The columbarium, which also includes a Buddhist vihara, or guest house, occupied by monks and nuns, covers an area of about 50,000 square feet and provides niches for about 4,000 cinerary urns.
About 30,000 sqft is used for the niches while a further 10,000 sqft had been turned into a garden which is seen as good fung shui and could influence the value of the niches.
It is believed most of the garden is on government land.
For the first five years the Fat Yuen vihara in Tuen Mun provided space for only 1,000 cinerary urns but after a renovation two years ago, it now contains 3,000 more niches with prices ranging from HK$20,000 to nearly HK$120,000.
According to Fat Yuen executive director Lee Ka-choi, 10 percent of the new niches, or about 300, had been sold.
He said the management was planning to consecrate three statues representing Buddhism, Taoism and Confucianism in the vihara in September to further enhance business.
Lee said he suspected the complaints were filed by competitors but insisted only part of the garden was on government land.
"I really don't understand why this is such a big deal. The occupation of unused government land is quite normal in villages," he said.
"Before [the renovation], it was a piece of abandoned land and the government did nothing more than allow mosquitoes to breed there. Now that we have landscaped it, they want it back."