Complaints were received that tax recovery was often postponed, especially from larger defaulters. Inquiries revealed that that arrears of tax were extremely high, that coercive tax recovery measures had never been employed, that the list of large defaulters were large, that some corporators themselves were defaulters etc.

The old arrears of property tax in this corporation after excluding the current demand are as high as Rs 22.2 crore. This was the position on March 31, 1998. It is an extremely high figure especially in view of the fact that the demand for 1998-99 is Rs 60.4 crore excluding the arrears mentioned above. This high level of tax arrears shows the poor performance of the Corporation in raising resources and the influence of vested interests that have paralysed the administration of this institution.

In the month of April and May, 1999, it was decided to test if the poor recovery position was the result of the incompetence of the Corporation, and the tax department was ordered, for the first time in the history of the Corporation, to attach and auction immovable property to recover tax arrears. The result was an increase in recovery by almost three times as compared to the same period in previous year as shown below:
Year; Period; Tax recovered;
1998; April 15 to May 30; Rs 2,64,06,753.
1999; April 15 to May 30; Rs 7,51,25,410.
Percentage of increase - 285 per cent.

Similarly, in the 38 newly added townships, the recovery went up to from May 1 to May 19, 1999, by more than 7 times compared to the same period in the previous year. (From Rs 10.8 lakh in 1998 to Rs 74.40 lakh in 1999).

This would clearly indicate that the heavy arrears was because of incompetence and mismanagement and not because of the excuses presented by the officials like recovery being stayed by court orders etc. The fact that the auction process had never been applied to immovable property has been confirmed in writing by the assessor and and controller of taxes. This would show that the corporation had sold its mandate to vested interest.

From this the following things become evident:
a) The mismanagement/incompetence in tax recovery has reduced the funds for development and performance of the mandatory duties of the corporation and therefore the corporation is not competent to perform its duties under the Act. For ready reference the relevant portion of section 63 of the Act is quoted below:
``63. Matters to be provided for by the corporation: It shall be incumbent on the corporation to make reasonable and adequate provision, by any means or measures which it is lawfully competent to use or to take, for each of the following matters, namely ...'' And then the section goes on to enumerate the essential duties of the corporation for which it has to provide funds.

There are two aspects here.

First, the corporation has to make a reasonable and adequate provision from the funds available. This stipulation is violated when tax is not recovered without sufficient reason. Because of poor recovery a lesser provision has to be made than what could have been made. It cannot be argued that tax has not been recovered yet reasonable provision is made from the balance recovered.

Second, the corporation has to use all lawful means and measures at its command to make reasonable/adequate funding provisions, obviously by generating funds through taxation. By allowing arrears to accumulate and not auctioning immovable property, the Corporation has violated this stipulation and not used the necessary means to make funds available for the obligatory functions listed in section 63.

b) It has therefore committed default in the performance of its duties.

c) It has abused its powers by showing undue favour to some tax payers.

The recovery position of Water Tax arrears was equally bad with old arrears amounting to over Rs 20 crore, when the annual demand (excluding these arrears) was just about Rs 34 crore, it was learnt.

Charge No 5: Non-recovery of tax from locked premises resulting in lesser funds for performance of statutory duties regarding city development under section 63 of the Act - Therefore incompetence and persistent default in performance of duties under Act.

There are over a thousand surveyed and listed properties that are locked up and no effective action to recover tax from such properties has been taken so far. The properties whose owners avoid tax, need to be put to auction as well. Even the survey of other such properties has not been completed. Some available details of these properties are presented below as given by the Assessor and Controller of Taxes.

Information about locked Properties (As on June 9, 1999)
Location, No. of properties
Dhole Patil Ward, 123; Yerawada Ward, 450 approx; Hadapsar Ward, 135; Bhavani Peth Ward, 125; Tilak Road Ward, 230; Karve Road Ward, information yet to be received; Aundh Ward, information yet to be received; Suburban Ward, information yet to be received; Bill section No.2, 10; Bill section No.4, 17; Bill section No.5, 04. Total Surveyed: 1144.

There is a standard and well established procedure for dealing with such cases. The properties can be put to auction after publication of the tax demand notice and the property attachment/auction notices in the Press. This has not been done for years which has resulted in loss of revenue and consequent curtailment of development expenditure on the items listed in Section 63 of the BPMC Act.

This amounts to incompetence and persistent default in performance of statutory duties of the Corporation. The observations made in respect of Charge No 4 would apply here also. Since the tax itself was not recovered the obligation in Section 63 to make a ``reasonable and adequate provision'' for certain obligatory duties/functions was obviously violated. It may also be noted that this situation which has persisted for many years has become common knowledge.

In fact it was pointed out to the petitioner by citizens belonging to the National Society for Clean Cities. This makes it even more clear that the corporation has knowingly ignored this source of revenue at the cost of the city's development and is causing a loss to the corporation.