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SUPREME COURT OF INDIA
Vikram Nath, Ahsanuddin Amanullah, JJ.
The Patna Municipal Corporation & ORS.
[A1: Patna Municipal Corporation
A2: Municipal Commissioner-cum-Chief Executive Officer
A3: Deputy Commissioner
A4: Chief Engineer
A5: Surveyor
A6: Accounts Officer]- Appellants
Versus
M/s Tribro Ad Bureau & Ors.
[R1: M/s Tribro Ad Bureau
R2: State of Bihar
R3: Mayor] – Respondents
Civil Appeal No. 11117 Of 2024 (@Special Leave Petition (Civil) No.22592 Of 2016) Emanating From Lpa No.1391 Of 2012 Arising From Cwjc No.5108 Of 2012 [Patna High Court].
With
The Patna Municipal Corporation & Ors.
[A1: Patna Municipal Corporation
A2: Municipal Commissioner-cum-Chief Executive Officer
A3: Deputy Commissioner
A4: Chief Engineer
A5: Surveyor
A6: Accounts Officer]- Appellants
Versus
M/s Kraft & Ors.
[R1: M/s Kraft
R2: State of Bihar
R3: Mayor] – Respondents
Civil Appeal No. 11118 Of 2024 (Special Leave Petition (Civil) No. 24582 Of 2024) (@Diary No.30152 Of 2017) (Emanating From Lpa No.1436 Of 2012 Arising From Cwjc No.5369 Of 2012 [Patna High Court])
Decided On : 16-10-2024
(A) Constitution of India – Article 265 – Patna Municipal Corporation Act, 1951 – Section 431 – Levy of tax on advertisement(s) – Imposition of royalty cannot be equated with imposition of tax/levy – Royalty and tax cannot be equated – Royalty and tax are not one and same – Nomenclatures cannot be used interchangeably in law, both carrying starkly different imports and connotations – Revision of rate was within power of Corporation – Corporation’s power to charge royalty cannot be interfered with on the ground that same is not available, either in the Act or in Regulations concerned, as there is no question of ‘royalty’ being a tax – Enhancement of rate from Re.1 per square foot to Rs.10 per square foot was not exorbitant or disproportionate, requiring judicial interdiction – Challenge could later be mounted on limited grounds to quantum/rate of royalty and not on decision to charge royalty itself – There has been no serious attempt to challenge enhancement in quantum from Re.1 per square foot to Rs.10 per square foot – Patna Municipal Corporation (Grant of Permission for Display of Advertisements & Similar Devices) Regulations, 2012 relates only to grant of permission for display of advertisements and similar devices in any place within jurisdiction of Corporation – However, it cannot be said that these Regulations would have conferred the right to demand royalty by Corporation, which was traceable to agreement/arrangement between parties – Payment of enhanced rate of Rs.10 per square foot was not made retrospective by Corporation – Future enhancement in rate of royalty cannot be made to operate and/or have effect retrospectively – Decision of Corporation, to charge Rs.10 per square foot with regard to hoarding(s)/advertisement(s) as communicated at relevant point of time to concerned parties needs no interference – However, imposition of penalty for non-payment needs to be interfered with as no such power exists – Interest on delayed payment(s) would not be a ‘penalty’ but rather, in realm of ‘compensation’ for late/delayed payment of amounts which were payable on/from an earlier date – In order to balance equities, enhanced rate of Rs.10 per square foot would be payable by respective Respondents No.1/advertising companies and other similarly-situated persons in terms of Resolution of Corporation from the date same was made public/communicated to concerned parties, whichever is later, with 6% simple interest per annum. (Paras 23, 24, 29, 32, 33, 34, 35, 36 and 37)
(B) Indian Evidence Act, 1872 – Section 115 – Estoppel – Conduct of parties and acquiescence would preclude a party from turning around and assailing a decision acquiesced to, except where there is inherent lack of jurisdiction, or exercise of authority is perverse or malafide, in law or in fact. (Para 23)
Facts of the case:
Vide impugned Judgment it has been held by a Division Bench of High Court of Judicature at Patna that appellant(s) herein could not raise any demand of tax/fee/royalty on advertisement(s) since it has been made without any legislative sanction and is violative of Article 265 of Constitution of India. Division Bench further directed that all amounts recovered by appellants herein on this count i.e., by way of ‘tax’ on advertisement(s), be refunded to concerned parties, as also that, as a consequence, there was no question of any imposition of penalty by Appellant No.1/Patna Municipal Corporation.
