2020 (10) TMI 1219 - HC - Indian Laws

Approval of revised rates of license fees for the advertising hoardings in private properties - collection of license fees in garb of tax for the advertisement hoardings in the private properties - HELD THAT - The petitioners have consistently paid the license fees on the advertisement hoardings in a private property as per the provision of Section 386(2) of the GPMC Act prior to 1992 onwards and at no point of time the petitioners have challenged the power to levy the license fees under the provisions of Section 386(2) of the GPMC Act. It is also pertinent to note that in the year 2012 the petitioners agreed for levy of the license fees by enhancing the rate by 10% every year after initial embargo of 5 years. Thus the petitioners can be said to have waived the right to challenge the power to levy of fees for the license for outdoor advertising hoardings in private properties. When an Article of Constitution is an enabling provision it does not mean that the State is obligated to provide for such a statute and on that ground existing laws could be stuck down only on that premise - Section 386(2) of the GPMC Act is in operation since 1949 and the challenge thereto being ultra vires to the Articles of the Constitution would result in detriment to the public interest since the amount of license fee being collected by the Municipal Corporation along with the other amount collected by way of tax or otherwise are always being utilized for the benefit of people at large. The Court should be conscious of the position as to the extent of public interest involved when the provisions operate the field as against the prevention of such operation. Even if the writ court is of the view that the challenge raised requires to be considered then again it will have to be examined while entertaining the challenge raised for consideration whether it calls for prevention of the operation of the provisions in the larger interests of the public. An attempt has been made only to set out some of the basic consideration to be borne in mind by the writ court and the same is not exhaustive. In other words the writ court should examine such other grounds for consideration while considering a challenge on the ground of vires to a statute or the provision of law made before it for the purpose of entertaining it and when such writ petitions are entertained those petitions should be disposed of as expeditiously as possible and on a time-bound basis so that the legal position is settled one way or the other. On bare perusal of Sub-section-2 of Section-386 of the GPMC Act it cannot be said that the Commissioner has excessive delegation because license fees which may be charged by the Commissioner shall come into effect only after the sanction of the Corporation and not otherwise. Thus in effect sub-section-2 provides for procedure and limits in form of checks and balances to control the power conferred upon the Commissioner to levy the fees for the licenses to be issued as per Subsection-1 of Section 386 - It is also pertinent to note that Subsection-2 starts with the words except as may otherwise be provided by and under this Act which means that it is an exception carved out from other provisions of the Act providing for any fees of license which may be issued under Sub-section-1 of Section 386. The Commissioner of the Municipal Corporation is therefore empowered to levy fee at such rate from time to time which may be fixed but such power is subject to the sanction of the Corporation. The fees to be charged as per the provisions of Sub-section-2 of Section 386 cannot be said to be having unbridled or unfettered power. It is also evident from the materials on record that the levy of fees to be charged for advertisement hoardings in private properties does not become effective immediately when the Commissioner proposes unless and until the same is approved by the Standing Committee which in turn is required to be approved and sanction by the Corporation as provided under Sub-section-2 of Section-386 of the GPMC Act. The provisions of Sub-section-2 of Section 386 of the GPMC Act is constitutionally valid as per Etnry-5 read with Entry-66 of list-II of the VIIth Schedule and deletion of Entry-55 of list-2 cannot be said to have any effect on the power to levy fees as provided by Section 386(2) of the GPMC Act - the provisions which are inconsistent with any of the provision of part-IX of the Constitution of India including Article 243X would be required to be amended but the provision contained in Section 386(2) of the GPMC Act cannot be said to be inconsistent with any of the provision of part-IX of Constitution of India and therefore Article 243ZF would not come into play in the facts of the case. The submissions of the petitioner that provision of Sub-section-2 of Section 386 suffers from excessive delegation and provided for unguided and uncanalised power to the Commissioner as there is no procedure for limits for imposition of fees in absence of any guideline is concerned it is settled position of law that the guidelines are required to be prescribed by legislature in case where there is levy of tax and not in case where there is imposition of fees. If the State Government is of the opinion that execution of any resolution or order of the Corporation for any of other Municipal Authority or officer subordinate thereto for doing of any act which is about to be done or has been done for and on behalf of the Corporation is in contravention of excess of powers conferred by the GPMC Act or any other law for the time being in force or such action is likely to lead breach of the peace etc. then the State Government may by order in writing suspend the execution of order or prohibit doing of any such act. Therefore even the sanction of the Corporation as provided under Sub-section-2 of Section 386 is subject to the control of the State Government as provided under Section 451 of the GPMC Act. In view of the above it cannot be said that there is excessive delegation by legislature upon the Commissioner for determination of the levy of the fees under Sub-section-2 of Section 386 of the GPMC Act. These writ applications fail and are accordingly rejected subject to the right of the petitioners to challenge the quantum of license fees before the State Government as per the provisions of the GPMC Act in accordance with law. The respondent State Government is therefore directed to consider such challenge if made by the petitioners without being influenced in any manner by what has been stated hereinabove and decide such challenge as expeditiously as possible. Application disposed off.

