The classification of buildings for property tax assessment must consider the nature of activities and functions performed, ensuring fair treatment for non-profit entities and statutory bodies.

S. RAVINDRA BHAT, J.

1. The Petitioner, (hereafter “BCI”) challenges the assessment order dated 01.03.2016 made by the first respondent i.e. South Delhi Municipal Corporation (“SDMC”) calculation sheet dated 02.03.2016 and notice u/s 154(1) of the Delhi Municipal Corporation Act, 1957 (“the Act”) dated 26.05.2016 pertaining to the property of the petitioner used as its offices. BCI also challenges SDMC communication dated 04.03.2017 addressed to it assessing its property at Use factor 4 (meant only for properties used for commercial activity) and demanding that the entire amount assessed, i.e. Rs. 94,21,784/- be paid to SDMC on the ground that the petitioner was covered by Bye-law 9 (b) of the Delhi Municipal Corporation (Property Taxes) Bye-laws, 2004 (hereinafter referred to as the Bye-laws) as it is an office building. BCI further challenges the constitutionality of Section 170(b) of the Act and of Bye-law 9 (b) of the Bye-laws and the actions of SDMC in assessing the property tax.

2. BCI is a regulatory body, created for enrolling Advocates, prescribing the educational qualifications for enrolment, approving establishment of law colleges, etc. it is the apex body supervising the functions of State bar councils and is set up under the Advocates Act, 1961. It was allotted a plot of land by virtue of a Perpetual Lease Deed dated 20.04.2001 in the Siri Fort Institutional Area (No. 2/6, Siri Institutional Area, Siri Fort Road, Khelgaon, New Delhi-49) upon which it constructed a six storied building including ground floor and basement, covering a total built up area 1243.51 sqm. The building plans and the subsequent amendments for the said institutional building were sanctioned by the Delhi Development Authority (DDA). Although the building was inaugurated on 22.09.2003 by the then Chief Justice of India, it was allegedly not completed. It is only when BCI applied to the Chief Fire Officer for a No Objection Certificate, which was granted on 05.04.2006, that the construction is said to have been completed. Electricity connection was, only installed on 12.09.2007 by BSES Rajdhani Power Ltd. on a domestic basis and occupation occurred w.e.f. 12.09.2007.

3. SDMC on 01.03.2016 issued a suo moto assessment order under section 123D of the Act adopting Use Factor 4 w.e.f. 01.09.2007. Consequently SDMC also issued an impugned communication/calculation sheet dated 02.03.2016 raising a demand upon the petitioner of Rs. 89,42,232/- on the basis of the assessment order. Later, SDMC issued a demand notice under Section 154(1) of the Act demanding an amount of Rs. 94,21,784/-. By application (dated 10.11.2016) BCI applied for a certified copy of the assessment order dated 01.03.2016, and later for a calculation, which was not given. BCI applied under the Amnesty Scheme 2016-17 on 10.01.2017 to the Joint Assessor and Collector (HQ) for re-opening and rectification of the assessment order. Since the said letter remained unattended, on 25.02.2017, BCI filed a voluntary return paying a sum of Rs. 10,67,003/-. As there was a calculation mistake, it filed a Revised Return dated 18.03.2017 and paid an additional sum of Rs. 1,63,135/- more.

4. BCI argues that it only performs the functions prescribed for it under Section 6 of the Advocates Act, 1961, which makes it ex-facie clear that they are not related to commercial activity, as there is complete absence of a profit motive. It is argued that, Bye-law no. 9(b) of the Bye-laws empowers SDMC to mindlessly and arbitrarily classify all buildings as “business buildings” if the activity of maintenance of accounts/records is being carried out without making the distinction as to profit motive. It further urged that due to this Bye-Law, all organisations/institutes who are maintaining records/accounts in their respective buildings, would be deemed to be assessed as a commercial building attracting the highest rate of Use Factor 4 irrespective of whether any statutory/charitable/non-profit work is bei