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2015 (1) TMI 1497 - HC - Indian LawsImposition of 'advertisement tax' other than the advertisements published in newspapers under Section 132 (6) (l) of the Madhya Pradesh Municipal Corporation Act, 1956 - HELD THAT - It cannot be agreed that the scheme propounded by the byelaws is contrary to any of the provisions of the Act of 1956. The fact that collection of tax is made through an agency, which necessarily has to work under the authority of the local body, cannot contravene the provisions of Article 265 of the Constitution. It cannot be agreed that this mode of collection is contrary to the Act of 1956 and the intention of the legislature - Reading of Section 133 of the Act of 1956 will show that it merely deals with the procedure for imposition of tax. The procedure for assessment, collection, remission, refund and recovery of taxes, cesses etc. is provided by the byelaws framed by the Municipal Corporation under Section 427 (3) of the Act of 1956. In the case in hands, Byelaws have been framed for assessment and collection of tax under Section 427 (3) of the Act of 1956; and thus, the provisions of Sections 173 and 174 of the Act of 1956 would not be applicable - The Byelaws of 1978 are framed under Section 427 of the Act of 1956 and Section 431 of the Act of 1956 provides that all byelaws shall be published in the Gazette and the effect of these provisions is that the Byelaws of 1978 shall become part of the Act of 1956. The Government of Madhya Pradesh has accepted and approved the Byelaws of 1978 framed by the Municipal Corporation, Indore and the same came into force with effect from 18.08.1978. Thus, no case is made out to quash the Resolution No.167 dated 24.08.2011 and Resolution No.233 dated 13.10.2011 passed by the Mayorincouncil. Nor any case is made out to quash the work order dated 20.10.2011 issued by respondent No.2 Indore Municipal Corporation in favour of respondent No.3 and the agreement by which respondent No.2 awarded the contract to respondent No.3 for collection of the 'advertisement tax'. Considering the fact that the procedure, as prescribed under the Byelaws of 1978, has not been followed by the Municipal Corporation while directing respondent No.3 contractor to recover 'advertisement tax' on their behalf, we quash the demand, which are subject matter in this batch of writ petitions and direct the Municipal Corporation to issue fresh demand regarding levy and collection of the 'advertisement tax', as per the rules of Byelaws and when the demand is finalized by the Municipal Corporation, then only the same may be given to respondent No.3 contractor to recover it. The writ petitions are allowed in part.
Issues Involved:
1. Imposition of 'advertisement tax' by the Municipal Corporation, Indore. 2. Validity of Resolution No.167 and Resolution No.233 passed by the Mayor-in-Council. 3. Legality of the work order issued to M/s. Shauryaditya Advertise for the collection of 'advertisement tax'. 4. Authority and procedure for the assessment, collection, and recovery of 'advertisement tax'. 5. Delegation of powers to a private contractor under Section 189A of the Madhya Pradesh Municipal Corporation Act, 1956. 6. Compliance with the Byelaws of 1978 for the assessment and collection of 'advertisement tax'. 7. Right to take coercive action for recovery of 'advertisement tax'. 8. Determination of whether the glowsign board/signage constitutes an advertisement. 9. Validity of demand notices and invoices raised by the private contractor. 10. Constitutional mandate under Article 265 of the Constitution of India. Detailed Analysis: 1. Imposition of 'advertisement tax' by the Municipal Corporation, Indore: The petitions challenge the imposition of 'advertisement tax' under Section 132(6)(l) of the Madhya Pradesh Municipal Corporation Act, 1956, by the Municipal Corporation, Indore. The court affirmed that the Corporation is empowered to levy such a tax under the Act of 1956. The procedure for imposition is detailed in Section 133 of the Act, while the assessment and collection are governed by the Byelaws of 1978. 2. Validity of Resolution No.167 and Resolution No.233 passed by the Mayor-in-Council: The petitioners challenged these resolutions and the subsequent work order issued on 20.10.2011, which granted the contract for the recovery of 'advertisement tax' to M/s. Shauryaditya Advertise. The court found no grounds to quash these resolutions, as they were within the Corporation's powers under the Act of 1956. 3. Legality of the work order issued to M/s. Shauryaditya Advertise for the collection of 'advertisement tax': The court upheld the work order issued to M/s. Shauryaditya Advertise, finding that the Corporation had the authority to delegate the recovery of 'advertisement tax' to a private contractor under Section 189A of the Act of 1956. However, the court emphasized that the contractor could only recover the tax after it had been properly assessed by the Corporation. 4. Authority and procedure for the assessment, collection, and recovery of 'advertisement tax': The court highlighted that the authority to assess and levy 'advertisement tax' lies with the Municipal Corporation, as detailed in Sections 173, 174, and 175 of the Act of 1956. The Byelaws of 1978 provide the specific procedures for assessment and collection. The court noted that the Corporation must follow these procedures before any recovery can be made by the contractor. 5. Delegation of powers to a private contractor under Section 189A of the Madhya Pradesh Municipal Corporation Act, 1956: The court clarified that Section 189A allows the Corporation to delegate the recovery of taxes to a private contractor but does not extend to the assessment or levy of taxes. The contractor can only collect taxes that have been properly assessed and demanded by the Corporation. 6. Compliance with the Byelaws of 1978 for the assessment and collection of 'advertisement tax': The court found that the Municipal Corporation had not followed the prescribed procedures under the Byelaws of 1978 for assessing and collecting 'advertisement tax'. The demand notices issued by the contractor were therefore invalid. The court directed the Corporation to follow the proper procedures for assessment and then delegate the recovery to the contractor. 7. Right to take coercive action for recovery of 'advertisement tax': The court held that the contractor does not have the authority to take coercive action for the recovery of 'advertisement tax'. Such powers are reserved for the Municipal Corporation under the Act of 1956. Any coercive action taken by the contractor was deemed illegal and without jurisdiction. 8. Determination of whether the glowsign board/signage constitutes an advertisement: The court noted that the determination of whether a glowsign board or signage constitutes an advertisement must be made by the Municipal Corporation before any tax can be levied. This involves verifying the ownership, location, and content of the advertisement. 9. Validity of demand notices and invoices raised by the private contractor: The court quashed the demand notices and invoices issued by the contractor, as they were not based on a proper assessment by the Municipal Corporation. The court emphasized that any demand for 'advertisement tax' must be preceded by a quasi-judicial assessment process by the Corporation. 10. Constitutional mandate under Article 265 of the Constitution of India: The court reiterated that Article 265 mandates that no tax shall be levied or collected except by authority of law. The assessment and collection of 'advertisement tax' must comply with the statutory provisions and the Byelaws of 1978. The court found that the current process followed by the Corporation and the contractor did not meet this constitutional requirement. Conclusion: The court allowed the writ petitions in part, quashing the demand notices issued by the contractor and directing the Municipal Corporation to reassess the 'advertisement tax' following the Byelaws of 1978. The contractor can only recover the tax after it has been properly assessed by the Corporation. The court emphasized that no coercive action for tax recovery can be taken by the contractor.
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