M/s Pankaj Advertising Prop. Through Its Prop. Versus State of U.P. And 7 Others
GST
2019 (2) TMI 426 – ALLAHABAD HIGH COURT – 2019 (24) G. S. T. L. 162 (All.) , [2020] 73 G S.T.R. 235 (All)
ALLAHABAD HIGH COURT – HC
Dated:- 8-2-2019
Writ Tax No. – 577 of 2018
GST
Pankaj Mithal And Pankaj Bhatia JJ.
For the Petitioner : C.K.Parekh,Vikas Rastogi
For the Respondent : C.S.C.,Sahab Tiwari, Saurabh Tiwari
ORDER
(Delivered by Hon'ble Pankaj Bhatia,J.)
Heard Sri C.K. Parekh, learned counsel for the petitioner, Sri Avinash Chandra Tripathi, learned Standing Counsel and Sri Sahab Tiwari, learned counsel appearing for Nagar Palika Parishad, Hathras, (respondent nos. 2, 3 and 4).
The present writ petition has been filed seeking to declare the Nagar Palika Parishad Hathras (Vigyapan Kar Ka Nirdharan Aur Wasuli Viniyaman) Upvidhi, 2015 as ultra-vires of the provisions of Uttar Pradesh Goods and Service Tax Act, 2017; U.P. Municipalities Act, 1916 and Articles 1
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, Hathras on 12.1.2017 and published on 19.8.2017, a demand of advertisement tax on Hoardings/Sign Boards/Glow Signs affixed at various places including on the private buildings was sought to be recovered from the petitioner.
The petitioner therefore challenged the legislative competence to the imposition, collection and realization of the Advertisement Tax under the U.P. Municipalities Act, 1916 alleging that when there is no provision to impose such a tax there can be no power to frame any bye-laws in that regard.
The issue relating to the power of the municipality to levy and collect Advertisement Tax has a chequered history. Prior to 2011, the municipalities in exercise of their powers under the U.P. Municipality Act 1916 sought to levy and recover Advertisement Tax, which was challenged before the High Court, Allahabad by means of Writ Petition No. 7848 of 2010 (M/B) Bharti Airtel Limited through its Authorised Signature vs. State of U.P. And others, the said petition came to be
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i) a tax on the annual value of buildings or lands or both.
(ii) a water tax on the annual value of buildings or lands or both;
(iii) a drainage tax on the annual value of buildings leviable on such buildings as are situated within a distance, to be fixed by rules in this behalf for each municipality from the rearest sewer line;
(iv) a conservancy tax for the collection, removal and disposal of excrementious and polluted matter from privies, urinals, cesspools;
(2) In addition to the taxes specified in sub-section (1), the Municipality may, for the purposes of this Act and subject to the provisions thereof, impose any of the following taxes, namely :-
(i) a tax on trades and callings carried on within the municipal limits and deriving special advantages from, or imposing special burdens on, the municipal services;
(ii) a tax on trades, callings and vocations including all employments remunerated by salary or fees;
(iii) a theatre tax which means a tax of amusements or entertainm
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vide that the municipal taxes shall be assessed and levied in accordance with the provision of this Act and the Rules and bye-laws framed thereunder.
The said amendment under section 128 was justified by legislative competence in view of the Entry-55 of the State List-II of the Seventh Schedule to the Constitution of India. The U.P. Municipal Corporation Rules were framed under U.P. Municipal Corporation Act which provided for the procedure for levy and collection of the Advertisement Tax. The said rules came up for consideration before the Full Bench in the case of Anurag Bansal vs. State of U.P. And Others, which was decided on 24.4.2011 wherein the said rules were held to be ultra vires, the provision of the Act as same were made without following the procedure laid down under the Act. In a similar manner, bye-laws framed by the Nagar Nigam, Lucknow, Nagar Nigam, Allahabad and Nagar Nigam, Bareilly were challenged and were declared as illegal, void and inoperative vide judgement of
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inserted and which provides for levy and collection of Goods and Services Tax and by virtue of the said amendment in the Constitution Entry-55 of the List-II which provided for taxes or advertisement has been omitted with effect from 16.9.2016. In pursuance of the 101 Amendment U.P. Goods and Service Tax 2017 (Act No. 1 of 2017) came into operation with effect from 01.7.2017.
