Atul Garg vs Nagar Nigam Ghaziabad And Others
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HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 


 
A.F.R.
 
Court No. - 40
 

 
Case :- WRIT - C No. - 8751 of 2012
 

 
Petitioner :- Atul Garg
 
Respondent :- Nagar Nigam Ghaziabad And Others
 
Counsel for Petitioner :- Anoop Trivedi
 
Counsel for Respondent :- N.N. Mishra,S.C.
 

 
Hon'ble Amreshwar Pratap Sahi,J.

Hon'ble Harsh Kumar,J.

Heard Sri Anoop Trivedi, learned counsel for the petitioner, Sri S.M. Shukla, learned counsel for the Nagar Nigam and learned Standing Counsel for the State.

This petition has been filed praying for quashing of the advertisement fee as well as the charges for removal of advertisements under the impugned orders dated 17th January, 2012 and 31st January, 2012 passed by the Ghaziabad Municipal Corporation on the ground, that the petitioner who was a candidate of the Assembly Elections of the State of Uttar Pradesh, 2012 fielded by the Bharatiya Janta Party, had set up hoardings and kiosks for advertisements without the permission of the Municipal Corporation in spite of a public notice having been issued in this regard and notified in the newspapers. The petitioner has also been called upon to deposit the amount therein on the ground that the Municipal Corporation had to incur an expenditure for removal of the said advertisements and therefore the petitioner was liable to make good the aforesaid demand raised through the impugned order keeping in view the directives issued by the Election Commission, the powers exercisable by the Municipal Corporation, Ghaziabad under the U.P. Municipal Corporation Act 1959 and the Rules framed thereunder.

Upon a challenge having been raised in this petition, a Division Bench of this Court on 23rd February, 2012 passed the following interim order:-

"Heard learned counsel for the petitioner and Shri N.N. Misra, learned counsel appearing for respondnets.

By means of this petition, the petitioner has prayed for quashing the orders dated 7.1.2012 and 31.1.2012 issued by the resplendent no.3 by which the petitioner has been asked to deposit Rs. 2,58,000/- and 36,400/- respectively as fee for putting the hoardings and expenses for removal of such hoardings incurred by the Nagar Nigam.

Learned counsel for the petitioner submits that by virtue of section 192 and 193 of the U.P. Municipal Corporations Act 1959, the respondents can not charge any tax or fee on the advertisement with regard to the election of Legislative Assembly.

Learned counsel for the petitioner further submits that the hoardings admittedly have been put in connection with the assembly election in the District Ghaziabad.

Learned counsel for the respondents submits that the petitioner is liable to make the payment under section 193 of the U.P. Municipal Corporations Act, 1959 for removal of unauthorised hoardings and the Nagar Nigam is entitled to realise the expenses.

We are of the primafacie view that the Nagar Nigam is not entitled to realise any tax or fee but only the expenses. However, the advertisement/hoardings are required to be put after approval of the competent authority and hoardings having been put without the approval of the competent authorty, it is open for the Nagar Nigam to realise the amount which was incurred in removing the hoardings.

Learned counsel for the petitioner submits that realisation of expenses is not also permissible under the U.P. Municipal Corporations Act, 1959. According to the petitioner under order dated 17.1.2012 the total amount which is said to be incurred for the expenses in removing the hoardings is Rs. 56700/- and with regard to the order dated 31.1.2012 the total amount is for expenses Rs. 7000/-.

In view of the aforesaid, we are of the view that subject to deposit of Rs. 56700/- and Rs. 7000/- respectively within two weeks from today, no further recovery shall be made from the petitioner.

Respondents are allowed three weeks' time to file counter affidavit.

List in the week commencing 19.3.2012. "

A counter affidavit has been filed by the Nagar Nigam, Ghaziabad justifying its action on the grounds referred to hereinabove while referring to the provisions of Section 193 and Section 196 of the 1959 Act.

It has been further stated in the counter affidavit that the Municipal Corporation has charged only the expenses for removal and has not imposed any advertisement tax on the petitioner.

While responding to the contentions raised on behalf of the petitioner, the Municipal Corporation has filed a chart of the calculation made of the entire amount to be realised from the petitioner prescribing the rates of advertisement fee as well as the removal charges at the rate of Rs. 50 per sqft. and Rs. 100/200 per sqm respectively. Along with the chart, the respondent Corporation has also appended the rates of tax leviable on advertisements through hoardings and other devices leviable on advertisements. A rejoinder affidavit to the same has been filed by the petitioner questioning the correctness of such levy and denying the allegations contained in the counter affidavit.

A two-fold submission has been raised by Sri Anoop Trivedi, learned counsel for the petitioner namely that the respondent Municipal Corporation is prohibited under law from imposing or levying any tax relating to advertisement of an election to a legislative body or of the candidature in respect of such an election. He has invited the attention of the Court to the first proviso to Section 192 of the 1959 Act to further contend that if the tax is not leviable, then there is no occasion for seeking a written permission under Section 193 of the 1959 Act as contended by the respondent, inasmuch as, Section 193 would come into operation only if a levy has been made of tax under Section 192 on any advertisement. In essence the argument is that if any advertisement is not subject to levy of tax as presently involved, then permission for setting up hoardings, banners or posters or bills during elections is not required as per Section 193.

