Service charge

Union government-owned institute moves High Court after BBMP demands service fee

On Wednesday, the Karnataka High Court ordered the Bruhat Bengaluru Mahanagara Palike (BBMP) not to rush to continue the process on the basis of opinions issued to an institute belonging to the Union government demanding payment in the amount of 3 .75 crore over the past 21 years.

A division bench comprising Chief Justice Ritu Raj Awasthi and Justice Sachin Shankar Magadum adopted the interim order on a petition filed by the Indian Plywood Industries Research and Training Institute (IPIRTI), an independent company under the Ministry of ‘Environment, Forests and Climate Change.

The petitioner’s institute challenged the constitutional validity of Articles 110 (1) (j) and 110 (2) of the Karnataka Municipal Corporations Act 1976, and the rules governing the collection of service charges from buildings exempt from tax. property tax so far as the enforceability of these laws for buildings owned by the central government.

Stressing that Article 285 of the Constitution exempts the properties of the Union government from all taxes levied by a State or by any authority within a State, the petitioner argued that the collection of service charges on buildings belonging to the Center, regardless of their classification and use, by virtue of the powers conferred by law to collect rental charges from buildings exempt from payment of property tax, constitute a violation of the constitutional provision.

It was stated in the petition that the BBMP started charging a retroactive service fee from 2000-01 after the petitioner applied for khata in 2013, as a khata certificate was required to obtain compensation for the institute’s land acquired for the metro project.

Lawyer MN Kumar, appearing for IPIRTI, told the judiciary that the BBMP even locked the main doors of the institute last year for failing to pay the service fees demanded by the BBMP.