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2016 Supreme(P&H) 1529
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
RAJESH BINDAL and HARINDER SINGH SIDHU, JJ.
M/s Laqshya Media Pvt. Ltd. - Petitioner
Vs.
State of Punjab and others - Respondents
CWP No. 4215 of 2016 (O&M)
Decided On : 23-08-2016
For the Petitioner:Mr. Piyush Kant Jain, Advocate.
Mr. Jagmohan Bansal, Addl. Advocate General, Punjab.
For the Respondents:Mr. Ashok Kumar Bazaz, Advocate.
The absence of machinery provisions for assessment and collection of tax renders the demand legally unsustainable, emphasizing the importance of machinery provisions for the assessment of taxes.
Headnote:
Advertisement Tax - Municipal Corporation - Punjab Municipal Corporation Act, 1976, Section 90, Section 122, Section 399 - The court discussed the provisions of the Punjab Municipal Corporation Act, 1976, specifically focusing on the levy and collection of taxes on advertisements. The court analyzed the absence of machinery provisions for assessment and collection of tax, the requirement for framing bye-laws, and the procedure for recovery of tax. The court also highlighted the constitutional validity of the taxing statute and referred to relevant judgments to support its decision.
Fact of the Case:
The petitioner sought quashing of the order demanding advertisement tax by the Municipal Corporation. The petitioner had entered into a concession agreement to design, build, and maintain bus shelters with advertisement rights. The petitioner challenged the demand of advertisement tax, citing the absence of machinery provisions for assessment and collection of tax, delay in issuing the demand notice, and the confiscatory nature of the demand.
Finding of the Court:
The court found that the demand of tax on advertisement was legally unsustainable due to the absence of machinery provisions for assessment and collection of tax. The court quashed the impugned order but allowed competent authority to raise demand following the prescribed procedure.
Issues: The issues included the legality of the demand for advertisement tax, absence of machinery provisions for assessment and collection of tax, delay in issuing the demand notice, and the confiscatory nature of the demand.
Ratio Decidendi: The court held that the absence of machinery provisions for assessment and collection of tax rendered the demand legally unsustainable. The court referred to relevant judgments to support its decision and emphasized the importance of machinery provisions for the assessment of taxes.
Final Decision: The court quashed the impugned order but allowed competent authority to raise demand against the petitioner following the prescribed procedure.
Rajesh Bindal, J.
1. The petitioner has filed the present petition seeking quashing of the order dated 22.1.2016 (Annexure P-16), passed by the Commissioner, Municipal Corporation, Ludhiana, demanding advertisement tax amounting to Rs. 41,77,500/-.
2. Learned counsel for the petitioner submitted that the petitioner entered into a concession agreement with M/s Ludhiana City Bus Services Ltd. (for short, 'the Company') on 26.5.2008. In terms of the agreement, the petitioner was granted concession to design, build and maintain bus shelters at different places, which were to be transferred to the Company free of charge after expiry of the concession period. The petitioner was given right to display advertisements.
3. It was argued that the petitioner was earlier issued letters dated 5.1.2015, 22.1.2015, 8.4.2015 and 17.8.2015 raising illegal demand of advertisement tax. Those were impugned by filing CWP No. 20050 of 2015. The writ petition was disposed of on 21.9.2015 with a direction to the authorities to decide the legal notice dated 19.8.2015 got served by the petitioner by passing a speaking order. The petitioner was further directed to deposit Rs. 25,00,000/-. The needful was done. The legal notice was disposed of by respondent No. 3 by passing order dated 22.1.2016, which has been impugned in the present petition.
4. Learned counsel for the petitioner, while challenging the aforesaid order, submitted that Section 90 of the Punjab Municipal Corporation Act, 1976 (for short, 'the Act') provides for taxes, which can be imposed by the Corporation. It includes tax on advertisement. Sub-section (3) thereof provides that taxes as specified in sub-sections (1) and (2) shall be levied at such rates as may, from time to time, be specified by the Government by notification and shall be assessed and collected in accordance with the provisions of the Act and the bye-laws made thereunder. Stress was laid regarding assessment and collection of the tax in accordance with the provisions of the Act and the bye-laws made thereunder claiming that there is no procedure provided for assessment and collection and no bye-laws have been framed. Sub-section (4) of Section 90 of the Act provides that even the Government may, by special or general order, direct a Corporation to impose any tax, as provided for in sub-section (1) thereof, if not already imposed.
5. Section 122 of the Act was referred to, which specifically deals with tax on advertisements. It provides that every person liable to pay tax under specified conditions shall pay the same calculated at such rate, as may be specified by the Government. Sub-section (2) thereof provides that tax leviable under this sub-section shall be payable in advance in such number of instalments and in such manner, as may be determined by the bye-laws made in this behalf. “Bye-law” has been defined under Section 2(4) of the Act to mean a bye-law framed under the Act by notification in the official gazette. Section 399(1)(A)(7) of the Act was referred to, which provides for framing of bye-laws with reference to submission of returns by the person liable to pay any tax under the Act. Section 399(1)(A)(8) of the Act provides for framing of bye-laws for any other matter relating to levy, assessment, collection, refund or remission of taxes under the Act.
6. As regards rate of tax, learned counsel for the petitioner referred to the notification dated 17.5.2005, issued by the Government of Punjab, specifying rates of tax on advertisements, which was revised vide notification dated 15.12.2014.
7. It was further argued that despite all these enabling provisions specifically requiring framing of bye-laws for levy, filing of returns, assessment, collection, refund etc. with reference to the taxes leviable under the Act, no bye-laws have been framed, in the absence of which the tax on advertisement could not be demanded, as the levy would take the character of being confiscatory.
8. The Punjab Municipal Outdoor Advert