Coming to the second argument Sri Trivedi submits that the levy of removal charge is also unauthorised inasmuch there is no foundation or basis by way of any resolution or bye law or regulations so as to justify the imposition of removal charges either treating it as a fee or a penalty, and therefore in the absence of any authorisation in law, such a charge cannot be imposed and realised.

Learned counsel for the petitioner submits that even otherwise assuming for the sake of arguments though not admitting, that such a removal penal charge can be realised, there is no basis for prescribing the rate of Rs. 100/200 per sqm. by the respondent Municipal Corporation nor any such exercise has been undertaken to rationally calculate the rates for such charges. He therefore submits that the imposition of removal charges not being authorised in law violates Article 14 of the Constitution of India as the rates have been prescribed arbitrarily without any basis.

Replying to the aforesaid submissions learned counsel for the Municipal Corporation, Ghaziabad Sri S.M. Shukla contends that permission being mandatory under Section 193 for any advertisement, the levy of tax under Section 192 is only to prescribe the moment after which permission is required. He submits that the announcement of levy tax has got nothing to do with the requirement of permission which is mandatory for putting up any advertisement under Section 193 of the Act. It is further submitted that the if an advertisement has been set up without permission as prescribed under the statute then it is within the powers of the Corporation to take appropriate action including realisation of expenses for the removal of such unauthorised hoardings, bills or posters. He submits that the Municipal Corporation has not levied any tax but has sought to realise charges for putting up the advertisements without permission and also for its removal.

We have considered the submissions raised. In order to appreciate the controversy, Section 172(h) is extracted hereinunder which authorises the levy of a tax on advertisements:-

" A tax on advertisements not being advertisements published in newspapers"

This is further elaborated under Section 192 of the 1959 Act which is extracted hereinunder:-

"192. Tax on advertisements. - Where a Corporation imposes a tax mentioned in clause (h) of sub-section (2) of Section 172, every person who erects, exhibits, fixes or retains upon or over any land, building, wall, hoarding or structure any advertisement or who displays any advertisement to public view in any manner whatsoever, in any place whether public or private, shall pay on every advertisement which is so erected, exhibited, fixed, retained or displayed to public view, a tax calculated at such rates and in such manner and subject to such exemptions as may be provided by the Act or rules made thereunder:

Provided that no tax shall be levied under this section on any advertisement or a notice-

(a) of public meetings, or

(b) of an election to any legislative body or the Corporation,

(c) of a candidature in respect of such an election:

Provided also that no such tax shall be levied on any advertisement which is not a sky-sign and which-

(a) is exhibited within the window of any building, or

(b) relates to the trade or business carried on within the land or building upon or over which advertisement is exhibited, or to any sale or letting of such land or building or any effects therein or to any sale, entertainment or meeting to be held upon or in the same, or

(c) relates to the name of the land or building upon or over which the advertisement is exhibited, or the name of the owner or occupier of such land or building, or

(d) relates to the business of any railway administration, or

(e) is exhibited within any railway station or upon any wall or other property of a railway administration except any portion of the surface of such wall or property fronting any street.

Explanation 1.-The word "structure" in this section shall include any movable board on wheels used as an advertisement or an advertisement medium.

Explanation 2.-"Public place" shall, for the purpose of this section, mean any place which is open to the use and enjoyment of the public, whether it is actually used or enjoyed by the public or not."

The first proviso particularly clause (b) read with clause (c) thereof clearly prohibits the levy of tax on any advertisement or a notice of any election to any legislative body or of a candidature in respect of such an election. This levy of tax on advertisement is virtually an exemption from taxation only. . In our considered opinion the first proviso to Section 192 therefore prohibits the levy of any tax relating to any advertisement or a notice of an election to any legislative body or of a candidature in respect of such an election. Consequently, a tax cannot be levied or imposed on any such advertisement and which is also not disputed in the counter affidavit filed on behalf of the Municipal Corporation.

The next question is with regard to the putting up of advertisements with the written permission of the Municipal Commissioner as prescribed in Section 193 that is extracted hereinunder:-

"193. Prohibition of advertisement without written permission of Municipal Commissioner. - (1) No advertisement shall, after the-levy of the tax under Section 192 has been determined upon by the Corporation, be erected, exhibited, fixed or retained upon or over any land, building, wall, hoarding or structure within the City or shall be displayed in any manner whatsoever in any place without the written permission of the Municipal Commissioner.

(2) The Municipal Commissioner shall not grant such permission if -

(i) the advertisement contravenes any bye-law made by the Corporation under 21[c1ause (48)] of Section 541, or (ii) the tax, if any, due in respect of the advertisement has not been paid.

(3) Subject to the provisions of sub-section (2) in the case of any advertisement liable to the advertisement tax, the Municipal Commissioner shall grant permission for the period to which the payment of the tax relates and no fee shall be charged in respect of such permission:

Provided that the provisions of this section shall not apply to any advertisement erected, exhibited, fixed or retained on the railway premises or relating to the business of any railway administration."

