Malls, star hotels, govt among major property tax defaulters
Mar 31, 2014
Source : The Times of India
 
CHENNAI: Corporation of Chennai has been falling short of its property tax targets for several years. While officials say the total arrears amount to around 250 crore, data accessed by TOI through an RTI application shows that more than 55 crore is due from the top 50 private defaulters. According to records, Chennai's oldest mall, Spencer Plaza, spread over 10 acres on Anna Salai, owes the most at 8.10 crore.

"We have sold several portions of the buildings to various firms. They may not have paid the property tax but we have paid the tax for the portions that we own," said M Balasubramanium, director of Mangal Tirth, which developed Spencer Plaza. Asked why corporation records use the name Spencer, he said that new buyers may not have registered with the corporation.

Spencer Plaza is followed by Indralok Hotel, Adyar Gate (now Park Sheraton), Toshiba JSW Turbine and Generator Private Limited, and J Hotels Ltd (now Accord Metropolitan, T Nagar). Others include shopping malls, IT parks, hospitals, clubs, educational and charitable institutions and banks. However, the majority of big defaulters are luxury hotels - Indralok Hotel ( 4.54 crore), Park Sheraton ( 4.16 crore), Accord Metropolitan, T Nagar ( 2.97 crore) and Breeze Hotel in Poonamallee High Road ( 1.96 crore).

R Srinivasan, secretary of Tamil Nadu Hotels' Association, says disputes are the main reason for arrears piling up. "The property tax assessment of the corporation might be wrong and then the hotel owner may have to approach the court against the excess property tax. And, such cases would be pending in court".

Corporation officials agree that the cause of arrears is delays in courts. "The delay in the disposal of cases under litigation is the major hindrance to recovering the dues. For instance, if we revise the property tax of an establishment, then the party approaches the court and gets a stay order," said an official.

Sources say owners of several large buildings continue to underestimate their property tax value and pay lower tax to the corporation. "Political pressure stops us from cracking down on these violators," the official adds.

Several government institutions, including CMDA, magistrate complexes, police stations, housing board apartments, slum board tenements and Southern Railway are defaulters.

In its RTI reply, the corporation said it did not have the records of all private-government defaults. In 2009, it began uploading the names of defaulters with arrears of more than 1 lakh on its website, but soon discontinued the practice.

In Chennai, the number of taxpayers increased from 6.5 lakh to 10.82 lakh after expansion of the city but tax collection has not risen in tandem. There is no fine for late payments nor an incentive for advance payments.

TIMES VIEW

That an assessee has moved court and obtained an interim order in his favour is no excuse for noncollection of tax dues. While rushing to court is the right of an assessee, no one can say the corporation does not enjoy similar rights. A court granting interim orders has powers to vacate such orders, provided the authorities of the government convince the forum that stay orders would starve the exchequer. Interim orders are meant to be interim relief, and corporation should not waste time to get them vacated, by presenting facts to the court. A couple of years ago, the I-T department, battling interim orders and unable to recover dues as the matters remained in court, compiled a list of pending tax matters and presented the chief justice with a request that they be given priority and if possible, a special bench be constituted. Chennai corporation could resort to a similar strategy.

 

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