REVENUE SHARING ARRANGEMENT WITH SDMC VIZ. PETITIONER’S HOARDINGS - ADVERTISEMENT TAX AND BUILDING TAX
58. Petitioner has also laid a challenge to the imposition of property tax on the structure which is a hoarding on the ground that the Respondents are already levying Advertisement Tax. It is argued that there is already a revenue sharing arrangement with SDMC for the financial year 2017-18, and SDMC has received Rs.18 Crores from the advertisement revenue generated from
Petitioner’s hoardings as per the revenue sharing arrangement. It is contendedthat the DMC Act provides for a detailed, clear and separate scheme for charging advertisement tax on the advertisement being displayed on or upon any land or building under Section 142 and onwards of the DMC Act and, therefore, the legislature never intended to tax the same thing twice which the Respondents are trying to do under the guise of delegated legislation.
59. The afore-noted challenge is misconceived, as advertisement tax and property tax are separate levies. They are two separate incidences of tax i.e. advertisement tax and property tax. The property tax is levied under Section 113 of the DMC Act, which details the different kinds of taxes that can be imposed by the corporation under the DMC Act. Property tax has been listed
as one of the taxes leviable under Section 113 of the Act. Section 114 provides for components of property tax, which are building and land. Advertisement tax is levied under Section 142 of the DMC Act, which categorically provides for advertisement tax to be paid at such rate not exceeding those specified in
the V Schedule. The advertisement tax under the V Schedule provides that no tax shall be levied on any other advertisement in terms of the details given therein. This clearly shows that the two taxes i.e. property tax and advertisement tax operate in completely different fields and are levied on different incidences. There is no overlapping of the two taxes. Whereas the
incidence of levy of building tax is the erection of a permanent immovable structure which qualifies as a building, the incidence of levy of advertisement tax is the display of an advertisement. Therefore, we do not find any merit in the contention of the Petitioner that the Respondent cannot levy property tax,
merely because the advertisement is being subjected to advertisement tax.
Thus, the contention that hoardings, per se, are only susceptible to
advertisement tax is devoid of any merit. The challenge to the vires of the provision impugned in the present petition on this ground is totally devoid of merit and is rejected.
Conclusion
60. The upshot of the above analysis is that under section 2(3) of the DMC Act, all immovable structures (except boundary wall) are covered by the definition of ‘building’ and are liable to be subjected to property tax. Thus, the immovable structures erected to hold and support ‘hoardings’ would also qualify as ‘building’ and would be liable to be subjected to property tax. However, only such of the hoardings (as defined in Bye Law 9(m) of the 2004
Bye Laws) would be liable to be subjected to property tax, which qualify as immovable structures (and are, thus, ‘building’s). Hoardings which are permanently fastened on the immovable structures which are embedded in earth, or something that is embedded in earth, and meet the test of permanence are liable to be considered as immovable structures. However, if the twin tests
of degree/mode of annexation or object of annexation fail, hoardings would be excluded from the definition of building, and would not be liable to be subject to property tax. The challenge of the petitioner to the validity of Bye-Laws 9(m) and 14 of the 2004 Bye-Laws as being violative of Article 14 and Article 265 of the Constitution, is without any merit and is rejected. Corporation is
competent to include such of the hoardings – which constitute immovable property in ‘covered space’, and this is in accordance with power conferred by statute. Corporation is also within its power to provide the manner in which property tax on building is to be levied by way of Bye-Laws and,therefore, the argument that tax can be imposed by statute and not by delegated
legislation is irrelevant because such of the hoardings which constitute immovable structure are covered by building, and the Act itself provides for property tax on buildings. No basis has been shown to hold that the use factor of 10 assigned to hoardings is excessive. MVC is well within its power to give these recommendations. Property tax can be levied in addition to
Advertisement tax as both the levies are separate.
Relief
61. In light of our findings given hereinabove, we are of the opinion, that factual determination of relevant factors regarding immovability of thehoardings being brought to tax is necessary, as a condition precedent, for the purpose of levying building tax. Accordingly, we consider it appropriate and therefore set-aside the demands and notices issued by the Respondent that are
subject matter of W.P.(C.) 8118/2012 and also the notice Ref. No. Jr. A&C/Tax/HQ/2012/D-1070 dated 26.11.2012 impugned in W.P.(C.) 678/2013 on the ground that the question as to whether the hoardings in the instant cases qualify as permanent immovable structures, capable of being included in the definition of ‘building’ under Section 2(3) of the Act, has not been examined. The Respondent shall however be at liberty to issue fresh
show-cause notice(s) to the Petitioners and all such other assessees, having regard to the views expressed in this judgment. In such an event, Respondent shall, after affording an opportunity of hearing, pass orders of assessment/demand, in accordance with law.
IN THE HIGH COURT OF DELHI AT NEW DELHI
W.P.(C.) 8118/2012
DELHI INTERNATIONAL AIRPORT (P) LTD Vs SOUTH DELHI MUNICIPAL CORPORATION .
CORAM:
HON’BLE MR. JUSTICE VIPIN SANGHI
HON’BLE MR. JUSTICE SANJEEV NARULA
Author: SANJEEV NARULA, J.
Pronounced on: 22.10.2020
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