A perusal of the aforesaid provision clearly demonstrates that it begins with a prohibitory note namely no advertisement shall be erected, exhibited fixed or retained upon in any manner whatsoever in any place without the written permission of the Municipal Commissioner. There are certain prohibitions on the Municipal Commissioner not to grant permission. Sri Anoop Trivedi, learned counsel for the petitioner vehemently urged that this permission is clearly contingent upon the levy of tax under Section 192, and not on the advertisements which are not subject to any levy of tax under the said provision. We are unable to accept this submission for the simple reason that the words "after the levy of the tax under Section 192 has been determined upon by the Corporation" clearly defines the contingency whereupon no advertisement at all, whether it is subject to levy of tax or not shall be erected or exhibited. If the argument advanced on behalf of the learned counsel for the petitioner is accepted then it will give a free hand to any person contesting elections to display any amount of advertisements at public places irrespective of any statutory control which does not appear to be the legislative intent of Section 193 of the 1959 Act. Public places can be utilised by candidates for advertisements without payment of tax, but this does not give them the licence to swamp public places and fixtures meant for public enjoyment with banners, posters in whatever manner they feel like.

The right to canvass during elections and to express oneself through banners, posters may involve a right to freedom of expression, but the right to contest an election is not a fundamental right. The candidate therefore does not have a right to heap a locality with banners, posters and post bills and thereby utilise public places, electric poles and walls to such an extent so as to cause environmental and hygienic problems coupled with an indiscriminate smearing of fixtures at public places in an unabated manner. The quantum and manner of advertisements by utilising public places and fixtures under the management and protection of the Municipal Corporation cannot be left scot free and unregulated at the cost of merciless campaigning ingenious devices during elections. It is no doubt true that elections that are the foundation of democratic governance are celebrated like national festivals, but that does not mean that political parties or candidates or their agents can indulge in excessive festoonery so as to affect decent public life. Such advertisements should avoid defacing the beauty and cleanliness of public places and structures. This would also involve a huge exercise of garbage cleaning to maintain cleanliness. Accordingly, such a right has to be regulated and for that in the event the enactment requires permission, then no advertisements should be displayed without the permission of the Municipal Corporation and if at all is attempted then the Municipal Corporation has the authority to realise a fee or such charges that may be necessary for carrying out removal of advertisements in order to maintain the beauty, environment and hygiene of public places.

The aforesaid conclusion drawn by us however deserves to be clarified as we are of the considered opinion that in view of the nature and quantum of the services involved in the present controversy, namely, the putting up of advertisement during election and the massive exercise of removal to be undertaken by the Municipal Corporation, we find that the corporation can levy a fee provided there is a legal sanction for the same. The Municipal Corporation is exercising a delegated power under the 1959 Act, keeping in view the Constitutional provisions that authorizes the State to levy taxes and fees. All municipalities throughout the country are now constitutionally recognized bodies under Part IX-A of the Constitution of India. Article 243-W empowers the legislature of a state subject to the provisions of the Constitution to endow municipalities with all such powers and authority that may be necessary to enable them to function as Institutions of self governance and the law can contain provisions for devolution of powers and responsibilities as provided for therein. Article 243-X empowers the legislature to frame a law conferring authority on the municipalities to impose taxes, duties, tolls and fees. Thus levy of any fee is constitutionally protected provided the same is in accordance with and authorized by law. To clarify as to how the authority of law would operate authorizing a local body or a development authority to levy a tax or a fee, the Supreme Court in the case of Ahmedabad Urban Development Authority Vs. Sharadkumar Jayantikumar Pasawalla & Others reported in 1992 (3) SCC 285, laid down as follows in paragraph nos. 7 and 8 of the said decision extracted hereinunder:-

"7. After giving our anxious consideration to the contentions raised by Mr. Goswami, it appears to us that in a fiscal matter it will not be proper to hold that even in the absence of express provision, a delegated authority can impose tax or fee. In our view, such power of imposition of tax and/or fee by delegated authority must be very specific and there is no scope of implied authority for imposition of such tax or fee. It appears to us that the delegated authority must act strictly within the parameters of the authority delegated to it under the Act and it will not be proper to bring the theory of implied intent or the concept of incidental and ancillary power in the matter of exercise of fiscal power. The facts and circumstances in the case of District Council of Jowai are entirely different. The exercise of powers by the Autonomous Jantia Hills Districts are controlled by the constitutional provisions and in the special facts of the case, this Court has indicated that the realisation of just fee for a specific purpose by the autonomous District was justified and such power was implied. The said decision cannot be made applicable in the facts of this case or the same should not be held to have laid down any legal proposition that in matters of imposition of tax or fees, the question of necessary intendment may be looked into when there is no express provision for imposition of fee or tax. The other decision in Khargram PanchayatSamiti's case also deals with the exercise of Incidental and consequential power in the field of administrative law and the same does not deal with the power of imposing tax and fee.

