The Telegraph
Since 1st March, 1999
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Tenants to pay for landlord sins

For thousands of tenants, this Supreme Court verdict could be bad news.

A division bench of the apex court, comprising Justice M.B. Shah and Justice D.M. Dharmadhikaran, has recently allowed the Calcutta Municipal Corporation (CMC) to involve commercial-building tenants of every type (lessee, sub-lessee, sub-tenant or even just an occupant) in its tax-collection drive if the landlords are tax-defaulters.

The decision of the court, which came while it was arbitrating in a case involving the CMC and the Calcutta Gujarati Education Society and Association, was expected to bring in additional revenue to the tune of crores to the CMC coffers, officials said.

At the receiving end will be every trade licence-possessing tenant who has a rented office in a commercial-use building in the city and is unfortunate enough to have a tax-defaulter as a landlord. There are about 80,000 buildings used for commercial purposes in the area within the CMC’s jurisdiction. There are over two lakh commercial establishments in these buildings, implying that this decision, in a single sweep, brings over two lakh Calcuttans within the provisional purview of one more civic tax.

All this, however, augurs well for the cash-strapped CMC. It now collects Rs 180 crore as property tax every year. Of the 80,000 commercial buildings, however, the landlords of at least one-fifth are defaulters. With most of the defaulters being owners of bigger buildings, the amount, that the CMC should get as property tax but does not, should be about Rs 100 crore. Armed with the court order, the CMC can now expect to realise this extra Rs 100 crore figure every year.

“The additional revenue will be pumped back into the city,” said mayor Subrata Mukherjee. “Much of our development activities get stalled because of funds shortage,” he said.

Tenants, expectedly, are not overjoyed. All-India Tenants’ Welfare Federation president Hazarilal Pramanik said tenants should not be made to pay for the sins of their landlords.

But the court ruling does not spare building owners either. For, the involvement of tenants in the process means that the days of a landlord deliberately suppressing rent to pay lower taxes are over. The tax for a building will escalate as the rent collected from tenants is an important factor in the calculation of property tax (CMC Act-1980).

The CMC now has only one question to ask of the Supreme Court: what share should a tenant pay of the defaulting landlord’s property tax'

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