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Confusion and Controversy over J&K Property Tax!

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Controversy over the imposition of Property tax in Jammu Kashmir has not subsided despite J&K Administration’s extensive canvassing. The proposed Property Tax may be inevitable in J&K, however, some quarters observe the exercise as irregular and felt sufficient debatable grounds – legal, constitutional and socio-political.

Imposition of Property Tax is well within the domain of Urban Local bodies that have inherent power to impose it under Sub-section 1 (a) of Section 84 and Sub-section 1 (a) of Section 65 respectively of J&K Municipal Corporation Act (MC Act) and J&K Municipal Act (Municipal Act) both of 2000. However, it was never imposed for certain reasons as neither the Municipal bodies passed such a resolution nor the Government came out with rules prescribing rates and assessment mechanisms.

A narrative that the Property Tax, a local tax otherwise alien to the erstwhile Jammu Kashmir state, is being imposed by the Lieutenant Governor’s Administration after emasculating Art 370 and by bifurcation the state of Jammu Kashmir into J&K Union Territory, lacks the substance as the incumbent Administration has only enforced the provision already available since 2000 and pushed the Urban Local bodies to impose the provision of Property Tax that was duly provided for in both the Municipal Acts of 2000 passed by the then National Government led by Dr Farooq Abdullah.

It is also wrong to say that there was no property tax ever in Jammu and Kashmir. The state was subjected to Property Tax charged by the state government (not by the local bodies) under J&K Urban Immovable Property Act 1962 till it was repealed in 2002 after the new Municipal Acts 2000 were passed.

It was undoubtedly a well-thought plan by the Centre as it was very clear on the strengthening of Urban Local Bodies and Panchayati Raj Institutions in J&K. That is why, the Central government while introducing J&K Reorganisation Act 2019, did not repeal that time the JK Municipal Corporation Act 2000 and JK Municipal Act 2000 and also J&K Urban Immovable Property Tax (Repeal and Saving) Act 2002 among the list of 166 repealed state laws. The central government had made up its mind to bring Municipal and Local Bodies’ laws at par with the provisions commensurate with the 74th Constitutional Amendments to devolve empowerments to the Urban Local Bodies enabling these bodies entitled to more funds and grant-in-aid from Central Finance Commission and State Finance Commission besides share in State’s revenue.

To achieve this objective, a couple of provisions of the act to make the existing Municipal Laws adaptable and empower the government to exercise statutory and controlling powers of making rules for exemptions etc, and for the interim arrangements for rate, assessments and collection at the annual taxable value of property tax under section 143A and 71A respectively (both sections added by the amendment in 2020).

While the Central Government often swears in the name of empowerment to the Panchayati Raj Institutions and Urban Local Bodies under the 73rd and 74th Constitutional Amendments respectively, on Oct 05, 2020, it amended both J&K Municipal Corporation Act and J&K Municipal Act by incorporating the additions, deletions, substitutions and modifications of some existing provisions by its Jammu Kashmir Reorganisation (Adaptation of State Laws) Third Order 2020 issued vide SO 3466 and thus impaired these Urban Local Bodies subservient to the Government beyond the spirit of 74th Amendment. Now, the urban local bodies have no power but to pass a resolution to impose the property tax as ordered within thirty days of notifications SO 86 and SO 87 both dated 21.02.2023.

In the absence of any logical reasoning against the application of universal property tax, the opponents have put forth two major issues against the Administration’s move on Property Tax – First, the important one is that the Administration should have left such an important policy matter for the popular government that would be in place once the impending Assembly polls are soon held as per multiple assurances by the centre,

The second grudge is that the LG’s administration, due to its disconnect with the people and the local political parties (including the local unit of BJP), always acts in a sudden and arbitrary manner. The Administration, according to the opponents, does not discuss, important issues affecting the people, even with the elected representatives of local bodies and PRIs, what to talk of the political representatives in J&K.

 The issue of regressive property tax first emerged only when the centre amended the Municipal Corporation Act and Municipal Act both on Oct 05, 2020, which met with severe criticism and reactions from the political parties. Two weeks after i.e. on Oct 20, 2020, while addressing a function at Baramulla in Kashmir, Lt Governor Manoj Sinha stated the issue of property tax was misrepresented by some people adding that there were such plans for the union territory.

Following the LG’s statement, Mayor Chander Mohan Gupta and also much later his successor Rajinder Sharma (both of BJP) announced in the General House Meetings that there was no proposal of imposing Property Tax by JMC.

Amidst the stiff opposition to Property Tax proposal, Jammu observed a complete shutdown Saturday (11.03.2023) on a Bandh call given by the Chamber of Commerce and Industries. The same day, Dr Farooq Abdullah held an all-party meeting (minus BJP, Apni Party & Democratic Azad Party) at his Jammu residence and has resolved to meet the national opposition parties in Delhi during the resumed Parliamentary session. 

About the Author: Rattan Singh Gill is an Advocate at J&K High Court and a Freelancer. Email: [email protected]

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