8. The High Court has referred to the decisions of this Court in Hingir's case, and Jagannath Ramanuj's case and Delhi Municipal Corporation's case (supra). It has been consistently held by this Court that whenever there is compulsory exaction of any money, there should be specific provision for the same and there is no room for intendment. Nothing is to be read and nothing is to be implied and one should look fairly to the language used. We are, therefore, unable to accept the contention of Mr. Goswami. Accordingly, there is no occasion to interfere with the impugned decision of the High Court. The appeal, therefore, fails and is dismissed with no order as to costs."

As noted above in the present case, nothing has been brought on record that would demonstrate that any regulation by law or resolution of the Municipal Corporation exists for imposition of the fee imposed by it. We may however clarify that such a fee can be imposed relating to advertisement even if the imposition of tax is prohibited. For this it would be appropriate to indicate as to the nature of imposition which is sought to be justified by the respondent-Corporation.

In ordinary parlance, tax is a charge imposed by the State for the support of governance which is a compulsory burden with a corresponding contribution by the tax payer. Its intent is to generate revenue and levy a tax thereby creating an oppressive obligation which is constitutionally permissible. On the other hand, fee is a charge for rendering special or professional services or for seeking a privilege like a doctor receiving a fee for his professional visit, a solicitor receiving a fee for an advise given to a client and a fee received by a clergyman for conducting a wedding. However when it comes to a statutory collection of a fee, then fee paid to a public official is a recompense for availing a privilege for example the grant of a license. When a certain advantage is sought to be availed, a fee can be levied.

Thus tax is compulsory exaction where all have to pay and one cannot volunteer not to pay unless exempted.

However the above ordinary parlance meaning came to be interpreted for the purpose of drawing a distinction between a tax and a fee after the advent of the Constitution by the Apex Court and a neat division was made but it was held that there is no generic difference between a tax and a fee. This began with the famous judgment in the case of The Commissioner, Hindu Religious Endowments, Madras Vs. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt AIR 1954 SC 282. This was followed by the pronouncement of the Apex Court in the case of Corporation of Calcutta & Another Vs. Liberty Cinema AIR 1965 SC 1107. While considering the provisions of UP Municipalities Act 1916, the Supreme Court came to the conclusion that there is a generic difference between a tax and a fee holding that both are compulsory exaction of money by public authorities but whereas a tax is imposed for a public purpose and is not supported by any services rendered in return, a fee is levied and essentially for services rendered as there is an element of quid pro quo between the person who face the fee and the public authorities which imposed it. This was held in the case of Nagar Mahapalika, Varanasi Vs. Durga das Bhattacharya & Others AIR 1968 SC 1119. This distinction was again dealt with in the case of State of Tripura & Others Vs. Sudhir Ranjan Nath 1997 (3) SCC 665 where the distinction between fee for an application and a regulatory fee was explained. It was held that an application for grant of license for which some fee is imposed does not necessarily mean that it is a fee in return for services as the fee is not intended to be a fee for services rendered. But fee which is compensatory in order to regulate an activity can be levied for services rendered where there is an element of quid pro quo. Such fee is charged either to increase the general funds or to defray the cost of administering the local needs or both of them. The Supreme Court referred to the judgment in the case of Liberty Cinema (supra) and also to the judgment in the case of State of U.P. & Others Vs. Vam Organic Chemicals Ltd. & Others 1997 (2) SCC 715. The said distinction again came to be dealt with in the case of State of U.P. & Others Vs. Vam Organic Chemicals Ltd. & Others 2004 (1) SCC 225. The test of co relationship or correspondence was explained in order to find out as to whether a fee imposed by an authority was for fulfilling its statutory obligation and can be upheld or if not established to be commensurate, can be it struck down. We may usefully refer to the application of the aforesaid law by local bodies in the State of U.P. that came up for consideration in the case of U.P. Udyog Vyapar Pratinidhi Mandal & Others Vs. State of U.P. & Others 2003 (2) AWC 1011, Sangam Eent Nirmata Samiti through its President Shri Uma Shanker Ailwani, son of Late Shri Jamuna Das and Pratap Eent Udyog through its Partner Devendra Pratap Singh son of Sri Gulab Singh Vs. Zila Panchayat through its Chairman, Commissioner, Allahabad Mandal and State of Uttar Pradesh through Secretary Local Bodies 2005 (61) ALR 340. The upshot of the aforesaid decision is clearly to the effect that a fee can be levied but by way of a regulation and for this reference can also be had to the judgment of the Apex Court in the case of Calcutta Municipal Corporation & Others Vs. M/S Shrey Mercantile Private Ltd. & Others 2005 (4) SCC 245. The said decision again went on to explain the distinction between a tax and a fee and also the power of the State to regulate and the power to tax, paragraph nos. 14 to 17 thereof are extracted hereinunder:-

"14. 14. According to "Words & Phrases", Permanent Edition, Vol. 41 Page 230, a charge or fee, if levied for the purpose of raising revenue under the taxing power is a "tax". Similarly, imposition of fees for the primary purpose of "regulation and control" may be classified as fees as it is in the exercise of "police power", but if revenue is the primary purpose and regulation is merely incidental, then the imposition is a "tax". A tax is an enforced contribution expected pursuant to a legislative authority for purpose of raising revenue to be used for public or governmental purposes and not as payment for a special privilege or service rendered by a public officer, in which case it is a "fee". Generally speaking "taxes" are burdens of a pecuniary nature imposed for defraying the cost of governmental functions, whereas charges are "fees" where they are imposed upon a person to defray the cost of particular services rendered to his account.

