2011 (8) TMI 585 - HC - Indian Laws

Power of Nagar Parisad and Nagar Panchayat - Whether advertisement tax can be imposed on signboards, glowsigns affixed above shops of private individuals - Held That - In Bharti Airtel Limited vs. State of U.P, High Court held that the action of the respondents in imposing Advertisement Tax and thereafter awarding contracts to private agencies for realizing the tax on hoardings, signboards and glowsigns on private shops by the company for advertising their products where the company s business was being carried out was invalid and consequently quashed the notices. Neither the Nagar Parishad nor the Nagar Panchayat have any authority of law to levy a tax or a fee on Advertisements placed by the petitioners over the private shops or buildings where they are carrying on their business. Consequently, the work orders issued by the Nagar Parishads and the Nagar Panchayats to the private agencies and the bills raised pursuant to it, being wholly illegal and without any authority of law, are quashed.

Issues Involved:
1. Authority of Nagar Parishads and Nagar Panchayats to impose Advertisement Tax on glowsigns, signboards, and hoardings affixed above private shops.
2. Legality of work orders issued to private agencies for collecting Advertisement Tax or fees.
3. Distinction between tax and fee under the relevant legal provisions.
4. Validity of the bye-laws under which fees were purportedly imposed.

Detailed Analysis:

1. Authority to Impose Advertisement Tax:
The central issue was whether Nagar Parishads and Nagar Panchayats have the authority to impose Advertisement Tax on glowsigns, signboards, and hoardings affixed above private shops. The court examined the provisions of Section 128 of the U.P. Municipalities Act, 1916, and Section 119 of the U.P. Kshettra Panchayat and Zila Panchayat Adhiniyam, 1961. It was found that neither of these sections explicitly provided for the imposition of Advertisement Tax. The court cited precedents such as Bimal Chandra Banerjee vs. State of Madhya Pradesh and others, and Ahmedabad Urban Development Authority vs. Sharad Kumar Jayanti Kumar Pasawalla and others, which held that no tax could be imposed unless expressly provided by statute. Therefore, the Nagar Parishads and Nagar Panchayats lacked the authority to levy Advertisement Tax.

2. Legality of Work Orders to Private Agencies:
The petitioners challenged the legality of work orders issued to private agencies for collecting Advertisement Tax or fees. The court noted that the respondents had no power or authority under any law to impose such a tax or delegate this power to private agencies. Consequently, the work orders and the resulting assessment bills were deemed wholly illegal and without any authority of law, leading to their quashing.

3. Distinction Between Tax and Fee:
The court addressed the conflicting claims regarding whether the charge was a tax or a fee. It referred to Article 246 and Article 243H of the Constitution, which empower the State Legislature to authorize Panchayats to levy, collect, and appropriate taxes. However, the court clarified that the power to impose taxes on advertisements is specifically listed under Entry 55 of List II of the Constitution. The court also examined Section 294 of the Municipalities Act, which allows for the imposition of a licence fee but noted that this provision required the fee to be fixed by a bye-law. The court found that some Nagar Parishads had framed bye-laws under Section 298 of the Act, which allowed for a fee for posting bills and advertisements. However, these bye-laws exempted fees for signboards on private property where business was conducted.

4. Validity of Bye-laws:
The court scrutinized the bye-laws of Nagar Panchayat, Udham Singh Nagar, and Nagar Panchayat Muni-ki-Reti, which stipulated that no fee would be levied for signboards on private property. Similarly, Section 143 and Section 239 of the Adhiniyam were examined, and it was found that these provisions did not authorize the imposition of fees on hoardings, glowsigns, etc., on private shops. The court also referred to Section 172(h) of the U.P. Municipal Corporation Adhiniyam, 1959, which allowed for a tax on advertisements but not a fee, reinforcing the conclusion that the Nagar Parishads and Nagar Panchayats lacked the authority to impose such fees.

Conclusion:
The court concluded that neither the Nagar Parishads nor the Nagar Panchayats had any legal authority to levy a tax or fee on advertisements placed by the petitioners over private shops or buildings where they conducted their business. The work orders issued to private agencies and the resulting bills were quashed as being wholly illegal and without any authority of law. The writ petitions were allowed, and each party was ordered to bear its own costs.

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