Core question before Division Bench, is whether demand is by way of a tax/levy or simply in nature of royalty for permission for advertising through hoardings within limits of Corporation.
Findings of Court:
Amount(s), if any, paid over and above Re.1 per square foot, for the period in question, shall be adjusted towards the final liability to be determined by the Corporation vis-à-vis respective Respondents No.1 herein and all other similarly-situated persons.
Result : Appeals disposed of.
JUDGMENT :
AHSANUDDIN AMANULLAH, J.
Heard learned counsel for the parties.
2. Delay condoned.
3. Leave granted in both petitions.
4. As the issue involved in both cases is same, these appeals are dealt with collectively. For the sake of convenience, facts in the Civil Appeal arising out of Special Leave Petition (Civil) No.22592 of 2016 are noticed.
5. Challenge is laid to the Final Judgment and Order passed by a Division Bench of the High Court of Judicature at Patna (hereinafter referred to as the “High Court”) in Letters Patent Appeal No.1391 of 2012 dated 26.04.2016 (hereinafter referred to as the “Impugned Judgment”) by which the Judgment and Order passed by the Single Bench dated 29.06.2012 in Civil Writ Jurisdiction Case No.5108 of 2012 (hereinafter referred to as the “Single Bench Judgment") has been set aside and it has been held that the appellant(s) herein could not raise any demand of tax/fee/royalty on advertisement(s) since it has been made without any legislative sanction and is, thus, violative of Article 2653[‘265. Taxes not to be imposed save by authority of law. – No tax shall be levied or collected except by authority of law.’] of the Constitution of India, 1950 (hereinafter referred to as the “Constitution”). The Division Bench further directed that all amounts recovered by the appellants herein on this count i.e., by way of ‘tax’ on advertisement(s), be refunded to the concerned parties, as also that, as a consequence, there was no question of any imposition of penalty by the Appellant No.1/the Patna Municipal Corporation (hereinafter referred to as the “Corporation”).
CONTEXT:
6. On 29.08.2005, a Meeting was called by the Appellant No.2/Municipal Commissioner-cum-Chief Executive Officer, attended by representatives of the advertising agencies (respective Respondents No.1), wherein it was resolved that if any agency puts up its advertisement(s), it will have to submit a list of advertisement(s), the place/location, size, etc. to the Authorised Officer of the Corporation, and that the Corporation would charge royalty at the rate of Re.1/-per square foot per year on such hoardings, which would be displayed on the land under the jurisdiction of the Corporation. The Appellants on 15.01.2007 came out with fresh rates of royalty/tax on advertisements whereby different rates of royalty for different kinds of hoardings and advertisements were prescribed, the same being Rs.10/-per square foot per year in the case of the respondent, which was made effective from 02.11.2007.
7. In the interregnum, the Patna Municipal Corporation Act, 1951 was repealed and replaced by the Bihar Municipal Act, 2007 (hereinafter referred to as the “Act”), which came into force with effect from 05.04.2007, vide Section 488(1) of the Act. Thus, the Corporation started operating under the (new) Act. By Office Order dated 02.11.2007, various rates of royalty/penalty under the provisions of the Act were prescribed and the order was made effective from 24.08.2007. The Municipal Commissioner of the Corporation recommended that all those advertisers who had not paid their dues in terms of the order dated 02.11.2007 would be liable to be charged twice the rate fixed and further that hoardings displayed without permission should be removed and such persons would be charged a penalty five times the amount due from them. On 15.12.2010, the Council of the Corporation passed Resolution No.18 to cancel the registration of the advertising agencies that had defaulted in making payment of the enhanced royalty/fee/tax. The same was done when it came to the notice of the Corporation that several advertising agencies had illegally displayed hoardings, with some not even having permission to do so from the Corporation and not having paid dues. On 11.02.2012, in terms of various Resolutions/decisions of the Corporation under the Act, a demand was raised towards royalty/fee/tax on the Respondent No.1 to the tune of Rs.64,50,040/-(Rupees Sixty-Four Lakhs Fifty Thousa
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