Selvel Media Services Private Limited VS State Of U.P

The case revolves around the imposition of advertisement tax by the Nagar Nigam (Municipal Corporation) of Kanpur on advertising companies for displaying advertisements through hoardings within its jurisdiction. The petitioners, represented by Sri W.H. Khan, Senior Counsel, and Sri Javed Husain Khan, learned counsel, challenge the validity of this tax, particularly after the deletion of the provision to levy advertisement tax and the implementation of the U.P. Goods and Service Tax, 2017 from July 1, 2017.

The dispute arises from the history of tax regulations in Kanpur. Previously, the Nagar Nigam had framed rules for the assessment and collection of tax on advertisements under the U.P. Municipal Corporation (Assessment and Collection of Tax on Advertisement) Rules, 2009. However, these rules were invalidated by the Lucknow Bench of the Allahabad High Court in the case of Anurag Bansal Vs. State of U.P. & others in 2011. Subsequently, new rules were introduced in 2016 under the name Kanpur Nagar Nigam (Vigyapan Kar Ka Nirdharan Aur Wasuli Viniyam) Upvidhi, but these were also struck down in 2017 through a writ petition.

Despite the annulment of these rules, the Nagar Nigam continued to demand advertisement tax from the petitioners. The power to levy such tax was originally vested in Section 172 (2) (h) of the Municipal Corporation Act, 1916, but this provision was deleted as of July 1, 2017, under Section 173 of the U.P. GST Act.

In the courtroom, the petitioners, the State of U.P., and the Kanpur Nagar Nigam were represented by respective counsels, presenting arguments regarding the legality and applicability of the advertisement tax post the implementation of the U.P. Goods and Service Tax Act.

The central issue at hand is whether the Nagar Nigam has the authority to levy advertisement tax following the deletion of the relevant provision and the enactment of the GST Act. The petitioners contend that without a valid legal framework in place for such taxation, the demand for advertisement tax is unjustified.

The court’s decision will likely have significant implications for the taxation policies of municipal corporations in Uttar Pradesh and may establish precedents regarding the interpretation of tax laws in the context of local governance and the GST regime.

The case involves a dispute over the imposition of advertisement tax by the Nagar Nigam (Municipal Corporation) of Kanpur on advertising companies for displaying advertisements through hoardings within its jurisdiction. Representing the petitioners, Sri W.H. Khan, Senior Counsel, assisted by Sri Javed Husain Khan, argued against the imposition of advertisement tax effective from July 1, 2017. They contended that with the deletion of the provision allowing for the levy of advertisement tax and the enactment of the U.P. Goods and Services Tax Act, 2017, no advertisement tax could be legally imposed.

The petitioners, all advertising companies, challenged the legality of the tax imposition. The dispute stems from the fact that previous attempts by the Nagar Nigam Kanpur to levy advertisement tax through the U.P. Municipal Corporation (Assessment and Collection of Tax on Advertisement) Rules, 2009, and later the Kanpur Nagar Nigam (Vigyapan Kar Ka Nirdharan Aur Wasuli Viniyam) Upvidhi, 2016, were struck down by the Lucknow Bench of the Allahabad High Court in previous cases.

Despite the lack of valid rules or bylaws for levying advertisement tax, the Nagar Nigam continued to demand such taxes from the petitioners. The authority to levy advertisement tax was originally provided under Section 172(2)(h) of the Municipal Corporation Act, 1916, which was deleted effective July 1, 2017, by virtue of Section 173 of the U.P. GST Act. Additionally, the power of the State Government to legislate regarding advertisement tax, as provided under Entry 55 of List II of the VII Schedule of the Constitution of India, was also deleted effective September 12, 2016, by the Constitution (101 Amendment) Act, 2016.

The petitioners argued that the authority to levy any tax, including advertisement tax, must be derived from statutes, as mandated by Article 265 of the Constitution of India.

During the hearing, the court heard arguments from the petitioners’ counsel, as well as the learned Standing Counsel for the State of U.P. and the counsel representing Kanpur Nagar Nigam. The case revolves around the legality of imposing advertisement tax in light of the changes in relevant legislation and previous court rulings. The outcome of this case could have significant implications for the taxation of advertisements within the jurisdiction of Kanpur Nagar Nigam and potentially impact similar cases in other municipalities across Uttar Pradesh.

