2023 (10) TMI 800 - SC - Indian Laws

Levy of Advertisement Tax - sign boards displaying the name and products of the business establishment - violation of Article 19(1)(a) and 19(1)(g) of the Constitution of India - HELD THAT - A perusal of Section 132(6)(1) of the Municipal Corporation Act would indicate that a tax on advertisement other than the advertisement published in newspapers can be imposed. Sub-section (1) of Section 133 of the Act provides that Corporation may by a special meeting bring forward a resolution to propose imposition of any tax under Section 132 defining classes of persons or description of property proposed to be taxed amount or rate of tax to be imposed and system of assessment to be adopted. By virtue of power vested under Section 427 of the Act respondent Corporation has made the Municipal Corporation (advertisement) bye-laws 1976 which came to be approved by the State Government under Section 430 of the Act and it was duly published in the official gazette on 18.08.1978 as required under Section 429 and 431 of the Act of 1956. The respondent-Corporation is tracing its source of power to levy and collect advertisement tax under clause 4 5 and 6 of the bye-laws of 1976. Whether the display boards or sign boards or name boards as displayed by the appellants would partake the character of advertisement so as to attract Section 132 of the Act and thereby the demand is to be sustained? - HELD THAT - This Court in the case of ICICI BANK ANR VERSUS MUNICIPAL CORPORATION OF GREATER BOMBAY ORS. 2005 (8) TMI 666 - SUPREME COURT has held that advertisement should have some commercial exposition or the soliciting customers to the product or service prominently shown in the advertisement. By mere mentioning the name of the product in which the business establishment is being run would not partake the character of the advertisement until and unless by such display customers are solicited. In the absence of the display of the name board or sign board either by a business establishment or any other establishment including public offices and professionals or schools or colleges etc. it would drive the potential customer to such a situation where it would be neigh impossible to identify the business establishment from which the potential customer proposes to buy. In the instant case on the demand being raised both the appellants objected to the same and even before the ink on the objections so raised could dry or in other words even before it came to be considered they approached the High Court invoking the extra ordinary jurisdiction of the High court which was in due haste as such the dismissal of the petition though for a different reason which we have not subscribed our approval yet the end result requires to be sustained and at the same breadth it is held that impugned notices are required to be adjudicated by the first respondent afresh in the light of objections filed to the said notices. Appeal disposed off.

Summary

Issues Involved:
1. Whether the display of trade name and business on signboards amounts to "advertisement" under the Municipal Act, 1965.
2. Whether the imposition of advertisement tax on such signboards violates Article 19(1)(a) and 19(1)(g) of the Constitution of India.
3. Whether the premises outside municipal limits are liable for advertisement tax.

Summary:

Issue 1: Definition of Advertisement
The appellants argued that displaying their trade name and business on signboards does not constitute an "advertisement" as per Section 189-A of the Municipal Act, 1965. They contended that such displays merely provide necessary information to the public about the business and products offered, which is essential for customer identification. The High Court, however, dismissed their petitions by relying on the judgment in Bharti Airtel Vs. State of Madhya Pradesh, which was deemed inapplicable as it dealt with the appointment of a tax collecting agent for advertisement tax, not the definition of "advertisement."

Issue 2: Violation of Constitutional Rights
The appellants contended that imposing advertisement tax on signboards displaying the business name and products violates Article 19(1)(a) (freedom of speech and expression) and Article 19(1)(g) (freedom to practice any profession, or to carry on any occupation, trade or business) of the Constitution of India. They argued that if such displays are taxed, it would unjustly extend to all businesses and professionals, thereby infringing on their constitutional rights.

Issue 3: Jurisdiction over Premises Outside Municipal Limits
In CA 5363 of 2023, the appellant argued that one of its premises was situated outside the municipal limits, and thus, the advertisement tax levied was without jurisdiction. The High Court dismissed the petition, but the Supreme Court found that the demand notices required a fresh examination by the respondent authorities.

Judgment:
The Supreme Court held that the principles from Bharti Airtel were inapplicable to the present case. It emphasized that the display of a business name and the nature of products on signboards does not amount to "advertisement" unless it solicits customers or promotes specific products. The Court noted that such displays are essential for identifying business establishments and do not constitute commercial advertisements.

The Court directed the first respondent to re-examine the objections raised by the appellants against the demand notices within eight weeks. If the issue is decided against the appellants, the enforcement of the demand will be stayed for an additional eight weeks to allow for potential legal challenges. The interim order will continue during this period.

Conclusion:
The appeals were disposed of with directions for a fresh examination of the demand notices by the respondent authorities, considering the objections raised by the appellants. The judgment underscores the distinction between informational displays and advertisements for tax purposes.