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    Published On : Sat, Mar 30th, 2013
    Business News | By Nagpur Today samratnt

    Levy of LBT defy Constitution of India – VTA

    Nagpur News: Vidarbha Taxpayers Association (VTA) has challenged levy of Local Body Tax (LBT) by State Government in lieu of Octroi by filing a writ petition in Nagpur bench of Bombay High Court, which came on board for hearing on 25 & 26 March 2013, however is now listed to be heard on April 2, 2013.

    VTA President J. P. Sharma said, after in depth study of The Maharashtra Municipal Corporations (MMC) Act, 1949 and The Bombay Provincial Municipal Corporations (Local Body Tax) Rules, 2010 by our counsel Advocate Harnish Gadhia along with members of VTA, we have pointed various logical grounds, which clearly stipulates that levy of LBT by State Government is unconstitutional.

    Sharma said this is absolute breach of trust by the State Government as in early 2000 when Maharashtra Value Added Tax (MVAT) was at proposal stage; Government had assured traders that gradually Octroi would be completely withdrawn. In recent past Government declared that when Goods and Service Tax (GST) would be implemented Octroi would be merged therein and now with LBT being forcefully imposed.

    Tejinder Singh Renu secretary of VTA said that our legitimate grounds challenging LBT’s legality is yet to be heard by High Court. He said, as per Section 127(2)(f) of the MMC Act, 1949, the Corporation can levy any tax but not being a tax on professions, trades, callings and employments; however in present case the incidence of taxation is changed and also mounts to double taxation, as if the incidence of taxation of the LBT is sale or purchase then even the incidence of Maharashtra Value Added Tax Act, 2002 is the same. Moreover, a tax on entry of goods into local area for consumption, use or sale is a separate entry No. 52 List II Schedule VII to the Constitution of India whereas the tax on sale or purchase is a separate entry No. 54 therein.

    Renu said city of Nagpur didn’t get the opportunity to raise objections and give suggestions to the draft of the Bombay Provincial Municipal Corporations (Local Body Tax) Rules, 2010, which is mandatory provision of previous publication. Likewise, levy of LBT is contrary to Sec 149 of MMC Act, 1949, wherein the Corporation has to first seek provisional approval of the State Government for making rules for imposition of a tax which falls in the categories enshrined U/s. 127(2) of the MMC Act. Notably, LBT can be levied by the Corporations U/s. 127(2)(aaa) of the MMC Act. After seeking provisional approval the corporation can make rules in respect of such a tax i.e. LBT and in present case NMC never proposed levy of LBT in lieu of octroi to the State Government.

    That, in the entire length and breadth of the LBT Rules, 2010 there has been an excess delegation by giving plenary powers in the hands of the Commissioner. If the context in which this word ‘satisfaction’ is perused, then it shall reveal that, Commissioner shall have powers of subjective satisfaction and not objective satisfaction. Rule No. 36(f) of the LBT Rules, 2010 is arbitrary and unreasonable. Provisions under Rule 22(b) insist that every registered dealer will have to mention name, address and LBT number of the purchaser on every invoice of Rs.500 or more. This clearly causes a hurdle in free trade and business does violating Article 19(1) (g) – Right to freedom of Trade and Business of Indian Constitution.

    Similarly, it is also learnt through newspapers that even after advent of LBT; NMC shall continue to levy Transit Pass (Rahadari). If that be so then this is contrary to the MMC Act & the LBT Rules, 2010.

    J. P. Sharma, president & Tejinder Singh Renu, secretary VTA through press release supports strike called on April 1 and made it clear that taxpayers are not against taxation of LBT, but the hue and cry is due to its burdensome compliance and procedure along with too stringent rules which are similar to MVAT, which are already causing hurdle in free trade.

    VTA trust that after hearing our grounds, appropriate relief may be granted by High Court.


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