A division bench of justices B D Ahmed and Veena Birbal dismissed the plea saying "the Delhi legislative assembly had the power and competence to legislate with regard to taxes on lands and buildings."
The pleas, by some individuals and others, had pleaded with the court to declare the Delhi Municipal Corporation (Amendment) Act, 2003 and the Delhi Municipal Corporation (Property Tax) Bye-laws, 2004 as unconstitutional, on the alleged ground that the city government has no power to enact them.
"The power to legislate on property taxes is traceable to Entry 49 of the State List, which, has not been excluded from the domain of the Legislative Assembly of NCT of Delhi by Article 239AA (3) (a) of the Constitution.
"Therefore, the Legislative Assembly had the power and competence to legislate with regard to taxes on lands and buildings and therefore, it cannot be said that the Amendment Act of 2003, was void or ultra vires the Constitution," the bench said after examining various provisions of the law.
The court rejected the plea that the penalties prescribed under the amended Act were beyond the legislative competence of the Delhi government.
The bench also rejected the argument that the unit area method is not a recognised system of valuation and a flat rate of taxation under the method is arbitrary and discriminatory.
While examining various provisions of the previous MCD Act and the newly amended Act, the bench also referred to a Supreme Court judgement and said "there is nothing arbitrary or discriminatory in the flat rate of tax imposed in the context of the unit area regime of property taxation employed under the amended act of MCD Act 1957."