15. In the case of State of West Bengal v. Kesoram Industries Ltd.MANU/SC/0038/2004 : [2004]266ITR721(SC), the Constitution Bench of this Court while differentiating between the "power to regulate" and "power to tax" observed:

"108. It is of paramount significance to note the difference between "power to regulate and develop" and "power to tax".

109. The primary purpose of taxation is to collect revenue. Power to tax may be exercised for the purpose of regulating an industry, commerce or any other activity; the purpose of levying such tax, an impost to be more correct, is the exercise of sovereign power for the purpose of effectuating regulation though incidentally the levy may contribute to the revenue. Cooley in his work on taxation (Vol.1, 4th Edn., 1924) deals with the subject in paras 26 and 27:

"There are some cases in which levies are made and collected under the general designation of taxes, or under some term employed in revenue laws to indicate a particular class of taxes, where the imposition of the burden may fairly be referred to some other authority than to that branch of the sovereign power of the State under which the public revenues are apportioned and collected. The reason is that the imposition has not for its object the raising of revenue but looks rather to the regulation of relative rights, privileges and duties as between individuals, to the conservation of order in the political society, to the encouragement of industry, and the discouragement of pernicious employments. Legislation for these purposes it would seem proper to look upon as being made in the exercise of that authority which is inherent in every sovereignty, to make all such rules and regulations as are needful to secure and preserve the public order, and to protect each individual in the enjoyment of his own rights and privileges by requiring the observance of rules of order, fairness and good neighborhood, by all around him. This manifestation of the sovereign authority is usually spoken of as the police power. The power to tax must be distinguished from an exercise of the police power." State v. Tucker - 56 SC 516 : 35 SE 215.

The police power "is a very different one from the taxing power, in its essential principles, though the taxing power, when properly exercised, may indirectly tend to reach the end sought by the other in some cases". (p.94) "The distinction between a demand of money under the police power and one made under the power to tax is not so much one of form as of substance." (p. 95). The distinction between a levy in exercise of police power to regulate and the one which would be in the nature of tax is illustrated by Cooley by reference to a licence. He says:

"So-called license taxes are of two kinds. The one is a tax for the purpose of revenue. The other, which is, strictly speaking, not a tax at all but merely an exercise of the police power, is a fee imposed for the purpose of regulation." (p.97)

'Suppose a charge is imposed partly for revenue and partly for regulation. Is it a tax or an exercise of the police power? Other considerations than those which regard the production of revenue are admissible in levying taxes, and regulation may be kept in view when revenue is the main and primary purpose. The right of any sovereignty to look beyond the immediate purpose to the general effect neither is nor can be disputed. The Government has general authority to raise a revenue and to choose the methods of doing so; it has also general authority over the regulation of relative rights, privileges and duties, and there is no rule of reason or policy in the Government which can require the legislature, when making laws with the one object in view, to exclude carefully from its attention the other. Nevertheless, cases of this nature are to be regarded as cases of taxation. If revenue is the primary purpose, the imposition is a tax. Only those cases where regulation is the primary purpose can be specially referred to the police power. If the primary purpose of the legislative body in imposing the charge is to regulate, the charge is not a tax even if it produces revenue for the public". (Cooley, ibid., pp.98-99)

110. This Court in a seven-Judge Bench decision in Synthetics and Chemicals Ltd. v. State of U.P. agreed that regulation is a necessary concomitant of the police power of the State. However, it was an American doctrine and in the opinion of the Court it was not perhaps applicable as such in India. The Court endorsed recognizing the power to regulate as a part of the sovereign power of the State exercisable by the competent legislature. Brushing aside the need for discussion on the question, whether under the Constitution the States have police power or not, the Court accepted the position that the State has the power to regulate. However in the garb of exercising the power to regulate, any fee or levy which has no connection with the cost or expenses of administering the regulation, cannot be imposed; only such levy can be justified as can be treated as part of regulatory measure. Thus, the State's power to regulate perhaps not as emanation of police power but as an expression of the sovereign power of the State has its limitations. In our opinion, these observations of the Court lend support to the view which we have formed that a power to regulate, develop or control would not include within its ken a power to levy tax or fee except when it is only regulatory. Power to tax or levy for augmenting revenue shall continue to be exercisable by the legislature in whom it vests i.e. the State Legislature in spite of regulation or control having been assumed by another legislature i.e. the Union. State legislation levying a tax in such manner or of such magnitude as can be demonstrated to be tampering or intermeddling with the center's regulation and control of an industry can perhaps be the exception to the rule just stated."

