ISLAMABAD: The Municipal Corporation of Islamabad (MCI) is collecting 200pc increased property tax in contradiction to a court decision and without legal backing.

Islamabad High Court (IHC) Justice Mohsin Akhtar Kayani in December last year set aside the notification of 200pc increase in property tax in the federal capital and directed the MCI to go for a public hearing before notifying any hike in the property tax.

Both the CDA and MCI filed appeals which are still pending before a two-member division bench of the IHC. The MCI, however, started collecting the enhanced tax without getting the law approved in accordance with the direction of the IHC.

The IHC had declared the 200pc increase in property tax void observing: “The notification dated 17.12.2018 is illegal and void as no taxes proposals were issued nor even any objection were invited in terms of Section 88(4) of the ICT Local Government Act, 2015 neither public hearings were given before the imposition of levy of the property tax in Islamabad.”

IHC had set aside notification of 200pc hike in December last year; appeals against decision still pending

Subsequently, the court had directed to issue fresh notification in six months.

The court order stated: “The tax proposal be prepared by MCI and objections be invited from the public through publication of notice in newspapers, where-after a notification in terms of Section 88 of ICT Local Government Act, 2015 be issued in accordance with law within period of six (06) months positively.”

However, since the local government stood dissolved after the elected members completed their five-year term, the law could not be reviewed, said Qazi Adil Aziz, a former legal adviser and chairman of UC-11, Islamabad.

On the other hand, the MCI circulated property bills in accordance with the “void” notification on the letterhead of CDA’s revenue directorate earlier this month to all the residents, owners of residential and commercial properties with the Sept 30 deadline of depositing the dues.

Khawar Ehsan, a resident of F-11, received Rs98,100 property tax bill for the financial year 2020-21. His last bill for 2019-20 was Rs33,200.

Shahid Iqbal, a resident of G-9, said he had to deposit over Rs50,000 for his eight-marla house whereas he used to pay about Rs15,000 property tax in the previous years.

Advocate Raja Inam Ameen Minhas, who also received 200pc increased property tax, termed it unjustified and said without any value addition in the service, the residents cannot be forced to pay such a huge tax.

The IHC’s judgement had also declared that “CDA has no jurisdiction or authority to impose the property tax or recover the property tax in any manner as it is the sole prerogative of the MCI under ICT Local Government Act, 2015. Hence any tax demand by the CDA is illegal.”

However, the MCI is transferring all the tax collection in the CDA accounts.

When contacted, a CDA spokesman said the MCI was collecting the tax under section 132 of the LG Act and transferring the amount to the CDA as debt servicing.

According to him, the CDA lent Rs20 billion to the MCI since the latter had no fund to disburse salaries to its employees and to render municipal services.

Subsequently, the CDA is not collecting taxes but retrieving the loan from the MCI, he said.

Regarding the collection of 200pc increased property tax, the spokesman said the bills had been generated with the condition that in case the CDA’s appeals are rejected the additional amount would be refunded to the residents and owners of the properties.

Sources said since the federal cabinet in October last year transferred four directorates from the MCI to the CDA the latter had been facing financial challenges and had to rely on the tax collection.

Ex-legal adviser of the MCI, Qazi Adil Aziz, told Dawn that the MCI owed loan to the federal government. He said the municipal corporation could pay off the loan as soon as it would be able to recover taxes from the citizens or generate funds on its own.

He claimed that the CDA cannot recover the loan from the collection of taxes that too in violation of a court order and through improper procedure.

The IHC has set aside the notification of 200pc increase in property tax deciding over 30 identical petitions.

The petitioners said the corporation had misused its power while making 200pc increase and requested the court to set aside the raise.

The MCI approved the increase in property tax in Dec 2019, making it applicable from July 1, 2020. The revenue directorate was part of the CDA but was devolved to the MCI after formation of the local government in 2016.

Published in Dawn, September 20th, 2021