2015 (1) TMI 1415 - HC - Indian Laws

Imposition of tax on advertisement - Vires of Section 193 (1), 193 (2) (i) of the Act read with Section 541 (48) of the Act - Held that - It is well settled law that while interpreting a statute, meaning should be assigned to each and every word, line by line, word by word and the statute as a whole - According to Maxwell, a construction which would leave without effect any part of the language of a statute will normally be rejected. Hon ble Supreme Court by catena of judgment held that while interpreting any section of a statute, every word and provision should be looked into in context to which it is used and not in isolation - reliance placed in the case of Grasim Industries Limited v. Collector of Customs 2002 (4) TMI 52 - SUPREME COURT OF INDIA . The respondents cannot exclude the proviso while interpreting Section 192 of the Act while framing Rules in question. The respondents while framing Rules, have not considered the proviso which provides that no tax shall be levied on any advertisement which is not a sky-sign. Accordingly, the Rules seems to be comprehensive in nature and inclusive of sky-signs hence suffer from violation of statutory mandate. Petition allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Validity of the Rules framed by the respective Nagar Nigams.
2. Procedure followed in framing the Rules.
3. Jurisdiction of Nagar Nigams to impose advertisement tax.
4. Interpretation of "sky-sign" and its implications on tax imposition.
5. Refund of tax deposited by the petitioners.

Issue-wise Detailed Analysis:

1. Validity of the Rules framed by the respective Nagar Nigams:
The petitioners challenged the vires of the Rules framed by the Nagar Nigams of Lucknow, Allahabad, and Bareilly, which imposed advertisement tax. The Rules were framed under the provisions of Section 227 read with Sections 192, 219, 540(1), and 550 of the Uttar Pradesh Municipal Corporation Act, 1959. However, the court found that the Rules were framed arbitrarily without following the due statutory procedure contained in the Act, making them unsustainable.

2. Procedure followed in framing the Rules:
The court noted that the Rules were not framed following the procedure provided under Chapter IX of the Act, which requires a resolution by the Municipal Corporation. The Full Bench of the court in Anurag Bansal vs. State of U.P. and others had previously settled this issue, stating that the power to impose tax must originate from the Corporation and not be imposed arbitrarily by the State Government. The impugned Rules were framed without such a resolution, violating the statutory procedure.

3. Jurisdiction of Nagar Nigams to impose advertisement tax:
Section 172(1) of the Act allows the Corporation to impose certain taxes, including advertisement tax, subject to the provisions of Article 285 of the Constitution. Section 192 specifically deals with the tax on advertisements and provides exemptions for certain types of advertisements. The court found that the Rules framed by the Nagar Nigams did not consider these exemptions and included all advertisements, including those not considered "sky-signs," making them ultra vires to the Act.

4. Interpretation of "sky-sign" and its implications on tax imposition:
The court examined the definition of "sky-sign" under Section 2(71) of the Act, which includes any advertisement visible against the sky. Advertisements that are not "sky-signs" and relate to the trade or business carried on within the building where the advertisement is displayed are exempt from tax under Section 192. The court referred to various judgments, including those of the Calcutta High Court, Karnataka High Court, and Punjab and Haryana High Court, which supported the interpretation that such advertisements are exempt from tax. The impugned Rules failed to consider this exemption, making them invalid.

5. Refund of tax deposited by the petitioners:
The court ordered that the petitioners are entitled to a refund of any tax deposited under the impugned Rules. The respondents were directed to refund the tax expeditiously within three months.

Conclusion:
The court declared the impugned Rules framed by the Nagar Nigams of Lucknow, Allahabad, and Bareilly as illegal, void, and inoperative. It allowed the writ petitions and directed the respondents to refund the tax deposited by the petitioners within three months. The court also left it open for the respondents to frame new Rules in accordance with the law and the observations made in the judgment. No orders as to costs were made.