2019 (3) TMI 1568 - HC - GST

Levy of fees for the licence for the advertisements on hoardings in the private properties in Ahmedabad city - vires of section 386(2) of the Gujarat Provincial Municipal Corporations Act, 1949 - Held that - Issue Notice returnable on 20th March, 2019. Ad-interim relief is granted in terms of paragraph 7.0 (B)(ii) and (iii) of the petitions subject to the petitioners continue paying the licence fees applicable prior the Resolutions at Annexures-A and AA to the petitions without prejudice to their rights and contentions.

Summary

Issues involved:
Challenge to resolution approving revised rates of license fees, Declaration regarding tax collection on hoardings post-GST, Constitutional validity of section 386(2) of GPMC Act.

Analysis:
1. The petitioners challenged resolution No.928 approving revised license fees, arguing against tax collection on hoardings post-GST. They sought a declaration on the constitutionality of section 386(2) of the GPMC Act.

2. Counsel for petitioners referred to a previous judgment emphasizing regulatory nature of license fees. They argued that the Corporation's regulatory role justifies fees, not compensation.

3. The Municipal Commissioner's letter raised concerns about increased fees impacting tender participation, suggesting extraneous motives. Petitioners contended the fee raise lacked regulatory purpose.

4. Petitioners identified two flaws in section 386(2): lack of specified procedure/limits for levy and absence of guidelines for fee rate determination.

5. Reference was made to Article 243X of the Constitution, highlighting absence of limits in section 386(2) as unconstitutional.

6. Article 243ZF was cited, noting the expiration of the one-year protection period for inconsistent laws. The petitioners argued section 386(2) was no longer protected.

7. The potential reclassification of license fees as tax post-GST implementation was discussed, considering the impact of GST on tax subsumption.

8. The Supreme Court's decision in Krishna Mohan (P) Ltd. v. Municipal Corporation of Delhi was cited to challenge the uncanalized power vested in the Commissioner by section 386(2) of the GPMC Act.

9. The court issued notice returnable on 20th March 2019, granting interim relief to petitioners subject to continued payment of previous fees. Direct service to Union of India was permitted, with a copy of the order to be placed in each petition.