Delhi High Court Directs MCD to Reassess Property Tax Under S.123D After Granting Hearing - 2025-04-27

Delhi High Court Orders Reassessment of MCD Property Tax, Cites Lack of Hearing

New Delhi: The Delhi High Court has directed the Municipal Corporation of Delhi (MCD) to reconsider and reassess property tax demands issued under Section 123D of the DMC Act, 1957, highlighting the fundamental principle of natural justice requiring an opportunity of hearing.

Justice SachinDatta , presiding over separate but similar petitions filed by Mr. Deepak Sehgal and Ms. Deepak Karan Hospital Pvt Ltd, observed that the assessment orders under challenge were passed without affording the petitioners a chance to present their case or submit relevant documents.

The petitioners had challenged a demand notice dated February 1, 2024, and an earlier notice dated January 4, 2024, issued under Section 123D of the DMC Act. During the court proceedings, it became apparent that the demand notice stemmed from an assessment order dated January 25, 2024, also under Section 123D, a copy of which was reportedly supplied to the petitioners only during the court hearing.

The core of the petitioners' argument rested on the denial of a fair hearing. They contended that the January 4 notice, which supposedly provided seven days to upload documents, was received after the stipulated time had already expired. Furthermore, they argued that since they had consistently filed Self Assessment Property Tax Returns (SAPTRs) from 2004-05 to 2022-23, there was no justification for the MCD to invoke Section 123D, which typically applies in cases of incorrect statements, concealment, or suppression in SAPTRs. They also asserted that there was no basis for the MCD's conclusion regarding any incorrect statement or concealment.

Counsel for the petitioners emphasized that the lack of a hearing prevented them from pointing out these crucial aspects to the concerned Joint Assessor and Collector who issued the assessment order. They also questioned the validity of the demand notice, arguing it was based on an assessment order that had not been properly served.

While the MCD's counsel initially contested the claims, they conceded, based on instructions, that the petitioner was indeed not heard prior to the issuance of the assessment order under Section 123D. Given the petitioner's detailed representation dated February 3, 2024, the MCD expressed willingness to consider it, pass a speaking order, and potentially rectify the assessment order.

Accepting this submission, Justice Datta directed the MCD to consider the petitioner's representation and allow them to place on record any further information or documents. The court specifically mandated that a hearing be provided to the petitioners by the Joint Assessor and Collector, South Zone, R.K. Puram , New Delhi, scheduled for February 19, 2024, at 2:00 PM.

The court ordered that the entire exercise, including the issuance of a speaking order and/or rectification of the assessment order, must be completed within four weeks from the date of the order (February 14, 2024). Crucially, the demand notice dated February 1, 2024, has been held in abeyance until this exercise is completed.

In a significant observation, the court also highlighted the large volume of similar writ petitions being filed, attributing it to the Municipal Taxation Tribunal, established under Section 169 of the DMC Act, being non-functional due to a lack of coram. The court directed the Chief Secretary, GNCTD, to take necessary steps to fill the vacancies and ensure the Tribunal becomes operational expeditiously, expressing hope that swift action would be taken in this regard.

The order provides interim relief to the petitioners by ensuring their challenge to the assessment is properly heard by the MCD and also casts a spotlight on the broader issue of the non-functional Municipal Taxation Tribunal impeding access to justice for taxpayers.