Infrastructure and amenities charges levy on builders upheld by HC

Chennai: The state government’s user-pay policy of levying infrastructure and amenities (I&A) charges on developers and builders who develop commercial and residential structures recently received the approval of Madras high court.

The levy, which at first amounted to around Rs 100 per square feet of built up area in the case of newly constructed multi-storeyed buildings within the city, came into action in 2008 as the then government considered private builders were deriving “appreciable gains” within development and thus they must share the value involved in developing infrastructure of international standards within the state. A year later the rates were reduced by the government. However, few builders had challenged it in the court.

A division bench while advocating the legality of the recently added provisions within Section 63 of the Tamil Nadu Town and Country Planning (Levy of Infrastructure and Amenity Charges) Rules 2008, believe that while massive developments were commonplace throughout the state builders were not supplying necessary and appropriate infrastructure to residents of townships that were being developed by them. Instead, the state government has been compelled to arrange all the required infrastructure for insuring a sustainable development. The financial commitment within this regard too is substantial.

Under such state of affairs, the solution of user-pay concept is being considered as a viable option for sustainable development. Advantages that benefit developers are a special advantage while simultaneously increasing the burden on the municipal services. Hence, the state is justified in imposing the infrastructure and amenities charges.

Furthermore, noting that the right to develop a realty commodity isn’t unshackled however subjected to restrictions, the division bench also announced that just because developers have developed an interest within vast extents of land, they can’t claim that they’d be entitled to develop buildings comprising any range of floors and expect or compel the concerned authorities to grant permission for such development, as a matter of right.

During the period when such large-scale property development was being undertaken with numerous floors, the government saw it fit to confer the status of ‘special cases’ on these developments, and by studying the impact that will be caused to other parameters, decided to impose and collect I&A charges. The imposition was to meet the impact of development as well as for ensuring sustainable development.

The builders submission stating that providing facilities such as sewerage and water to land owners as well as developers was a public duty which is statutorily levied on to the state agencies and thus no further charges should be imposed; was rejected by the bench. The bench also rejected the argument that I&A charges would amount to multiple levy, as promoters were already paying for sewerage and water charges under Section 59 of the Rules. As per the bench this decision was taken based on the fact that I&A is a levy having a very definite object, purpose and intent.