16. therefore, the main difference between "a fee" and "a tax" is on account of the source of power. Although "police power" is not mentioned in the Constitution, we may rely upon it as a concept to bring out the difference between "a fee" and "a tax". The power to tax must be distinguished from an exercise of the police power. The "police power" is different from the "taxing power" in its essential principles. The power to regulate, control and prohibit with the main object of giving some special

benefit to a specific class or group of persons is in the exercise of police power and the charge levied on that class to defray the costs of providing benefit to such a class is "a fee". therefore, in the aforestated judgment in Kesoram's case, it has been held that where regulation is the primary purpose, its power is referable to the "police power". If the primary purpose in imposing the charge is to regulate, the charge is not a tax even if it produces revenue for the government. But where the government intends to raise revenue as the primary object, the imposition is a tax. In the case of Synthetics & Chemicals Ltd. v. State of U.P. , it has been held that regulation is a necessary concomitant of the police power of the State and that though the doctrine of police power is an American doctrine, the power to regulate is a part of the sovereign power of the State, exercisable by the competent legislature. However, as held in Kesoram's case (supra), in the garb of regulation, any fee or levy which has no connection with the cost or expense of administering the regulation cannot be imposed and only such levy can be justified which can be treated as a part of regulatory measure. To that extent, the State's power to regulate as an expression of the sovereign power has its limitations. It is not plenary as in the case of the power of taxation.

17. These well settled principles have been reiterated by this Court in the case of Commissioner of Central Excise v. Chhata Sugar Co.

Ltd.MANU/SC/0189/2004 : 2004(165)ELT369(SC) in which it has been held:-

"18. The Constitution of India postulates either a tax or a fee. However, the use of the expression "tax" or "fee" in a statute is not decisive; as on a proper construction thereof and having regard to its scope and purport "fee" may also be held to be a tax.

19. The definition of "tax" in terms of Clause (28) of Article 366 of the Constitution is wide in nature. The said definition may be for the purpose of the Constitution; but it must be borne in mind that the legislative competence conferred upon the State Legislature or Parliament to impose "tax" or "fee" having been enumerated in different entries in the three lists contained in the Seventh Schedule of the Constitution of India, the same meaning of the expression "tax" unless the context otherwise requires should be assigned.

20. Having regard to the fact that different legislative entries have been made providing for imposition of "tax" and "fee" separately, indisputably, the said expression do not carry the same meaning. Thus a distinction between a tax and fee exists and the same while interpreting a statute has to be borne in mind.

21. A distinction must furthermore be borne in mind as regards the sovereign power of the State as understood in India and the doctrine of police power as prevailing in the United States of America. In some

jurisdictions a distinction may exist between a police power and a power to tax but as in the Constitution of India, the word "tax" is defined, it has to be interpreted accordingly.

22. The expression "regulatory fee" is not defined. Fee, therefore, may be held to be a tax if no service is rendered. While imposing a regulatory fee, although the element of quid pro quo, as understood in common parlance, may not exist but it is trite that regulatory fee may be in effect and substance a tax. [See: Corporation of Calcutta v. Liberty Cinema [1965]2SCR477 ].

23. In Municipal Corporation Amritsar v. Senior Supdt. of Post OfficesMANU/SC/0050/2004 : (2004)3SCC92 it was held: (SCC p. 9-97,

"8. The question, whether the demand so made was by way of 'service charge or 'tax', need not detain us any longer. The demand so made was with regard to the services rendered to the respondents' Department, like water supply, street-lighting drainage and approach roads to the land and buildings. In the counter, the respondents averred that they are paying for the services rendered by the appellant separately. It is also categorically averred that no other specific services are being provided to the respondents for which the tax in the shape of service charges can be levied and realized from the respondents. There is no provision in the Municipal Corporation Act for levying services charges. The only provision is by way of tax. Undisputedly, the appellant Corporation is collecting the tax from general public for water supply, street- lighting and approach roads, etc. Thus, the 'tax' was sought to be imposed in the garb of 'service charges'."

24. We may furthermore notice that a seven-Judge Bench of this Court in Synthetics and Chemicals Ltd. v. State of U.P. while considering the question as to whether the levy on industrial alcohol by the State is justifiable, inter alia, held that when revenue earned out of the impost is substantial, the same would not be justifiable as fee.

25. In Liberty Cinema this Court, while interpreting Section 548 of the Calcutta Municipal Act providing for grant of a licence, observed: (AIR p. 1116, para 18)

"The reference to the heading of Part V can at most indicate that the provisions in it were for conferring benefit on the public at large. The cinema house owners paying the levy would not as such owners be getting that benefit. We are not concerned with the benefit, if any, received by them as members of the public for that is not special benefit meant for them. We are clear in our mind that if looking at the terms of the provision authorizing the levy, it appears that it is not for special services rendered to the person on whom the levy is imposed, it cannot be a fee wherever it may be placed in the statue. A consideration of where Sections 443 and 548 are placed in the Act is irrelevant for determining whether the levy imposed by them is a fee or a tax."

