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DHCBA Challenges Commercial property tax on Lawyer’s/Law Offices: Delhi HC issued notice to MCD

A Bench of Chief Justice DN Patel and Justice Prateek Jalan of Delhi High Court on Wednesday issued notice in a petition preferred by Delhi High Court Bar Association (DHCBA) against the classification of law offices as "commercial activity" for the purposes of calculation of property tax under Delhi Municipal Act. (DHCBA vs SDMC & Ors)

The notice was issued to the three local bodies, South Delhi Municipal Corporation, East Delhi Municipal Corporation and North Delhi Municipal Corporation seeking their stand on the petition filed by the Delhi High Court Bar Association (DHCBA).

The plea filed by DHCBA through its President Mohit Mathur and Secretary Abhijat has challenged an assessment order passed by SDMC in November 2018 for self assessment of property tax of lawyer’s offices under provisions of Delhi Municipal Corporation (DMC) Act.

“All the professionals form one class but the legal profession has been treated as part of commercial activity, which is illegal, arbitrary and contrary to the law laid down by this court,” the petition states.

''Use factor'' system was introduced in the new method of assessment of property tax under DMC Act and there is no specific category for advocates, they are being charged on the basis of methodology applied to Commercial properties which are subject to the highest rate of tax.

It was also contended that the Bar Council of Delhi (BCD) sent a representation to the Municipal Corporations of Delhi (MCD) on July 21 for reduction of the ''use factor'' 4 to 1 for levy of property tax in respect of offices of Lawyers in Delhi.

''Use factor'' 4 is for Commercial Properties which attracts the highest tax and “Use factor” applies to the residential properties and public purpose.

A plea filed by Advocate Nikhil Mehta states that “Lawyers appear before the court to represent their clients but in effect assist the court to dispense justice and this cannot be a business or any commercial activity”

It was also pleaded that while treating law offices as commercial units, the Authorities have also ignored the law laid by the Supreme Court in the matter of M.P. Electricity Board v. Shiv Narayan, (2005) 7 SCC 283 regarding the profession of advocates not being a "commercial enterprise, industrial, mercantile, shop or business venture"

The petition filed by DHCBA prayed that the office of legal professionals should be treated under ''Use Factor'' 1 which is for residential and public purpose properties and as an interim relief petition sought to stay the operation of November 2018 notice issued by the MCD.












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