1. Dispute over levy of advertisement tax on sign boards displaying trade names and products on business premises under the Municipal Corporation Act. (Para 2 , 3 )
Back
Next 
2023 Supreme(SC) 1050
SUPREME COURT OF INDIA
S. RAVINDRA BHAT, ARAVIND KUMAR, JJ.
M/S Harsh Automobiles Private Limited - Appellant
Versus
Indore Municipal Corporation - Respondent
Civil Appeal No. 5362 of 2023
With
M/S Sanghi Brothers (Indore) Private Limited - Appellant
Versus
Indore Municipal Corporation and Another - Respondents
Civil Appeal No. 5363 of 2023
Decided On : 09-10-2023
Important Points
Displaying a trade name and the nature of business on a sign board at the business premises for identification purposes constitutes information to the public, not an "advertisement," unless it actively solicits customers or promotes a specific brand to attract buyers.
Subject
Taxation Law - Municipal Tax
Act Referred
BOMBAY MUNICIPAL CORPORATION ACT: S.328(a)
CONSTITUTION OF INDIA: Art.19(1)(a), Art.226, Art.243(q), Art.265
MUNICIPAL ACT: S.189(a)
MUNICIPAL CORPORATION ACT: S.132, S.133(1), S.427, S.429, S.430, S.431
CONSTITUTION OF INDIA: Art.19(1)(a), Art.226, Art.243(q), Art.265
MUNICIPAL ACT: S.189(a)
MUNICIPAL CORPORATION ACT: S.132, S.133(1), S.427, S.429, S.430, S.431
Headnote
ADVERTISEMENT - Municipal Tax - Section 189-A of the Municipal Act, 1965 - The court examined whether the display of name boards and sign boards by business establishments constituted "advertisement" for the purpose of imposing advertisement tax. The court referred to various dictionary definitions of "advertisement" and held that for a display to be considered an advertisement, it must have a commercial purpose and be indicative of business activity with the intention to attract customers. The court further stated that if the display only provides information about the business establishment and its products without soliciting customers, it would not amount to advertisement. The court found that the appellants' name boards displayed general information about their businesses and products without soliciting customers, therefore they did not fall within the definition of advertisement. The court directed the municipal corporation to re-examine the objections raised by the appellants against the tax notices.
Fact of the Case:
The appellants were issued demand notices for payment of advertisement tax based on their display of name boards and sign boards at their business premises. They contended that such displays did not constitute advertisement but were merely providing information about their businesses.Finding of the Court:
The High Court had dismissed the writ petitions filed by the appellants, relying on a previous judgment in Bharti Airtel vs. State of Madhya Pradesh. However, the Supreme Court held that Bharti Airtel was not applicable to the present case as it dealt with a different issue regarding tax collection agents. The court also noted that imposition of advertisement tax on name boards and sign boards without solicitation of customers would violate Article 19(1)(a) and 19(1)(g) of the Constitution.Issues:
Whether displaying name boards and sign boards at business premises constitutes "advertisement" for purposes of imposing advertisement tax? Whether such imposition is violative of constitutional rights?Ratio Decidendi:
To be considered an advertisement, a display must have a commercial purpose and be indicative of business activity with the intention to attract customers. Mere display of name boards and sign boards providing information about the business establishment and its products without soliciting customers does not amount to advertisement.Final Decision:
The court directed the municipal corporation to re-examine the objections raised by the appellants against the tax notices, considering that their displays did not fall within the definition of advertisement. The court also held that imposition of advertisement tax on such displays would be without authority of law and violative of constitutional rights.Legal Category Hierarchy
Advocates appeared:
For the Appellant(s) : Ms. Manjula Baxla, Adv. M/S. Cyril Amarchand Mangaldas, AOR
For the Respondent(s): Mr. Mishra Saurabh, AOR
For the Appellant(s) : Ms. Manjula Baxla, Adv. M/S. Cyril Amarchand Mangaldas, AOR
For the Respondent(s): Mr. Mishra Saurabh, AOR
Table of Contents
2. Whether display of trade name and nature of business on own premises constitutes an advertisement or mere identification, and issues of territorial jurisdiction. (Para 5 , 6 , 7 , 8 )
3. Distinction between identification boards and advertisements; advertisements must solicit customers or promote sales rather than merely providing information about the business's identity and products. (Para 15 , 16 , 17 , 18 )
4. Display of trade name and products on business premises for identification does not constitute an advertisement unless it solicits customers or promotes a particular brand. (Para 18 )
5. Appeals disposed of; respondent directed to adjudicate objections to demand notices afresh within eight weeks. (Para 19 , 20 )
