OP SPECIAL
By VISHWAS DASS
BHUBANESWAR: Cash-strapped Bhubaneswar Municipal Corporation is struggling hard to provide basic amenities to its residents. It is struggling equally hard to extract dues from both government and private establishments that are citing excuses, quoting rules, and defaulting on payments to the civic body. Money is hard to come by; and so are civic facilities to the citizens.
Holding tax is a source of major revenue for the civic body.
As many as 36 state and central-government-owned establishments owe the civic body holding tax dues of around Rs 15.88crore.
The total dues from private institutions are high too. A classic case is of the reputed institution, Xavier Institute of Management, Bhubaneswar (XIMB) that boasts of being one of the three top management institutes in eastern India. Its pending holding tax dues are of Rs 1.15crore – accumulated amounts totaling Rs 76,92,729 till 2013-14, and dues for 2014-15 financial year put at Rs 38,46,416.
The Xavier institute was founded in 1987 under a ‘social contract’ between the Orissa government and the Orissa Jesuit Society. It charges as high as Rs 14lakh as course fee for the two-year MBA. Over 500 students are admitted a year. Added to this is the revenue it gets from an auditorium – which is rented out to the public at the rate of `1 lakh a day. XIMB however said it does not rent it out to the general public but only for government events.
A BMC source said that at present, XIMB is BMC’s biggest tax defaulter. Earlier, the state public works department (PWD) topped the list. It owed Rs 7 crore as holding tax dues. After the PWD took up the matter at the highest level, the government agreed to clear the BMC dues.
The Xavier Institute argues that it’s not a commercial institute, and that it as it is managed by a society for the Orissa government on its land. So, how holding tax should be levied on it as per the section 131-B (1) (c) of Orissa Municipal Act, 1950, it asks. BMC, on its part, has clarified that there is no provision for exempting an institution in the Orissa Municipal Act. “There is no provision of exempting a private academic institute from paying holding tax under the law. XIMB’s plea can’t be accepted and they would have to clear their pending dues,” municipal commissioner Krishan Kumar told Orissa POST.
XIMB is arguing that, except for its auditorium, none of its buildings spread over a campus of 20 acres (like hostel, main building, staff quarters, studio apartment etc) is being used for commercial activities.
XIMB spokesperson Asit Mohanty told OP: “First of all, XIMB is not a commercial institute. Even if our auditorium is rented out, on that count, the BMC should have levied commercial tax only on the auditorium, not on the entire premises. “We are only institute in the country that has kept 50 per cent seats reserved for Orissa’s domicile students. This should not be ignored by the government,” he stressed.
“Had the assessment been done as per residential holding rates, XIMB would have paid the dues to BMC,” Mohanty said.
Fact is also that the institute was being levied tax by way of residential charges till 2013. Then, rules changed, and it was brought by the BMC under the residential plus commercial tariff structure.
Mohanty alleged that a former XIMB legal officer who was involved in questionable activities and sacked as a result, had ‘misled’ BMC and connived with corporation’s staff to jack up the tax amount levied on XIMB.
Meanwhile, BMC deputy commissioner (holding taxes) Shubhranshu Mishra said:” The institute is charging for their conventional hall at steep rates and this amounted to a commercial activity. It is not that only XIMB has been asked to pay holding tax. There are other academic institutes too like KIIT and ITER, and they have cleared their dues. XIMB’s request of exempting it from paying taxes is not justifiable,” Mishra said.
The institute says it had paid 50 per cent of the 2013-14’s dues to BMC.
It is also argued that if BMC had assessed holding taxes based on the residential rates, as it had done in the past, XIMB would have to pay less than Rs 50lakh as holding tax to the civic body.