Summary

Issues Involved:

1. Constitutional validity of Section 386(2) of the Gujarat Provincial Municipal Corporation Act, 1949 (GPMC Act).
2. Levy of license fees as a tax in the guise of fees.
3. Arbitrariness and excessiveness of the license fees.

Detailed Analysis:

1. Constitutional Validity of Section 386(2) of the GPMC Act:

The petitioners challenged the constitutional validity of Section 386(2) of the GPMC Act on four grounds:

(i) Article 243X of the Constitution: The petitioners argued that Section 386(2) does not provide for the procedure and limits for levy or collection of fees as required by Article 243X. However, the court noted that Article 243X is an enabling provision and does not obligate the State to provide for such a statute. The court referred to the Supreme Court's judgment in Shanti G. Patel v. State of Maharashtra, which held that Article 243X merely outlines the scheme for levy and imposition of taxes and does not prescribe any specific procedure or limits.

(ii) Deletion of Entry 55 of List II: The petitioners contended that after the deletion of Entry 55 of List II, the State legislature has no competence to enact a law authorizing the Corporation to levy and collect fees. The court rejected this argument, stating that Entry 55 dealt with taxes, not fees, and the State legislature still has competence under Entry 66 of List II to levy fees.

(iii) Article 243ZF of the Constitution: The petitioners argued that Section 386(2) is inconsistent with Part IX of the Constitution and should have lapsed after one year from the commencement of the 74th Amendment. The court held that Section 386(2) is not inconsistent with any provision of Part IX and therefore does not lapse under Article 243ZF.

(iv) Excessive Delegation: The petitioners argued that Section 386(2) suffers from excessive delegation as it provides unguided and uncanalized powers to the Commissioner. The court noted that the Commissioner’s power to levy fees is subject to the sanction of the Corporation, providing sufficient checks and balances. The court also referred to the Supreme Court's judgment in Delhi Race Club Ltd. v. Union of India, which held that guidelines are required for taxation but not for fees.

2. Levy of License Fees as a Tax in the Guise of Fees:

The petitioners contended that the license fees were in the nature of a tax rather than a fee, as there was no quid pro quo and the fees were deposited in the same account as tax collections. The court referred to the Supreme Court's judgment in Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, which distinguished between a tax and a fee. The court held that the license fees in question were regulatory fees and not taxes, as they were levied for granting the privilege of placing advertisement hoardings on private properties.

3. Arbitrariness and Excessiveness of the License Fees:

The petitioners argued that the license fees were arbitrary, irrational, and highly excessive. The court noted that the sufficiency of the levy falls within the powers prescribed under Section 386(2) of the GPMC Act and is subject to the control of the State Government. The court refrained from considering the submissions regarding the alleged arbitrariness and excessiveness of the license fees, stating that the petitioners could challenge the quantum of the fees before the State Government as per the provisions of the GPMC Act.

Conclusion:

The court upheld the constitutional validity of Section 386(2) of the GPMC Act, rejected the contention that the license fees were in the nature of a tax, and refrained from adjudicating on the arbitrariness and excessiveness of the license fees, leaving it to the petitioners to challenge the quantum before the State Government. The petitions were dismissed with no order as to costs.