Section 17 of the 101 Constitutional Amendment Act is quoted as under:
17. Amendment of Seventh Schedule – In the Seventh Schedule to the Constitution,-
(a) in List I – Union List,-
(i) for entry 84, the following entry shall be substituted, namely:-
“84. Duties of excise on the following goods manufactured or produced in India, namely:-
(a)petroleum crude;
(b) high speed diesel;
(c) motor spirit (commonly known as petrol);
(d) natural gas;
(e) aviation turbine fuel; and
(f) tobacco and tobacco products.”;
(ii) entries 92 and 92C shall be omitted;
(b) in List II-State List,-
(i) entry 52
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f certain Acts. – Save as otherwise provided in this Act, on and from the date of commencement of this Act,-
(i) In the Uttar Pradesh Municipal Corporation Act, 1959 Clause (h) of sub-section 2 of Section 172 and Sections 192, 193 shall be omitted.
(ii) In the Uttar Pradesh Municipalities Act, 1916 clause (7) of sub-section (2) of Section 128 shall be omitted.
(iii) In the Uttar Pradesh Taxation and Land revenue Laws Act, 1975, Chapter II shall be omitted.
Admittedly, the bye-laws by virtue of which the municipalities intended to levy and collect tax on advertisement were framed on 12.1.2017, however, the same were published on 19.8.2017 i.e. after 01.07.2017 when the U.P. Goods and Service Tax Act, 2017 came into being and after the omission of Section 128(2) sub-section (vii) of the U.P. Municipalities Act.
That being the case, the narrow ground to be considered by this Court is whether the bye-laws framed on 12.1.2017 by the respondents and published on 19.8.2017, were beyond t
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173 of the U.P. Goods and Service Tax Act, 2017, the municipality did not even have the statutory competence to levy, impose or collect Advertisement Tax.
In the said view of the matter, the levy and collection of the Advertisement Tax under the provisions of Nagar Palika Parishad, Hathras (Vigyapan Kar Ka Nirdharan Aur Wasuli Viniyaman) Upvidhi, 2015 is clearly without legislative or statutory competence and is ultra-vires under Article 265 of the Constitution of India, U.P. Municipalities Act, 1916 and U.P. Goods and Service Tax Act, 2017. This Court has no hesitation in holding that the said Nagar Palika Parishad, Hathras (Vigyapan Kar Ka Nirdharan Aur Wasuli Viniyaman) Upvidhi, 2015 is without any legislative or statutory competence and, thus, are hereby struck down.
In view of the fact that the Court has held the levy and collection of Advertisement Tax as ultra-vires, the amounts so collected from the petitioner are liable to be refunded.
Accordingly, the Nagar Palika Parishad
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ity of law.
Therefore, the authority to levy any tax must be derived from some Statute.
The Nagar Palika Parishad, Hathras framed the said byelaws in exercise of its powers under Sub-Section (2)(vii) of the Section 128 of the Municipalities Act which enabled the municipality to impose tax on advertisement not being advertisement published in the news papers.
The aforesaid provision of Sub-Section (2)(vii) of the Section 128 of the Municipalities Act was omitted vide Section 173 of the G.S.T. Act which was enforced w.e.f. 01.07.2017. It may be pertinent to note that not only the G.S.T. Act was implemented w.e.f. 01.07.2017 but even the provision of Section 173 thereof was enforced with effect from the said date. Thus, Section 128(2)(vii) of the Municipalities Act stood omitted w.e.f. 01.07.2017.
In view of the aforesaid omission of Section 128(2)(vii) of the Municipalities Act by the G.S.T. Act, all municipalities in the State of U.P. were denuded of the power to impose tax on adver
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framing of bye-laws is not enough unless they see the light of the day which they saw for the first time on publication in the gazette by which time power to impose tax on advertisement was withdrawn.
Apart from the above, the State legislature was invested with the power to make laws in respect of taxes on advertisement vide Entry 55 of List II to the 7th Schedule of the Constitution but the said Entry was deleted by the Constitution (101st Amendment) Act, 2016 w.e.f. 12.09.2016. The said Amending Act vide Section 17 amends 7th Schedule and provides for the omission of Entry 55 of List 2 of the said Schedule. Thus, deleting the power of the State to make laws in respect of taxes on advertisement.
Accordingly, when the State was denuded of the power to make laws in respect of tax on advertisement obviously the municipalities also were divested of power to impose any tax on advertisement.
In view of the aforesaid, the impugned bye-laws are also ultra vires to Article 265 and List II
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