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Builders get reprieve on infrastructure, amenities levy
June, 18th 2007

Madras High Court grants interim stay till June 25

The High Court of Madras has granted an interim stay on the Tamil Nadu Government's order providing for the collection of infrastructure and basic amenities charges from builders seeking plan permission.

In the order passed on Friday, the court has granted an interim stay until June 25. This follows an affidavit filed by the Foundation for Fair Practices in Property Development (Fairpro), a registered company comprising builders and property developers in Chennai and rest of Tamil Nadu. Fairpro has challenged the legality and constitutionality of GO Ms No 191 Housing and Urban Development (OP1) Department dated June 1, 2007.

The order provides for the collection of an infrastructure and basic amenities charge by the Chennai Metropolitan Development Authority from builders in Chennai metropolitan area. For the other areas, the Director of Town and Country Planning is empowered to fix different rates for buildings in different areas and collect the charge.

CHARGES

The charges fixed for the various categories of buildings in the Chennai metropolitan area are: commercial and IT building, Rs 500 a sq. m.; multi- storeyed building, Rs 1,000 a sq. m.; institutions, Rs 200 a sq. m.; and industrial use, Rs 300 a sq. m.

The petitioner has argued that the infrastructure and basic amenities charge is an `arbitrary and illegal levy' to collect money from property developments under a new head. The objective of the levy is stated to be the provision of sustainable development leading to the formation of well-planned urban areas and growth centres, provision of basic amenities, road connectivity, sewerage and drainage system and standard infrastructure.

Fairpro has said that the laws governing the development of the property and building construction are the Tamil Nadu Town and Country Planning Act 1971, read with provisions of the local municipal Acts such as the Chennai City Municipal Corporation Act, 1919, Tamil Nadu District Municipalities Act and the Coimbatore City Municipal Corporation Act.

OTHER ACTS

The Town and Country Planning Act provides for the levy, assessment and recovery of development charges. Planning authorities can levy the development charges at a maximum rate of Rs one lakh per hectare for land development and Rs 25 a sq m for developing buildings.

For the Chennai area, the Act provides for sharing of charges between the Chennai Metropolitan Development Authority and Chennai Metropolitan Water Supply and Sewerage Board.

Also, the Madras Metropolitan Water Supply and Sewerage Board Act, 1978, provides for the board to collect infrastructure and development charges at a flat rate of Rs 64 a sq m of built up area through the Chennai Metropolitan Development Authority from applicants for multi-storeyed buildings.

For the other areas in the State there is no specific provision along these lines for collection of infrastructure development charges. Fairpro has argued that none of the Acts empower the State Government or its agencies to levy and collect infrastructure and basic amenities charges provided under the order, which has its own measure, procedure and collection at variance with the Town and Country Planning Act.

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