Municipal corporators from various civic bodies in Maharashtra have moved the Bombay High Court challenging the June 1 notification of the state government introducing local body tax on the entry of goods in the limits of cities in lieu of octroi.
Hearing one of the petitions on the issue, Justice Sharad Bobade and Justice Rajesh Ketkar last week granted a stay on recovery of local body tax for entry of goods in city limits of Nashik Municipal Corporation and also ordered continuation of octroi.
The judges asked the state’s Advocate General Darius Khambata to argue the matter on behalf of the state government as the Bombay Provincial Municipal Corporation Act has been challenged. The bench also allowed time to the state government till September 6 to file a reply.
However, hearing petitions filed by municipal corporators of Kolhapur, Kalyan-Dombivali, Ulhasnagar, Bhiwandi and Thane, on another occasion, the judges did not grant any stay, saying they would first hear the Advocate General before passing any interim orders. Octroi is a percentage tax levied on the entry of goods into the city, while local body tax is a lump-sum amount charged on the value of the goods.
While octroi is collected in cash on a daily basis, the local body tax is payable by the person within 40 days of bringing goods into the city. The government is favouring local body tax as it feels that this step would remove the rampant corruption prevailing in the state because there would be no need to employ contractors to collect octroi.
In the newly introduced local body tax, a lump sum amount has to be paid by the traders or the manufacturers or the owner of the goods within the specified time limit.