It was further observed: (AIR p.1116, paras 19-20)

"19. The last argument in this connection which we have to notice

was based on Sections 126 and 127 of the Act. Section 126 deals with the preparation by the Chief Executive Officer of the Corporation called Commissioner, of the annual budget. The budget has to include an estimate of receipts from all sources. These receipts would obviously include taxes, fees, licence fees and rents. Under Section 127(3) the Corporation has to pass this budget and to determine subject to Part IV of the Act, the levy of consolidated rates and taxes at such rates as are necessary to provide for the purposes mentioned in sub-section (4). Sub- section (4) requires the Corporation to make adequate and suitable provision for such services as may be required for the fulfilment of the several duties imposed by the act and for certain other things to which it is not necessary to refer. The first point made was that these sections showed that the act made a distinction between fees and taxes. It does not seem to us that anything turns on this as the only question now is whether the levy under Section 548 is a fee. The other point was that Clauses (3) and (4) of Section 127 showed that the Corporation could fix the consolidated rates and taxes and that the determination of rates for these had to be in accordance with the needs for carrying out the Corporation's duties under the Act. It was said that as the licence fee leviable under Section 548 did not relate to any duty of the Corporation under the Act, it being optional for the Corporation to impose terms for grant of licences for cinema houses, the rate for that fee was not to be fixed in reference to

anything except rendering of services. We are unable to accept this argument and it is enough to say in regard to that it is not right that Section 443 does not impose a duty on the Corporation. We think it does so, though in what manner and when it will be exercised it is for the Corporation to decide. It is impossible to call it a power, as the respondent wants to do, for it is not given to the Corporation for its own benefit. The Corporation has been set up only to perform municipal duties and its powers are for enabling it to perform those duties. Furthermore there is no doubt that an estimate of the licence fee has to be included in the budget and therefore the word 'tax' in Section 127(3) must be deemed to include the levy under Section548. The words 'subject to the provisions of Part IV' in Section 127 (3) must be read with the addition of the words 'where applicable'...

20. The conclusion to which we then arrive is that the levy under Section 548 is not a fee as the Act does not provide for any services of special kind being rendered resulting in benefits to the person on whom it is imposed. The work of inspection done by the Corporation which is only to see that the terms of the licence are observed by the licensee is not a service to him. No question here arises of correlating the amount of the levy to the costs of any service. The levy is a tax. It is not disputed, it may be stated, that if the levy is not a fee, it must be a tax."

26. A regulatory statute may also contain taxing provisions.

27. The decisions of this Court point out towards the need of existence of the element of quid pro quo for imposition of fee; be it to the person concerned or be it to a group to which he belongs; irrespective of the fact as to whether the benefit of such service is received directly or indirectly.

28. The point at issue is required to be considered keeping in view the aforementioned legal position.

29. By reason of the provisions of the U.P. Sheera Niyantran Adhiniyam, 1964, the trade carried out by the respondents is sought to be regulated.

30. Some service, therefore, was required to be rendered by the State or the statutory authority to the owners of the factory producing molasses or the molasses industries generally if an impost by way of "fee" was to be levied."

Thus the Municipal Corporation can levy an advertisement fee provided it has framed a regulation.

It is for this reason that the Municipal Corporation rightly issued a public notice calling upon all candidates to inform and seek permission with regard to fixing of banners and posters. We may however clarify that this seeking of permission through an application may be permissible by inviting an application, but no tax under the garb of inviting an application can be charged by the Municipal Corporation keeping in view the provisions referred to hereinabove.

Thus, the written permission of the Municipal Corporation is mandatory under Section 193 of the Act for any advertisement to be displayed by a candidate contesting an election even if such advertisement stands exempted from taxation in terms of Section 192. We are therefore of the considered opinion that a written permission is mandatory more so keeping in view the fact that it also forms part of the Model code of Conduct as imposed by the Election Commission. Sri Anoop Trivedi urged that the respondents have failed to bring on record any such directives of the Election Commission of India. We may clarify that whether it is the Election Commission of India or the State Election Commission it is not the case of the petitioner that all candidates who are contesting either assembly or parliamentary elections or elections of local bodies are authorised by the Election Commission to display posters and banners in whatever manner they feel like. This can be regulated by law and so far as Municipal Corporations are concerned their very existence is to maintain a clean environment and to prevent pollution that may be caused by such posters and banners. Thus, facilitating decent public life by mandating a prior permission is well within the powers of the Municipal Corporation and if the Municipal Corporation has found that the posters and banners were erected without its permission, then it certainly has the authority to remove the same. For this it would be appropriate to refer to Sections 195 and 196 of the 1959 Act which are quoted hereinunder:-

"195. Beneficiary from advertisement to be deemed responsible. - Where any advertisement shall be erected, exhibited, fixed or retained upon or over any land, building, wall, hoarding or structure in contravention of the provisions of Section 192 or Section 193 or after the written permission for the erection, exhibition, fixation or retention thereof for any period shall have expired or become void, the person for whom or for whose purposes the advertisement has prima facie been so erected, exhibited, fixed or retained shall be deemed to be the person who has erected, exhibited, fixed or retained such advertisement in such contravention unless he proves that such contravention was committed by a person not in his employment or under his control or was committed without his connivance.

196. Removal of unauthorised advertisements. - If any advertisement be erected, exhibited, fixed or retained contrary to the provisions of Section 192 or Section 193 or after the written permission for the erection, exhibition, fixation or retention thereof for any period shall have expired or become void, the Municipal Commissioner may, by notice in writing, require the owner or occupier of the land, building, wall, hoarding or structure upon or over which the same is erected, exhibited, fixed or retained to take down or remove such advertisement or may enter any building, land or property and have the advertisement removed."

