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2017 (10) TMI 1642 - HC - Indian LawsLiability of Advertisement tax - Direction to pay Advertisement tax in respect of glow signs and neon signs board affixed in or outside the premises of dealers, distributors and retailers and to pay the same to M/s. Shouraditya Advertisement, a collecting agency for the purpose of collection of advertisement tax. HELD THAT - The issue decided in the case of BHARTI AIRTEL LIMITED, IDEA CELLULAR LIMITED, VODAFONE ESSAR LIMITED, RELIANCE TELECOM LIMITED AND OTHER VERSUS THE STATE OF MADHYA PRADESH OTHERS 2015 (1) TMI 1497 - MADHYA PRADESH HIGH COURT where it was held that 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. As the controversy involved in the present case stands concluded by the judgment delivered by the Division Bench, this Court does not find any ground or reason to take a different view of the matter and accordingly the present Writ Petition stands dismissed.
Issues Involved:
1. Imposition of advertisement tax by Indore Municipal Corporation. 2. Validity of resolutions and work orders related to advertisement tax. 3. Authority of private contractors to collect advertisement tax. 4. Procedural requirements for imposing and collecting advertisement tax. 5. Classification of glow-sign boards and neon signs as advertisements. 6. Compliance with the Madhya Pradesh Municipal Corporation Act, 1956 and related byelaws. Issue-wise Detailed Analysis: 1. Imposition of Advertisement Tax by Indore Municipal Corporation: The petitioner challenged the imposition of advertisement tax by the Indore Municipal Corporation on glow signs and neon signs displayed by dealers, distributors, and retailers. The court upheld the imposition of the tax, referencing Section 132(6)(l) of the Madhya Pradesh Municipal Corporation Act, 1956, which empowers the Corporation to levy a tax on advertisements other than those published in newspapers. 2. Validity of Resolutions and Work Orders Related to Advertisement Tax: The petitioner contested the validity of Resolution No.167 dated 24.08.2011 and Resolution No.233 dated 13.10.2011, along with the work order dated 20.10.2011 issued to M/s. Shauryaditya Advertise for the collection of advertisement tax. The court found no grounds to quash these resolutions and work orders, stating that they were in accordance with the statutory provisions and byelaws. 3. Authority of Private Contractors to Collect Advertisement Tax: The court examined whether the Municipal Corporation could delegate the collection of advertisement tax to a private contractor. It was held that while Section 189-A of the Act of 1956 permits leasing out the recovery of taxes, the assessment and levy must still be conducted by the Municipal Corporation. The contractor is authorized to collect the tax but cannot take coercive action for recovery, which remains the responsibility of the Municipal Corporation. 4. Procedural Requirements for Imposing and Collecting Advertisement Tax: The court emphasized that the procedural requirements under the Byelaws of 1978 must be followed. This includes issuing a bill, allowing objections, and providing a quasi-judicial process for assessment and collection. The court found that the Municipal Corporation had not followed these procedures, leading to the quashing of the demand notices issued by the contractor. The Municipal Corporation was directed to reissue demands following the correct procedure. 5. Classification of Glow-Sign Boards and Neon Signs as Advertisements: The court addressed the argument that glow-sign boards and neon signs are not advertisements but merely name boards. It was determined that these signs fall under the definition of advertisements as per the Act and Byelaws, and thus, are subject to advertisement tax. 6. Compliance with the Madhya Pradesh Municipal Corporation Act, 1956 and Related Byelaws: The court found that the Municipal Corporation must comply with the Act of 1956 and the Byelaws of 1978 when imposing and collecting advertisement tax. This includes the need for a quasi-judicial process for assessment and the prohibition of coercive recovery actions by private contractors. Conclusion: The court upheld the imposition of advertisement tax by the Indore Municipal Corporation but quashed the demand notices due to procedural non-compliance. The Municipal Corporation was directed to follow the prescribed procedures under the Byelaws of 1978 for future assessments and collections. The authority of private contractors to collect tax was affirmed, but their ability to take coercive action was restricted. The classification of glow-sign boards and neon signs as advertisements was confirmed, subjecting them to the advertisement tax.
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