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Issues:
Challenge to imposition of tax on advertisements under Madhya Pradesh Municipal Corporation Act, 1956. Validity of the resolution imposing the tax under section 132 and compliance with section 133 of the Act. Effect of absence of bye-laws for assessment and collection of tax before a certain date. Interpretation of Article 265 of the Constitution regarding levy and collection of taxes. Applicability of sections 173 to 175 of the Act in the absence of specific bye-laws for assessment. Analysis: 1. The petitioners challenged the imposition of tax on advertisements, excluding those in newspapers, by the Indore Corporation under the Madhya Pradesh Municipal Corporation Act, 1956. The main contention was that the resolution imposing the tax lacked a 'system of assessment' as required by section 133 of the Act. The argument focused on whether the procedure for assessment and collection of taxes should be explicitly included in the resolution or regulated by separate byelaws. 2. The High Court analyzed the meaning of 'system of assessment' in section 133 and referred to a Supreme Court decision in Vallabhdas v. Municipal Committee, Akola. The court held that the 'system of assessment' pertains to the stage of imposition of the tax and not the entire procedure for assessment and collection. It emphasized that the Act provides for byelaws under section 427(3) to govern the assessment, collection, and recovery of taxes, thereby supporting the validity of the tax imposition. 3. The court delved into the constitutional aspect of tax imposition, citing Article 265, which mandates that taxes must be levied and collected as per the law. It highlighted that the assessment of tax involves a quasi-judicial process, and even if the statute lacks detailed procedural provisions for assessment, an implied provision can suffice. The court referenced various Supreme Court cases to establish the principles governing tax assessment and collection under the Constitution. 4. Addressing the absence of bye-laws for assessment and collection of the tax until a specific date, the court examined sections 173 to 175 of the Act. These sections outline a machinery for the recovery of Corporation claims, including taxes, in a quasi-judicial manner and provide for appeals. The court interpreted these sections to allow for provisional assessment of taxes, even in the absence of specific byelaws, through a quasi-judicial process involving objections and appeals. 5. Ultimately, the court dismissed the petitions challenging the tax imposition, ruling that the tax was not inoperative before the date when bye-laws were enacted for assessment and collection. It concluded that the provisions of sections 173 to 175 of the Act facilitated both the recovery and assessment of taxes, even in the absence of separate byelaws, by ensuring a quasi-judicial procedure with appeal mechanisms in place.
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