Law Web: Whether Municipal Corporation is entitled to recover advertisement tax?

In addition to the above, even the power of the State

Government to legislate regarding advertisement tax as

provided under Entry 55 of List II of the VII Schedule of

the Constitution of India also stood deleted w.e.f.

12.9.2016 by the Constitution (101 Amendment) Act,

2016.

Article 265 of the Constitution of India mandates that no

tax shall be levied or collected except by the authority of

law. Therefore, the authority to levy any tax much less the

advertisement tax must be derived from the Statutes.

Since the provision of Section 2 (h) of Section 172 of the

Municipal Corporation Act was omitted vide Section 173

of the U.P. GST Act w.e.f. 1.7.2017 and even the power of

the State legislature to legislate with regard to

advertisement tax stood deleted w.e.f. 12.9.2016, there is

neither any power left with the State Government or the

Municipal Corporation to legislate about the imposition of

tax on advertisement.

In view of the above, after 12.9.2016 or from 1.7.2017 the

Nagar Nigam, Kanpur ceased to have any jurisdiction to

impose and realize tax on advertisement. Accordingly, the

demand of tax on advertisement from the petitioners after

1.7.2017 is held to be illegal and without jurisdiction.

The notices of demand impugned in the petition to the

above extent are quashed and the amount, if any of the

advertisement tax deposited by the petitioners for the

period 1.7.2017 onwards shall be refunded to the

petitioners.

ALLAHABAD HIGH COURT

Case :- WRIT TAX No. - 354 of 2018

M/S Selvel Media Services Private Limited And 11 Others Vs

State Of U.P. And 4 Others

Hon'ble Pankaj Mithal,J.

Hon'ble Prakash Padia,J.

Dated: 6.5.2019

Heard Sri W.H. Khan, Senior counsel assisted by Sri

Javed Husain Khan, learned counsel for the petitioners,

learned Standing counsel for the State of U.P., and Sri

Alok Mishra, learned counsel for Kanpur Nagar Nigam.

The petitioners are all advertising companies. They are

aggrieved by the demand of advertisement tax imposed

by the Nagar Nigam, Kanpur on displaying advertisement

through hording within its jurisdiction. Basically, the

challenge is to the realization of the advertisement tax

w.e.f. 1.7.2017 on the ground that from the said date, as

the provision to levy advertisement tax has been deleted

and the U.P. Goods and Service Tax, 2017 has come into

force, no advertisement tax can be levied.

There is no dispute to the fact that previously Nagar

Nigam Kanpur framed U.P. Municipal Corporation

(Assessment and Collection of Tax on Advertisement)

Rules, 2009. These Rules were struck down by the

Lucknow Bench of the Allahabad High Court in the case

of Anurag Bansal Vs. State of U.P. & others 2011 (5)

ADJ (LB) (FB). Thereafter, Kanpur Nagar Nigam made

another set of rules for the purposes of levying

advertisement tax known as Kanpur Nagar Nigam

(Vigyapan Kar Ka Nirdharan Aur Wasuli Viniyam) Upvidhi,

2016 which were enforced w.e.f. 2.4.2016. The said bye

laws were also struck down vide judgment and order

dated 4.5.2017 in writ petition no. 9389 of 2017.

Thereafter, no further rules or bye laws for levying

advertisement tax have been made and enforced by the

Nagar Nigam, Kanpur but even then demand for

advertisement tax has been raised against the petitioners.

The power to levy advertisement tax was contained in

Section 172 (2) (h) of the Municipal Corporation Act, 1916

which stood deleted w.e.f. 1.7.2017 by virtue of Section

173 of U.P. GST Act.