsibilities to NMMC via the 2005 MoU, the factual basis for the exemption vanished.

NMMC has the sole power to levy property tax, which is distinct from MIDC’s service fees.

Under Clause 7(1) of the First Schedule of the MRTP Act, MIDC and its unit holders were exempt from property tax only until the execution of the transfer agreement dated 01.12.2005.

Post-December 2005, NMMC is legally entitled to realize property tax from the units as it assumed the burden of providing services.

No orders as to costs.