The case involves a dispute over the imposition of advertisement tax by the Nagar Nigam (Municipal Corporation) of Kanpur on advertising companies for displaying advertisements through hoardings within its jurisdiction. Representing the petitioners, Sri W.H. Khan, Senior Counsel, assisted by Sri Javed Husain Khan, learned counsel, argued against the legality of this tax demand. The crux of the petitioners’ argument lies in the contention that the levy of advertisement tax became invalid from July 1, 2017, due to the deletion of the relevant provision and the enactment of the Uttar Pradesh Goods and Service Tax (GST) Act, 2017.

Previously, the Nagar Nigam Kanpur had established rules for assessing and collecting advertisement tax, but these were invalidated by the Lucknow Bench of the Allahabad High Court. Subsequently, another set of rules was introduced in 2016 but met with a similar fate when challenged in court. Despite the absence of valid rules or bylaws for imposing advertisement tax, the Nagar Nigam continued to demand taxes from the petitioners.

The legal basis for levying advertisement tax stemmed from Section 172(2)(h) of the Municipal Corporation Act, 1916, which was deleted as of July 1, 2017, by virtue of Section 173 of the U.P. GST Act. Additionally, the state government’s power to legislate on advertisement tax, as provided under Entry 55 of List II of the Seventh Schedule of the Constitution of India, was also revoked as of September 12, 2016.

Article 265 of the Constitution of India mandates that taxes can only be levied or collected as per the authority of law. Consequently, with the deletion of the relevant provisions and the lack of legislative authority, both the state government and the Municipal Corporation lost the jurisdiction to impose advertisement tax after September 12, 2016, and July 1, 2017, respectively.

In light of these legal arguments and constitutional provisions, the court held that the demand for advertisement tax from the petitioners post-July 1, 2017, was illegal and without jurisdiction. Therefore, the court likely ruled in favor of the petitioners, declaring the tax demands null and void.

In the case heard before the court, Sri W.H. Khan, Senior Counsel, along with Sri Javed Husain Khan, learned counsel for the petitioners, and learned Standing Counsel for the State of U.P., as well as Sri Alok Mishra, learned counsel for Kanpur Nagar Nigam, presented their arguments. The petitioners, who are advertising companies, contested the demand for advertisement tax imposed by Kanpur Nagar Nigam for displaying advertisements through hoardings within its jurisdiction. They challenged the imposition of this tax from July 1, 2017, arguing that with the deletion of provisions allowing for the levy of advertisement tax and the enactment of the U.P. Goods and Service Tax, 2017, no advertisement tax could be imposed.

It was noted that previously, Kanpur Nagar Nigam had framed rules for the assessment and collection of tax on advertisement, but these rules had been struck down by the Lucknow Bench of the Allahabad High Court. Subsequently, new rules were made in 2016, which were also invalidated by a court judgment in 2017. Despite the absence of valid rules or bylaws for levying advertisement tax, the Nagar Nigam continued to demand such tax from the petitioners.

The power to levy advertisement tax, which was contained in Section 172(2)(h) of the Municipal Corporation Act, 1916, was deleted with the enactment of the U.P. GST Act. Additionally, the State Government’s power to legislate regarding advertisement tax was also deleted by a constitutional amendment in 2016.

Considering these legal developments, the court held that neither the State Government nor the Municipal Corporation had the authority to impose advertisement tax after the relevant dates. Therefore, any demand for tax on advertisement made after September 12, 2016, or July 1, 2017, lacked legal basis and jurisdiction.

Consequently, the court quashed the notices of demand issued to the petitioners and ordered the refund of any advertisement tax deposited by them for the period from July 1, 2017, onwards. The court also ruled that Kanpur Nagar Nigam should refrain from imposing any tax on advertisement after July 1, 2017.

In summary, the court upheld the petitioners’ challenge against the advertisement tax, declaring it illegal and without jurisdiction after the specified dates, and directed appropriate action to refund any taxes collected unlawfully.

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