6. What constitutes an advertisement for the purpose of taxing sign boards?
An advertisement must have a commercial purpose, draw public attention to promote a product or service, and solicit customers. Mere display of a company's name or the nature of its business for identification purposes does not constitute an advertisement. (Para 15 , 16 , 18 )
7. Does the display of products dealt with on a business name board automatically attract advertisement tax?
No. Mentioning the name of the product in which a business deals on its own premises is considered general information for identification and does not partake the character of an advertisement unless it solicits customers. (Para 18 )
8. How does the court distinguish between a simple name board and a commercial advertisement?
A simple name board identifies the place of business or resident. A commercial advertisement actively tries to influence people to buy a product or service or attract them toward a specific brand. (Para 17 , 18 )
JUDGMENT :
Aravind Kumar, J.
1. The Order dated 24.10.2017 passed in WP No.1842 of 2016 and WP No.2106 of 2012 by the High Court of Madhya Pradesh whereunder the demand notices raised against the appellants for payment towards advertisement tax came to be affirmed by relying upon the judgment of Bharti Airtel Vs. State of Madhya Pradesh rendered in WP No. 2296 of 2012 decided on 12.01.2015 has been called in question.
RE: Facts in C.A.5362 of 2023 arising out of final order and judgment dated 24.10.2017 passed in WP No.1842 of 2016
2. Appellant is the occupier of the premises at 14 Rukmini Plaza, AB Road, Indore and is a dealer of Hyundai Passenger Cars and is carrying on said business at the said premises apart from other places. Appellant has displayed a name board with its trade name and business in the premises where business is being run. Second respondent issued a notice on 04.07.2015 demanding an amount of Rs.2,03,850/- for recovery of advertisement tax namely for the displaying sign board at its premises under Section 189-A of the Municipal Act, 1965. An objection was raised to the same by the appellant contending inter alia that putting up of sign board and displaying the name of the appellant’s business would not fall within the definition of “advertisement”, rather it was displaying its own name and business through the sign board as it would be necessary for the general public to know the name and nature of business and the product it was dealing with. Being aggrieved by this notice writ petition under Article 226 of the Constitution of India came to be filed and the Hon’ble High Court by impugned order relying upon the judgment of Bharti Airtel (supra) dismissed the petition. Hence this appeal.
RE: Facts in CA 5363 of 2023 arising out of the final order and judgment dated 24.10.2017 passed in WP No.2106 of 2012.
Appellant is a company incorporated under the Companies Act, 1956 and in order to let the general public know the name and business of the company and the nature of its business and its products, appellant company has put up a name board displaying its trade name within the business premises displaying the products and services in which the appellant is dealing and as such the notice dated 04.01.2012 came to be issued by the second respondent demanding advertisement tax of Rs.1,31,137/- and yet another notice dated 04.01.2012 of Rs.51,000/- in respect of another premises where similar board had been put up by the appellant. These notices were duly replied to by the appellant by objecting to the same and contending inter alia that it was not displaying any advertisement rather it was displaying its own trade name and business sign board and sought for withdrawal of the notice. It was also contended that notice issued was without jurisdiction as one of its premises situated at Lasudia Mori, AB Road, Tehsil and District Indore was situated outside the municipal limits and therefore no tax was leviable. Hence, sought for notices being withdrawn.
3. Subsequently, second respondent issued another notice on 08.02.2012 revising its earlier demand of sum of Rs.1,82,137.50 to Rs.46,050. This notice came to be challenged by filing a Writ Petition under article 226 of the Constitution of India before the High Court of Madhya Pradesh in Writ Petition No.2106 of 2012. The High Court by impugned order dated 24.10.2017 relying upon the judgment of Bharti Airtel (supra) dismissed the petition. Hence this appeal.
4. We have heard the arguments of learned advocates appearing for the parties namely Shri Kapil Arora and Mr. Niraj Sharma, learned counsel appearing for the appellants and Shri Mishra Saurabh, learned counsel appearing for the respondent.
5. It is the contention of the learned advocates appearing for the appellant that impugned orders have been passed by relying upon the judgment rendered by the coordinate bench of the High Court in Bharti Airtel (supra) which was inapplicable to the facts on hand as the issue involved i
