Interesting cases of Central and State Government Properties in Cities

If the implementation of the order issued by the government is expected from the urban local bodies, they will need to allocate sufficient funds.

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Over the years , studies of the financial condition of municipal corporations in the country have consistently underlined the dire need to improve the financial health of municipal corporations. However, these pleas have not been seen to have a positive effect and, therefore, the situation of urban local bodies is deteriorating. As a proportion of the country 's GDP , intergovernmental transfers to urban local bodies have always been low (down from about 1 per cent in the 1960s) , declining sharply in recent decades and now hovering around 0.45 per cent. So, on the one hand, the contribution of cities in the national economy is steadily increasing and on the other hand, the contribution of the Center and the states in urban local bodies is gradually declining . The opposite is true in the United States, Brazil , South Africa, and Russia. These countries share 15 , 8 , 6.9 and 6.5 per cent of the national GDP with city governments.

In the last decade , two new laws from the Center have dealt a major blow to urban local bodies. The first was the Land Acquisition , Rehabilitation and Rehabilitation Act , 2013 - which was the right to fair compensation and transparency. The Land Acquisition , Rehabilitation and Resettlement Act itself states , " Landowners may suffer the least… and affected families whose land has been acquired should receive fair and reasonable compensation… and adequate provisions should be made for the rehabilitation and reassurance of such affected persons." The law was enacted to ensure that. The law became more lenient with landowners , but resulted in a lack of interest in urban local bodies . For any land acquired by the city, the municipality had to pay double the annual ready reckoner rate to the landowners. In one fell swoop , most land acquisitions became the property of urban local bodies. This basically meant that the city's development plans could not be implemented ; Parks , roads , schools , Hospitals and many other municipal facilities will no longer be built and almost all social infrastructure will no longer be built in the private sector beyond the reach of the urban poor. This one law undermined the concept of 'standard of living' in cities , supported the privatization of urban social infrastructure and emphasized anti-poverty urban development.

For any land acquired by the city, the municipality had to pay double the annual ready reckoner rate to the landowners.

The Land Acquisition , Rehabilitation and Resettlement Act , which was already leaking to the financing of urban local bodies , imposed the Goods and Services Tax (GST) on July 1 , 2017 . This includes municipal revenue sources such as octroi , entrance tax and advertising tax. As a result, urban local bodies face more funding than ever before. In 2015, when Goods and Services Tax ( GST )  When it was being prepared, the Union Ministry of Urban Development had expressed concern over these issues.  It was suggested that rules should be framed for the distribution of Goods and Services Tax ( GST ) revenue between the states and local bodies ; Which will be able to offset the financial losses incurred by them in the integrated tax system. The transformation of GST could certainly have been done in the sense that it was an opportunity to empower local self-governing bodies. Instead , they have been left to fend for themselves, despite the dire need to fund urban local bodies by dividing the entire amount of GST between the Center and the states . As a result , The whole objective of the Constitution Amendment Act (74th) for the empowerment of local self-governing bodies is going in the opposite direction by striking.

Representing urban local bodies before the new Central Finance Commission , the Union Ministry of Housing and Urban Affairs requested a substantial increase in grants for municipal resources, including an increase of at least 400 per cent in municipal transfers. Vijay Kelkar, former chairman of the 13th Finance Commission, had highlighted the imbalance in the federal structure of India - local self-governing bodies like municipalities are not being financed from their revenue to cover their expenses and allocating one-sixth of GST resources to the third tier. Many scholars have argued for the inclusion of a separate list of sources of revenue for local bodies in the Constitution.   While the 74th Amendment Act lists the activities of urban local bodies in the 12th Schedule , it does not provide a list of municipal resources corresponding to these works.

Surprisingly , while the Constitution Amendment Act speaks of empowering urban local bodies , it makes no comment on the provisions of the Indian Constitution that have moved forward from the imperialist past. Article 285 of the Constitution of India provides information on exemptions from Central Government property from local self-government taxation. It states that, 

1. In accordance with an Act of Parliament, the property of the Central Government is exempt from all taxes imposed by the State or any authority within the State.
2. In any matter under section (1), no provision shall be made by any authority within the State to levy any tax on any property of the Central Government , unless it is provided for by an Act of Parliament , which is taxable only if the property is taxed before the Constitution comes into force.  

The Supreme Court ruled that the central government and its departments would pay service charges, but not property taxes. The service charges of 75 , 50 and 33.33 per cent of the property tax levied on private owners will be paid.

In light of these constitutional provisions , urban local bodies will not be able to levy property tax on all properties owned by the central government. However , the central government was also unwilling to pay property service charges. This role was challenged by Rajkot , Ahmedabad , Jamnagar and Vadodara Municipal Corporations. In 2009, the Supreme Court finally ruled in favor of the case. The Supreme Court ruled that the central government and its departments would pay service charges, but not property taxes. The service charges of 75 , 50 and 33.33 per cent of the property tax levied on private owners will be paid. Different rates will apply depending on the amount of services used by the Central Government departments. These charges, however , shall not, in any case , exceed the amount paid by the State Government's assets. Also , urban local bodies will not resort to any coercive measures - e.g. Proceedings for recovery of revenue against Central Government property for non-payment of service or non-payment of fees . All disputes relating to the issue of service charges will be resolved through a dispute resolution mechanism.

State government assets controlling and supervising urban local bodies will also not be excluded. The same exemption from property tax is applicable to state government properties and service charges are levied on state government properties as well as central government properties . Clearly , with the introduction of the Goods and Services Tax ( GST ), the only substantial tax held by urban local bodies was drastically reduced.

There are a large number of central government and state properties located in cities. This is natural, because cities are the centers where the country's economy is concentrated. In Mumbai, for example , there are more than 4,000 central and state government properties. Each of these has an average of 500 units. Assessed as ordinary private property , the total property tax value would be a large part of the current revenue of Rs 6,000 crore. Given the negative impact of the provisions of Article 285 of the Indian Constitution on the country's urban local bodies, this article needs to be repealed. Urban authorities are not expected to give tax breaks on large government properties and should not do so. Just as municipalities are required to pay all central and state taxes , so are central and state properties required to pay local taxes. As long as the constitutional restrictions remain in place , all are equal , in this sense , nothing prevents the central and state governments from paying the equivalent amount of property tax to urban local bodies as service charges. The country should be aware of the fact that it is not right to ask cities to comply with orders without adequate funding and expect them to achieve the desired standard of living. In a state with such cities , The level of services provided to citizens is expected to decline gradually.