MMRCL releases metro contractors' dues amid property tax wrangle
Four private contractors—Dogus Soma JV, CEC-ITD JV, L&T STEC JV and HCC, had approached the Bombay high court, challenging the BMC's property tax demands under Section 184 of the Railways Act, 1989, which exempts railway land from such levies. They argued that the casting yard at Wadala Truck Terminal, used for Metro construction, falls under this exemption.
On March 18, Hindustan Times was the first to report that MMRCL had warned contractors that payments would be withheld unless they cleared their property tax dues with the BMC. The contractors had, in March last year, filed writ petitions, prompting the high court to restrain the BMC from taking coercive action through an interim order issued on April 30, 2024. This relief has since been extended.
In a letter dated May 14, 2025, the BMC informed its legal department that it stood by its position: casting yards are taxable, and contractors are jointly and severally liable.
Following a hearing on March 27 last year before additional municipal commissioner Ashwini Joshi, a formal order upheld the BMC's claims, and caveats were filed in court to protect its legal standing.
In its letter, of which HT has a copy, the BMC reiterated, 'Given the ongoing judicial proceedings, no fresh notices have been issued or enforcement action taken against the contractors.'
In view of the ongoing legal challenge, MMRCL has now released the contractors' withheld payments after securing an undertaking that links future tax settlement to contractual obligations. MMRCL had also sought a revised tax calculation based on reduced floor space index (FSI), which the BMC provided on January 31, 2025.
Advocate Prerak Choudhary, representing the contractors, said, 'Our case is that the BMC's property tax demands violate Section 184 of the Railways Act, 1989, as no tax is payable on casting yards used for the metro project. We challenged these demands before the Bombay high court, which granted interim relief against coercive recovery. Despite this, the contractors' payments were withheld at the BMC's request, though they are now being released. While the immediate issue is resolved, we await the court's decision on the broader legality of the tax demands.'
The final verdict in the case is still awaited.
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