IMPORTANT POINT
Water tax and water benefit tax under the MMC Act can be levied regardless of actual water consumption, distinguishing them from water charges based on actual usage.

JUDGMENT :

(Sandeep V. Marne, J.) :

1) Upon noticing conflicting views of Division Benches of this Court on the issue of liability of owner/occupier not consuming water supplied by the Municipal Corporation to pay water tax and water benefit tax, the learned Single Judge (V. M. Kanade J.) has made a reference to the larger Bench vide order dated 28 March 2007 to consider the following issues:

(i) Whether the Corporation has a power to levy tax under Section 140(a)(i) of the said Act on the actual supply of water?

(ii) Whether the water benefit tax, as envisaged under Section 140(a)(ii) of the said Act, could be levied irrespective of the actual consumption of water since it pertains to maintenance of the system?

(iii) Whether the Corporation is entitled to levy fixed tax apart from water charge which is levied for actual consumption of water?

2) When the larger Bench took up the issues for consideration, it noticed that one of the conflicting judgments rendered by the Division Bench of this Court in Harish Lamba V/s. Municipal Corporation of Greater Mumbai and Ors., Writ Petition No.1206/1999 decided on 21 November 2006 was challenged before the Supreme Court in Special Leave to Appeal (Civil) No. 210023/2007. Therefore, by order dated 1 February 2008, the larger Bench thought it appropriate to await the judgment of the Supreme Court and the Reference was adjourned by order dated 1 February 2008. When the Reference was again taken by the larger Bench for consideration on 6 February 2009, it was noticed that leave was granted by the Supreme Court and the Special Leave Petition was converted into Civil Appeal No.142/2009. The Full Bench therefore adjourned the reference sine-die with liberty to the parties to move the Court after Supreme Court decided the issue.

3) In Municipal Corporation of Greater Mumbai V/s. Harish Lamba, Indian Inhabitant and Ors., 2020 15 SCC 171 the Supreme Court allowed Civil Appeal No. 142/2009 and set aside the judgment of Division Bench of this Court in Harish Lamba V/s. M.C.G.M (supra). When Petitions came up before the Division Bench on 17 March 2023, Municipal Corporation urged that the issues stood concluded by the judgment of the Apex Court in M.C.G.M. V/s. Harish Lamba (supra). However, the Division Bench noted that Reference to the larger Bench was pending and that therefore it would be appropriate that the larger Bench considers the Apex Court judgment and passes appropriate orders on the reference made. This is how the reference is listed before us for decision on the above quoted three questions.

4) Writ Petition No.455/2005 is filed by MARS Enterprises, which had undertaken redevelopment of the building at 5 Battery Street, Gordon House, Behind Regal Theatre, Mumbai, The building was originally owned by Mr. Manu Narang, after whose death, the same has devolved upon his heirs, who run business under the name MARS Enterprises. A water connection was provided to the building before undertaking the exercise of redevelopment. Petitioner requested for disconnection of water supply vide letter dated 9 June 1995 and the Municipal Corporation addressed letter dated 4 November 1997 to Petitioner informing about disconnection of the water supply. It appears that Petitioner used water tankers during the course of redevelopment of the building and after completion of construction, it applied for water connection. In the above background, Petitioners received Bill from the Municipal Corporation on 6 February 2004 demanding total property tax of Rs. 21,62,245/- which included levy of ‘water tax’ in Column No. 2 of Rs.8,77,042/- and levy of ‘water benefit tax’ of Rs. 1,68,662/-. It also included levy of sewerage tax.

5) MARS Enterprises has accordingly challenged Bill dated 6 February 2004, as well as order of the Investigating Officer dated 5 February 2004 in Writ Petition No. 455 of 2005 with further prayer to restrain the Municipal Corporation, inter-alia, from recovering the amount of water tax and sewerage ta