Court Validates Sewerage Tax Levy by Municipal Corporation; Directs Reconciliation of Tax Liabilities for Unit Owners
In a landmark decision dated June 11, 2026, the Bombay High Court ruled in favor of issuing individual property tax bills to unit owners in cooperative premises, settling a long-standing dispute between the Kotia Nirman Cooperative Commercial Premises Societies Limited and the Municipal Corporation of Greater Mumbai (MCGM). The court directed that each unit owner in the "Kotia Nirman" building in Andheri (West), Mumbai, receive separate property tax demand notices covering the period from April 1, 2008, to March 31, 2022.
The judgment, delivered by Justices Bharati Dangre and Manjusha Deshpande, addressed several key issues raised by the petitioners, including the validity of the Water Charges Rules, 2015, and the levy of Sewerage Tax. The court dismissed the challenge against the Sewerage Tax, affirming the Standing Committee's authority to impose such levies retrospectively.
The court's decision follows a series of legal proceedings initiated by Kotia Nirman Cooperative and its members, who argued for individual tax assessments rather than a collective billing approach. The dispute intensified when water supply to the building was disconnected due to unpaid property taxes, prompting the cooperative to seek judicial intervention for restoration of services and clarification of tax liabilities.
In addressing the contempt petitions filed against the MCGM for alleged non-compliance with previous court orders, the court found that the Municipal Corporation had fulfilled its obligations by issuing individual tax bills. Consequently, the contempt proceedings were dropped.
The judgment also provided a remedy under Section 217 of the Mumbai Municipal Corporation Act, 1888, allowing aggrieved unit owners to challenge the tax assessment before the Chief Judge of the Small Causes Court. The court acknowledged the petitioners' concerns regarding the timeliness of such appeals and directed that any delay due to ongoing litigation be considered a sufficient cause for condonation.
Despite upholding the validity of the Sewerage and Waste Removal Rules, 2015, the court granted unit owners the liberty to contest individual levies as per the prescribed legal framework. The ruling emphasized the necessity for accurate reconciliation of tax liabilities and underscored the importance of transparent financial dealings between developers and individual unit owners.
The decision marks a significant step in ensuring equitable tax practices for cooperative societies and reinforces the importance of adhering to established statutory provisions for municipal governance.
Bottom line:-
Imposition of property tax by the Municipal Corporation and issuance of individual property tax bills to unit owners in cooperative premises - Validity of Water Charges Rules, 2015 and Sewerage Tax levy challenged - Directions issued for reconciliation of tax liabilities and remedy provided for individual grievances under Section 217 of the Mumbai Municipal Corporation Act, 1888.
Statutory provision(s): Mumbai Municipal Corporation Act, 1888 Sections 197, 202 to 206, 217; Water Charges Rules, 2015; Contempt of Courts Act
