2017 (5) TMI 1659 - HC - Indian Laws

Levy of advertisement tax - vires of Section 172 read with Section 192 of the Act, 1959. Held that - In the present case, apart from the fact that no rules as contemplated under Section 540 have been framed, it is also pertinent to note that the objections for making even Bye-laws 2016, were received and heard by a Committee of the officers of the Corporation and not by the elected members of the Corporation or the Executive Committee or any other Committee of councillors. The Supreme Court in Municipal Council, Khurai 1964 (12) TMI 37 - SUPREME COURT considered this aspect of the matter and clearly held that powers to hear objections cannot be delegated to a Sub-Committee. It is clear that to impose a tax specified under sub-section (2) of Section 172, the procedure contemplated under Sections 199 to 203 requires to be followed scrupulously and a deviation therefrom is not permissible and if there is any, the rules framed would be rendered illegal or ultra vires the procedure contemplated under these provisions. We are not entering into such controversy since, in the present case, there are no rules at all before us that have been framed and approved, published or notified in the Official Gazette by the State Government. The impugned Bye-laws, 2016 are even otherwise invalid and ultra vires the Act, 1959 having been framed without following the procedure contemplated under Sections 542 to 545 - Petition allowed.

Summary

Issues Involved:
1. Authority of the Municipal Corporation to impose advertisement tax via bye-laws.
2. Compliance with the mandatory procedure for framing bye-laws and rules under the Uttar Pradesh Municipal Corporation Act, 1959.
3. Validity of the impugned Bye-laws, 2016.

Issue-wise Detailed Analysis:

1. Authority of the Municipal Corporation to Impose Advertisement Tax via Bye-laws:
The petitioners challenged the imposition of advertisement tax by the Municipal Corporation via the Bye-laws, 2016, arguing that the Corporation lacked the authority to impose such a tax through bye-laws. The court noted that Section 172 of the Uttar Pradesh Municipal Corporation Act, 1959 (Act, 1959) allows the Corporation to impose taxes but specifies that such taxes must be assessed and levied in accordance with the Act and the rules made thereunder. The court emphasized that the legislature intentionally omitted the term "bye-laws" from Section 192, indicating that advertisement tax cannot be imposed by framing bye-laws. The court concluded that the Corporation could not impose advertisement tax through bye-laws as it was not within the powers conferred by Section 541 of the Act, 1959.

2. Compliance with the Mandatory Procedure for Framing Bye-laws and Rules:
The court examined whether the mandatory procedure for framing bye-laws and rules under Sections 199 to 206 and Sections 542 to 544 of the Act, 1959, was followed. The court noted that the procedure for imposing taxes under Section 172(2) is mandatory, requiring compliance with Sections 199 to 206. The court found that the Corporation did not follow the mandatory procedure, as objections were heard by a Sub-Committee of officers rather than the elected members of the Corporation or the Executive Committee. The court reiterated that the procedure for imposing taxes must be strictly complied with, and any deviation would render the tax imposition invalid.

3. Validity of the Impugned Bye-laws, 2016:
The court scrutinized the procedure followed for framing the Bye-laws, 2016, and found that the Corporation purportedly made bye-laws instead of rules and claimed to have followed the procedure under Sections 199 to 206. However, the court observed that the procedure for making bye-laws under Sections 542 to 544 was not followed. The court highlighted that the power to impose taxes must be expressly conferred and cannot be inferred from the power to regulate advertisements. The court held that the impugned Bye-laws, 2016, were ultra vires the provisions of the Act, 1959, as they were not framed in accordance with the mandatory procedure and lacked the authority to impose advertisement tax.

Conclusion:
The court declared the impugned Bye-laws, 2016, imposing advertisement tax, as ultra vires the Act, 1959, and invalid for not following the mandatory procedure. The writ petition was allowed, and the Bye-laws, 2016, were struck down.