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2005 Supreme(Bom) 727
IN THE HIGH COURT OF BOMBAY
Solapur Promoters and Builders Association Society
Versus
State of Maharashtra
Decided on 13.6.2005
Headnote:MAHARASHTRA REGIONAL AND TOWN PLANNING ACT, 1966 - Chapter VI-A (Inserted by Act 16 of 1992), Section 124-A (1) - Development charge under Section 124-A(1). - Development charge leviable under Section 124-A(1) of MRTP Act, 1966 is a fee that is imposed in order to enable authority to provide public amenities in area. - The Development Charge leviable under Chapter VI-A of the Maharashtra Regional and Town Planning Act is a fee that is imposed in order to enable the authority to provide public amenities within its area and for the maintenance and improvement of the area under its jurisdiction. An institution of use, a change of use or the development of lands and buildings falling within the territorial limits of the jurisdiction of a Planning Authority or a Development Authority places demands on the civic amenities which the authority is required by law to provide. The contribution towards the Development Charge is therefore, relatable to the amenities which are provided by the Authority of roads, parks, hospitals, water supply, electricity, sewerage and drainage amongst other public services. These are under Section 2(2) utilities, services and conveniences provided by the Authority within the area of its jurisdiction. The fee is imposed in order to enable the authority to provide public amenities in the area of its jurisdiction and for the maintenance and improvement of that area. The fee is in aid of the regulatory powers which are conferred upon the Planning Authority and the Development Authority. The nature of the charge and the conditions imposed by the legislature on the utilization of the proceeds makes it abundantly clear that the imposition is not a tax but a fee. Once it is established that what is levied under Section 124-A is a fee, there is no merit in the challenge to the enactment of Chapter VI-A on the ground of the legislative competence of the State legislature. The State legislature did have the power to impose a fee under Article 246(3) read with Entries 5 and 6 of the State list.
MAHARASHTRA REGIONAL AND TOWN PLANNING ACT, 1966 - Chapter VI-A (Inserted by Act 16 of 1992), Section 124-B - Constitution of India, Article 14 - Classification for assessing development charge. - Classification based on use of lands and buildings for purpose of assessing a development charge, not violative of Article 14 of Constitution. - It is evident from the legislation that the imposition of a Development Charge has taken into account the nature of the user of lands and buildings, the nature and location of the urban area within which the land or as the case may be the buildings, are situated and the nature of the development activity that is sought to be pursued. This classification is based on an intelligible differentia which has a rational nexus to the amenities which a Planning Authority or Development Authority provides within the area under its jurisdiction and which in turn generates a need for resources to fund and maintain the amenities. Therefore, there is no merit in the challenge on the ground of Article 14.
MAHARASHTRA REGIONAL AND TOWN PLANNING ACT, 1966 - Chapter VI-A (Inserted by Act 16 of 1992), Section 124- B(2) - Power to enhance development charge. - Power of authority to enhance development charge neither arbitrary nor illegal.
MAHARASHTRA REGIONAL AND TOWN PLANNING ACT, 1966 - Chapter VI-A (Inserted by Act 16 of 1992) Section 124- F - Power to grant exemption. - Power to grant exemption under Section 124-F of MRTP Act, 1966 neither arbitrary nor invalid.
MAHARASHTRA REGIONAL AND TOWN PLANNING ACT, 1966 - Chapter VI-A (Inserted by Act 16 of 1992), Section 124-H(b) - Deposit of amount of assessment. - Provision for deposit of amount of assessment pending disposal of appeal neither arbitrary nor illegal. - Under Section 124-H(b) of the Maharashtra Regional and Town Planning Act the appeal shall not be entertained unless the amount claimed in the notice of assessment from the appellant together with the interest, if any due thereon, has been deposited in the office of the authority. The requirement of deposit where permission to develop has been granted cannot be regarded as an arbitrary restriction on the right of the developer. A sufficient safeguard is available to the developer by requiring the authority to pay interest at the rate of 18% per annum in the event that any amount is held to be refundable to the developer upon the conclusion of the appeal. The provision for deposit cannot be regarded as rendering the right of appeal illusory.
( 1 ) THE constitutional validity of the Maharashtra regional and Town Planning (Amendment) Act, 1992 - Maharashtra act 16 of 1992 - has been challenged in these proceedings. By this amendment, the State legislature inserted Chapter VI-A into the provisions of the parent Act in order to provide for the levy, assessment and recovery of a development Charge. Sub-section (1) of section 124-A enacts the levy of a development Charge in the following terms :
"124-A (1) Subject to the provisions of this Act. the Planning Authority or the development Authority (hereinafter in this Chapter collectively referred to as "the Authority"), shall levy within the area of its jurisdiction development charge on the institution of use or change of use of any land or building, or development of any land or building, for which permission is required under this Act, at the rates specified by or under the provisions of this Chapter : provided that, where land appurtenant to a building is used for any purpose independent of the building, development charge may be levied separately for the building and the land. "
( 2 ) BY virtue of the provisions of sub-section (2) the Development Charge is leviable on any person who "institutes or changes the use of any land or undertakes or carries out any development". On 20th January, 1994, a further amendment enacted by the State legislature in the form of Maharashtra act 10 of 1994 received the assent of the Governor. In so far as is material, a proviso was introduced into the provisions of section 124-A to stipulate that no Development Charge shall be leviable where a development permission had already been granted or is deemed to have been granted by a Planning authority or Development Authority before 10th August, 1992, being the date of commencement of the Amending Act of 1992 by which the provisions of chapter VI-A were introduced. As a result of the amendment therefore, the imposition of the Development Charge has been made prospective with effect from 10th August, 1992.
( 3 ) A consideration of the provisions of the Act would be required in the context of the challenge before the Court to the validity of the legislation. Before doing so it would be appropriate to note the broad frame work of the other provisions of Chapter VI-A. Section 124-B provides for a classification of lands and buildings according to user and empowers the levy and collection by the Authority of a Development Charge at the minimum rates specified in the Second Schedule. The Authority is empowered to enhance the rates prescribed subject to the maximum specified in Column 5 of the Second Schedule. Before doing so, the Authority has to pass a special resolution approving regulations and to obtain the previous sanction of the State Government. Section 124-E provides for the assessment and recovery of the Development Charge. Section 124-F provides for exemptions; Sections 124-G and 124-H for appeals and Section 124-J for a Development Fund. Section 124k empowers the authority to take steps to ensure the stoppage of development or of a change of use where this has been commenced without the payment of the Development Charge.
( 4 ) THE first petitioner before the Court in these proceedings under Article 226 of the Constitution is an association, registered under the Societies' Registration act, 1860 of promoters and builders in the city of Solapur. The provisions of Chapter VI-A have been challenged in these proceedings on several grounds, namely : - (i) The State legislature does not Have the legislative competence to enact Sections 124-A and 124-B, there being no head of legislative power in the State List of the Seventh Schedule to the Constitution with reference to which a tax on development activity can be imposed; (ii) If the development Charge is treated as a fee, there is no nexus'between the fee that is charged and the services that are rendered. The imposition of the fee is not rational and the re
