The move — upgrading the land from Category C to A — impacts several posh hotels and shop owners in Star City Mall and Galleria Mall, who’ll now be forced to pay six times the property tax earlier.
In order to shore up its revenue, East Delhi Municipal Corporation (EDMC) has upgraded the land value of the area where Star City Mall and Galleria Mall and other posh hotels are located in Mayur Vihar Phase I Extension from Category C to A, leaving shop owners and hoteliers high and dry.
Shop owners operating in Star City Mall and Galleria Mall will now be forced to pay six times of what they had paid as annual property tax earlier. The measure was taken according to the recommendations of EDMC’s third Municipal Valuation Committee (MVC).
The committee changed the category of land where big business establishments operate. Therefore, the land where these two malls and two five stars hotels — Holiday Inn and Crown Plaza —are located now figures in Category A, which invites more property tax.
Now, the unit area tax has been increased from Rs 400 per sq m (under Category C) to Rs 630 per sq m (under Category A). Similarly, the annual value of land [annual rent that might reasonably be expected from letting out land or buildings] has been increased by 10 per cent against the earlier four percent.
A shop owner in Star City Mall, who didn’t want to be named, lamented, “This exorbitant tax imposed on us has left with no choice but to sell our property. The EDMC has changed the value of this land, calling it a district centre, while this area is far from what a district centre entails.”
Here’s what another shop owner had to add: “A district centre should have all the facilities —restaurants, cinema halls and more. This place is no district centre! Almost all shop owners are running huge losses. It’s shocking that this area has been upgraded to Category A. The adjoining areas are either Category D or unauthorised colonies.”
Of the three MCDs — North Delhi Municipal Corporation, South Delhi Municipal Corporation and EDMC — only EDMC passed the recommendations of the third MVC.
Adding to the furore, EDMC recently slapped notices to as many as seven big hotels operating in its area, asking them to pay their property tax dues in accordance with the new tax slab. These include JP Hotel and Golden Palm Hotel located in Mandawali area, Mahagun Hotel (Park Plaza) in Shahdara, Holiday Inn and Hotel Hilton (now Crown Plaza) in Mayur Vihar Phase I Extension, Red Fox Hotel in Mayur Vihar Phase III and The Leela in Shahdara.
Talking to City Spidey, Amrish Kumar, a senior official in (EDMC’s property tax department) said, “Over Rs 17 crore was due from these seven hotels for the financial year 2017-18. Despite several notices issued in the past, they have not paid their dues. We will wait for a few more days, and if they fail to comply, we’ll seal off the premises.”
City Spidey, however, was told that EDMC’s decision to change the category of commercial land in Mayur Vihar Phase I Extension was in complete violation of Delhi High Court’s judgment of 2014.
Earlier too, in 2011, EDMC had tried to convert land of Mayur Vihar Extension from Category C to A. In response, many individual shop owners and hoteliers had approached Delhi High Court. EDMC had to later roll back its decision.
Eros Group that operates two five star hotels in Mayur Vihar Phase I Extension area — Holiday Inn and Hotel Hilton (now know as Crown Plaza) — had filed a separate petition on the issue.
The copy of Delhi HC’s judgment, available with City Spidey, read: “Today, Harish Malhotra, senior counsel for petitioners states that petitioners are satisfied with the [roll back] decision taken by the Commissioner, EDMC, categorising the petitioners area as category ‘C’ instead of ‘A’.” In view of aforesaid, present writ petition is disposed of as satisfied.”
In effect, the notices issued to Holiday Inn and Crown Plaza are tantamount to contempt of court.
“It was shocking to receive notices of taxes due. We have sent our reply to the EDMC,” said a person associated with Eros Group. He added, “It seems the civic body has compared these hotels with other five stars hotels in Delhi. We can't be compared to other five-stars hotels. Charges of rooms in five stars hotels are very high compared to the pricing in these two hotels. We are not in a position to bear the extra charge in property tax at present.”