2010 (10) TMI 1193 - HC - Indian Laws

Summary

Issues Involved:
1. Maintainability of the writ petitions at Lucknow.
2. Authority of Nagar Palika Parishads/Nagar Panchayats to impose Advertisement Tax.
3. Legality of imposing Advertisement Tax as a fee.
4. Validity of imposing Advertisement Tax as a license fee.
5. Power of Nagar Palika Parishads/Nagar Panchayats to frame bye-laws for imposing Advertisement Tax.

Summary:

1. Maintainability of the Writ Petitions at Lucknow:
The preliminary objection regarding the maintainability of the writ petitions at Lucknow was raised, arguing that the appropriate forum would be at Allahabad. The court held that since the petitioner-companies are situated in Lucknow, and the notice and collection of Advertisement Tax occurred in Lucknow, the cause of action partly arose within the territorial jurisdiction of this Court sitting at Lucknow. Thus, the writ petitions are maintainable at Lucknow.

2. Authority of Nagar Palika Parishads/Nagar Panchayats to Impose Advertisement Tax:
The main issue was whether the Nagar Palika Parishads/Nagar Panchayats have the authority to impose Advertisement Tax on Hoardings/Signboards and Glow-signs affixed above private shops. The court examined Section 128 of the U.P. Municipalities Act, 1916, which enumerates the taxes that municipalities can impose. The court concluded that Section 128 does not provide for the imposition of Advertisement Tax on private properties, and thus, the Nagar Palika Parishads/Nagar Panchayats lack the authority to impose such a tax.

3. Legality of Imposing Advertisement Tax as a Fee:
The respondents argued that the Advertisement Tax is actually a fee imposed u/s 293-A of the U.P. Municipalities Act, 1916. The court held that even if considered a fee, it cannot be levied on private shops and properties where the Municipality does not provide any facilities. Therefore, Section 293-A does not authorize the imposition of such a fee.

4. Validity of Imposing Advertisement Tax as a License Fee:
The respondents alternatively argued that the tax could be considered a license fee u/s 294 of the U.P. Municipalities Act, 1916. The court found that no permission or sanction is required from the Nagar Palika Parishads/Nagar Panchayats for placing Hoardings/Signboards and Glow-signs on private shops. Hence, the question of realizing a license fee does not arise.

5. Power of Nagar Palika Parishads/Nagar Panchayats to Frame Bye-laws for Imposing Advertisement Tax:
The court examined the power of Nagar Palika Parishads/Nagar Panchayats to frame bye-laws u/s 298 of the U.P. Municipalities Act, 1916. It was held that since the Act itself does not authorize the imposition and collection of Advertisement Tax, no such bye-law can be framed. The court also noted that the bye-laws submitted by one of the Nagar Palika Parishads did not support the imposition of such a tax.

Conclusion:
The court declared the imposition/levying of Advertisement Tax by the Nagar Palika Parishads/Nagar Panchayats on Hoardings/Signboards and Glow-signs affixed/placed on private shops as invalid and without authority. Consequently, the notices issued by the respondents were quashed, and all the writ petitions were allowed with costs.