1987 (11) TMI 44 - HC - Income Tax

Summary

Issues Involved:
1. Calculation of Advertisement Tax
2. Power to Realize Arrears of Advertisement Tax
3. Validity of Notices under Section 175 of the Act
4. Retrospective Liability to Advertisement Tax
5. Principle of Promissory Estoppel

Detailed Analysis:

1. Calculation of Advertisement Tax
The petitioner argued that advertisement tax should be calculated based on the focus area of the screen, not on each slide or shot projected. However, the court referred to Section 142 of the Delhi Municipal Corporation Act, 1957, which mandates that "every advertisement" displayed to public view is liable to tax. The court clarified that it is the advertisement itself that is taxed, not the screen or board on which it is displayed. The Full Bench decision in Municipal Corporation of Delhi v. Palace Cinema supported this interpretation, stating that the liability to pay advertisement tax is created by Section 142 and quantified by the Fifth Schedule.

2. Power to Realize Arrears of Advertisement Tax
The petitioner contended that the Municipal Corporation had no power to realize arrears once advance tax was accepted. The court disagreed, citing that the liability to pay advertisement tax is statutory under Section 142, and any miscalculation does not eliminate this liability. The court emphasized that the Municipal Corporation is entitled to employ coercive processes provided by Sections 154 to 162 of the Act to recover arrears.

3. Validity of Notices under Section 175 of the Act
The petitioner argued that the Municipal Corporation had no power to issue notices under Section 175 seeking information about the advertisements displayed. The court did not find merit in this argument, stating that the bye-laws imposed a duty on the petitioner to disclose the advertisements, and the Municipal Corporation had the right to seek such information to calculate the correct tax.

4. Retrospective Liability to Advertisement Tax
The petitioner claimed that the Municipal Corporation could not create a liability retrospectively. The court held that the demand for arrears was not retrospective but was for the unpaid tax of previous years. The court noted that the residuary article of limitation allowed for recovery within three years, and thus the Municipal Corporation's demand was not barred by limitation.

5. Principle of Promissory Estoppel
The petitioner invoked the principle of promissory estoppel, arguing that the Municipal Corporation's acceptance of advance tax based on the focus area estopped it from raising additional demands. The court cited Union of India v. Godfrey Philips India Ltd., stating that promissory estoppel cannot compel a public authority to act contrary to law. Since the officials of the Municipal Corporation were not competent to interpret Section 142 contrary to its statutory meaning, any such representation could not work as promissory estoppel against the right to recover the correct tax.

Conclusion
The court dismissed the writ petition, holding that the petitioner is liable to pay advertisement tax on each advertisement projected on the screen. The principle of promissory estoppel does not apply as it cannot compel a public authority to act contrary to statutory provisions. The stay against the recovery of tax was vacated, and the parties were directed to bear their own costs.