Bombay HC Orders Sahara Star Hotel to Deposit ₹23.89 Crore Over Tax Dispute, Restores Water Supply

The Bombay High Court has directed Sahara Hospitality Limited to deposit ₹23.89 crore within four weeks as a condition for restoring water supply to its flagship Sahara Star Hotel in Mumbai, following a property tax dispute with the Brihanmumbai Municipal Corporation (BMC).

The order, issued on April 8 by a division bench comprising Chief Justice Shree Chandrashekar and Justice Aarti Sathe, provides interim relief to the hotel operator while legal proceedings continue. The court also stayed multiple demand notices issued by the civic body, subject to compliance with the deposit requirement.

₹23.89 Crore Deposit Condition for Water Restoration

The court directed that upon submission of an undertaking by the company’s director to deposit ₹23,89,31,590 within four weeks, the water supply to the property must be restored immediately. The bench noted that restoration should take place “forthwith” once the undertaking is filed.

According to case developments, Sahara Hospitality Limited has submitted the required undertaking, following which water supply to the hotel has been reinstated. The interim order ensures continuity of operations at the five-star property while the dispute is adjudicated.

The Sahara Star Hotel, located near Mumbai’s international airport in Vile Parle (East), is a key hospitality asset, and disruption of essential services such as water supply directly impacts its ability to function.

Demand Notices Stayed Pending Hearing

The High Court also granted interim relief by staying five demand notices and related attachment orders issued by the BMC earlier in 2026. These include notices dated January 1, February 12, February 16, and two notices dated February 23.

The stay will remain in effect until the next hearing, providing temporary protection to the petitioner against coercive recovery actions. The court has scheduled the matter for further hearing after six weeks.

The petition challenges the legality of the demand notices, arguing that they were issued based on retrospective reassessment of property tax liabilities.

Dispute Over Retrospective Property Tax Reassessment

The dispute stems from a reassessment conducted by the BMC, which re-evaluated the property tax structure of the Sahara Star Hotel. According to the petitioner, the civic authority reclassified what had historically been treated as a single property into multiple assessment units.

Sahara Hospitality Limited has contended that this reassessment was applied retrospectively in 2026, with tax demands linked to earlier years. The company claims that liabilities were imposed for areas that were either non-existent at the time or still under development.

The reassessment resulted in tax demands totaling approximately ₹69.19 crore, while attachment notices issued by the civic body reportedly amounted to ₹181.96 crore, including penalties. The petitioner has argued that these demands were raised without adequate justification or opportunity for representation.

Arguments Presented Before the Court

During the proceedings, Senior Advocate Chetan Kapadia, representing Sahara Hospitality Limited, argued that the actions of the municipal authority had a severe operational impact on the company. He stated that the disconnection of water supply effectively halted business activity at the hotel.

The petitioner further argued that the tax demands included arrears dating back several years and were raised for the first time in 2026 under provisional assessment. The company challenged both the methodology and the retrospective nature of the reassessment.

In response, the BMC opposed the grant of interim relief, stating that the reassessment followed inspections that identified unauthorized constructions at the property. The civic body also maintained that due process had been followed, including the issuance of a Special Notice, which it claimed was not responded to by the petitioner.

Legal Proceedings and Case Status

The petition filed by Sahara Hospitality Limited seeks quashing of the demand notices, restoration of essential services, and protection from further enforcement actions by the municipal authority. The case has been registered as Writ Petition (L) No. 11536 of 2026.

The High Court’s interim order balances operational continuity for the hotel with the municipal authority’s claims by mandating a partial deposit while suspending enforcement of the disputed demands. The matter remains under judicial consideration, with the next hearing scheduled after six weeks.

The outcome of the case is expected to address key issues related to retrospective tax assessments, property classification, and enforcement actions in the hospitality sector, particularly in large urban markets such as Mumbai.