A perusal of the Section 195 clearly makes a beneficiary deemed to be responsible where any advertisement has been erected or exhibited in violation of Section 192 or Section 193 of the Act. The reason for such a provision on the statute clearly indicates that it is the duty of the Municipal Corporation to ensure that no such activity is carried out without its permission as it may be detrimental to public life and consequently the Act empowers the Municipal Corporation to hold such person responsible and make them liable for such act having been committed in violation of the provisions.

This is further fortified by Section 196 quoted hereinabove which authorises the Municipal Corporation to remove any advertisement erected contrary to the provisions of Sections 192 & 193. It is thus clear from a perusal of the aforesaid provisions that exemption from taxation does not in any way authorise the candidate contesting an election to display any amount of posters, banners and advertisements at any place within the Municipal Corporation of his choice in an unregulated manner particularly at a public place without it's prior permission. Consequently, the Municipal Corporation would be justified in imposing costs and expenses that are incurred by the Municipal Corporation in removal of such unauthorised and unpermitted advertisements.

The combined effect of all sections discussed hereinabove reflects an intention of the legislature to regulate the putting up of any advertisements on public places. The exception which has been carved out is for railway establishments. It is therefore evident that the permission to display advertisements has to be obtained from the Municipal Commissioner in the light of the clear intention of the statutory provisions referred to hereinabove which do not grant exemption from permission for any advertisement.

It is not that political parties and candidates do not have sufficient means of advertisement in these modern times when all types of facilities of electronic display and print media advertisement so as to make aware the general public of their candidature and symbols are available. With the fast induction of electronic technology, much faster than it can be imagined, even remote villages where villagers have telephone sets, mobiles and dish antennas are subjected to compulsory viewing of all sorts of advertisements which facility can also be utilized by all political parties and candidates subject to any regulation being made by law. It is therefore not necessary nor can it be a matter of right to claim advertisement at public places without the permission of the public authority.

Having said so the question now is can imposition of any advertisement fee be justified which is sought to be realised from the petitioner. In essence we find from the counter affidavit that even though the fee has been described as a advertisement fee, the Municipal Corporation has attempted to support it with the rates of taxes of advertisements and hoardings. The Municipal Corporation under the garb of a fee cannot impose a tax which is specifically prohibited under Section 192. The fee which is sought to be realised as an advertisement fee therefore is essentially in the nature of a tax being imposed under the provisions of 1959 Act. This is evident from the display of rates through the counter which is clearly a tax on advertisement. Even though the impugned orders use the word "shulk" (fee or charges) in place of "kar" (tax), there is no bye law or any resolution or regulation brought on record by the Municipal Corporation so as to justify the imposition of any fee for advertisement, the imposition whereof as a tax is clearly prohibited to be levied under the provisions of Section 192 of the 1959 Act. Something which is specifically prohibited, cannot be permitted through the cloak of a different language, the intention whereof appears to be to levy a tax. An object which cannot be achieved directly cannot be permitted to be executed indirectly. Consequently, we are unable to sustain the imposition of any such advertisement fee which virtually amounts to the imposition of a tax on the petitioner that deserves to be struck down.

The next question is with regard to the removal charges. It is correct that no bye law or regulation has been framed, but at the same time there is no denial of the fact that expenses are incurred by the Municipal Corporation for removal of such unauthorised advertisements which cannot be put up except with the prior permission of the Municipal Commissioner. In the given circumstances we are unable to accept this submission raised on behalf of the petitioner that the imposition of such removal charge in the shape of expenses should not be levied. To the contrary we are clearly of the opinion that the Municipal Corporation can realise such expenses incurred by it for the purposes of removal of unauthorised advertisements that are in violation of Section 193 of the Act.

The third issue which arises for consideration is as to whether the rates prescribed for such removal namely Rs 100/200 per sqm. is justified or authorised in law or not. The contention of the learned counsel for the petitioner is that no foundation exists for prescribing such rates and as a matter of fact in the absence of any such bye law there is no authorisation even to realise the said amount. It is here we find that there is no specific challenge raised to the rates prescribed. As already observed above the Municipal Corporation would have the authority to realise the expenses occurred to remove unauthorised and unpermitted advertisements for which it will have to support its resolve to impose such removal rates prescribed for removal unauthorised hoardings. Since any such material is lacking before us, it will not be appropriate to comment on the same, leaving it open to the Municipal Corporation to justify its action by passing an appropriate order in this regard.

We therefore partly allow the writ petition subject to the observations made hereinabove and quash the impugned order dated 17.01.2012 and 31.01.2012 to the extent of imposition of advertisement fee. We also set aside the order in relation to the imposition of removal charges subject to the condition that the amount already deposited by the petitioner under the interim order dated 23.02.2012 shall be retained by the Municipal Corporation and the Municipal Corporation shall proceed to now pass an appropriate order justifying its action in imposing of removal charges in accordance with law which shall be done within a period of three months from today.

The writ petition is accordingly allowed.

Order Date :- 23.10.2018

P Kesari