MIDC units may escape civic levies soon

MUMBAI: Industrial estates in Maharashtra can now breathe easy. The state government will soon come out with a legislation streamlining the tricky issue of taxation of property in industrial areas. The immediate beneficiaries will be industrial units in the 226 MIDC areas in the state. They will no longer have to pay property tax and sundry charges to municipal bodies.

The proposed legislation will lay down a revenue-sharing formula that will offer local bodies a part of the revenue MIDC collects from industrial units. “This will insulate industrial units in designated MIDC areas from local bodies such as Gram Panchayats and municipal corporations. Once the law is enacted, the industries will no longer have to pay local bodies,” a top official told ET.

The state government’s initiative comes in the wake of the Bombay High Court’s order that freed industrial estates from the ambit of local self-governments with “immediate effect”. Though the High Court ordered the state to take charge of its industrial units last October, the state-run MIDC filed a review petition. The HC, however, dismissed the petition a few weeks ago.

This put the state government in a fix because taking out MIDC areas from local bodies would have deprived municipalities of precious revenue. “We can’t overnight change the system. It’s not feasible. So we have found a way for revenue sharing,” an official associated with the process said. With the expansion of townships, civic bodies were seen gaining control of industrial clusters, limiting the authority of MIDC and at the same time hurting the prospects of businesses.

The HC order came on a petition filed by Shyam Agarwal of Association of Small Scale Industries. The petition highlighted lack of services from MIDC though it has been collecting service charges from units located in the zones. The petition contended that the MIDC was responsible for deficiency in services and it was also failing to protect industrial units from local bodies.

The state government, under the Maharashtra Regional Town Planning Act of 1966, is empowered to notify industrial estates. Chapter 6 of the Act created a special authority, the Maharashtra Industrial Development Corporation (MIDC), to run and manage these estates. The Act (Section 113 sub-Section 5), makes it clear that once industrial estates are created and handed over to the MIDC, local authorities will have no right to govern them.

The petition had argued that though it’s been designated as an autonomous special authority, MIDC should be the only body governing the industrial estates. The HC upheld this view while making it clear that the state government will have to honour its own Act that gave powers to the MIDC.