Bhubaneswar, May 19: The Odisha Industrial Infrastructure Development Corporation (Idco) has accused the civic body of unlawfully collecting holding tax from industrial units at Mancheswar and Chandaka Industrial Estate.

Idco managing director Sanjay Kumar Singh wrote to housing and urban development secretary G. Mathivathanan complaining that the Bhubaneswar Municipal Corporation had served notices to the 88 micro, small and medium enterprises (MSME) based in the two industrial estates for collection of holding tax from January 2015 to March 2017 under commercial use component.

"Plots were allotted to various units at concessional rates in the industrial estate of Idco to promote MSME entrepreneurs. But the BMC is charging holding tax according to commercial tariff on such MSME units. The holding tax is assessed only on two types of property in the urban local body - residential and commercial. There is no provision in the act or rule to charge tax as per industrial purpose," wrote Singh.

"As Idco is allotting land at concessional rates for promotion of MSME units, the housing and urban development department may prescribe holding tax for industrial use other then residential or commercial," he said, adding that at the moment, there was no provision for the BMC to accept holding tax from industrial units.

BMC's additional commissioner Alok Kar, however, told The Telegraph that they had not received any communication from Idco on the matter.

"We haven't heard anything from Idco on this issue. But yes, we have done an assessment of the properties having their base in the two industrial estates at Chandaka and Mancheswar, and served notices on them," said Kar.

Another source in the municipal corporation said that since they had taken a decision to boost holding tax collection this fiscal by digitising all residential and commercial properties, Idco's letter might come as a major hurdle in the their way of implementing the initiative.

After a whopping Rs 100 crore revenue collection in the previous fiscal, the municipal corporation has this time decided to boost tax collection further this year. Accordingly, it has set a target to collect Rs 70 crore from holding tax alone by the end of the current fiscal. It has also initiated a process to hire an agency to geo-tag all properties and their details for proper assessment, billing and collection of holding tax.

Urban local bodies are allowed to collect holding tax from houses and commercial establishments under the Odisha Municipal Corporation Act, 2003. The Act says there can be three types of assessments of properties for collection of holding tax - residential, commercial and residential used on rent. The state government is also in process to implement the property tax system instead of holding tax this year.

Another matter that might trigger a war of words between the two agencies is that Idco was embroiled in a controversy in 2014 when the Comptroller and Auditor General (CAG) in its report stated that Idco officials had allotted land arbitrarily to ineligible entrepreneurs who had ultimately misused the allotted plots. The Telegraph had reported the issue on September 1, 2014.

"Before raising a finger at us, Idco should look into their activities. We faced a lot of loss in holding tax collection since we couldn't assess and map the properties properly. Now, when we are trying to improve on our past mistakes, and Idco is coming in the way. The issue will be discussed at the government-level and we are ready to do things as per the government's direction," said a senior official of the civic body requesting anonymity.