It seems the cash-strapped NMC is not sparing even the country's apex bank. The civic body which has drawn flak for sharp increases in
water charges and property tax, now wants the Reserve Bank of India (RBI) to pay octroi on the gold it stores in the city. RBI is the custodian of government's gold.
NMC has slapped a notice on RBI to submit information on the entire bullion it has imported into the city so far with view to levy octroi on it. Legal experts say the move is ridiculous and one that follows only letter of the law. For NMC, importing goods into city means transporting it into the jurisdiction of the local body. It does not matter whether the goods are being brought in for safe-keeping, consumption, or further sale. Similar notices have been sent to public sector and private banks for the gold they bring into the city for selling.
As a part of its sovereign functions, RBI is the custodian of the country's hold, which means it is held on the behalf of the government of India. Most of the gold was shifted to Nagpur in the late 1950s owing to its central location. A chunk of it is still stored in the city. According to the RBI valuations it currently has gold worth Rs 48,041 crore. This translates into an octroi amount of Rs 480 crore at 1% levy applicable on gold.
The NMC wants information of all the bullion RBI has brought into the city since it began operations. So with all previous years clubbed, if 10 times penalty is added for "evasion", the collection would amount to Rs 4,800 crore, almost six times the NMC annual budget. This may probably making it the richest civic body of the country. What if RBI refuses to pay, would NMC enter into the gold vault and seize everything?
RBI officials say that they have so far not received any notice. "It would be amateurish if the NMC is making any such demand," added an official.
However, NMC assistant commissioner, (octroi), Milind Meshram said the letter addressed to the General Manager (RBI) has already been despatched. However, Meshram himself was not aware that the RBI was the custodian of the government gold. 'Is it so,' he asked when apprised by TOI. Municipal commissioner Aseem Gupta could not be contacted.
A senior government official said though it sounded prima facie funny, NMC move but may not be legally incorrect as the NMC had the right to levy octroi on goods entering city limits. It needed to be examined whether government gold with RBI could be exempt. "Why not? There is no constitutional bar on taxing the RBI. Even government bodies like the ordnance factory are charged sales tax on the weapons sold to the state's police department. However, there is no levy on the despatches to the armed forces. The issue needs further examination," said former president of Institute of chartered accountants of India Ashok Chandak.