HIGH COURT OF ORISSA: CUTTACK W.P.(C) No.31804 of 2011 In the matter of applications under Articles 226 and 227 of the Constitution of India. -------M/s. Selvel Advertising Private Ltd., represented through its Attorney Mr. Tarak Majumdar, aged about 42 years, S/o. Late Gouranga Majumdar, E/M-34, Basanti Colony, Rourkela, Dist: Sundargarh and others … Petitioners State of Orissa and others … Opp. Parties For Petitioners Mr.Jayant Das, Senior Advocate M/s. Goutam Mukherji, P.Mukherji, A.C.Panda, S.Mishra, S.Das & S.D.Ray -Versus- : For Opp. Parties : M/s Rama Kanta Mohapatra, P.K. Nayak, H.B. Dash, G.Mohapatra (For O.P. Nos. 2 &
3) ---------- P R E S E N T: THE HONOURABLE THE CHIEF JUSTICE SHRI V.GOPALA GOWDA AND THE HONOURABLE SHRI JUSTICE B.N.MAHAPATRA Date of Judgment:
12. 12.2012 B.N. Mahapatra, J.This writ petition has been filed with a prayer to quash the Rourkela Municipality Regulations of tax on advertisement, 2010 made on 4th January, 2011 (Annexure-1) by the Rourkela Municipality, Rourkela in exercise of powers conferred by Sub-Section (30) of Section 388 of the Orissa Municipal Act, 1950 (for short ‘the Act, 1950’) on the ground that 2 the same is unconstitutional being violative of Articles 14, 19, 243X, 285, 300A of the Constitution of India. In the present writ petition the petitioners are five in number. Petitioner No.1 is a Private Limited Company and petitioners Nos.2 to 5 are of partnership concerns.
2. Case of petitioner No.1 as narrated in the Writ Petition in a nut-shell is that it is a Private Limited Company incorporated and registered under the provisions of the Companies Act, 1956 and has its office in Rourkela. It is a pioneer company in the field of advertisement in Eastern India. Petitioner No.1 operates in almost all major cities of the country. The petitioners basically deal in displaying of advertisement by way of hoardings and has been operating in Rourkela for varied periods ranging between 5 to 30 years. The petitioners have valuable client base which includes public sector undertakings, industrial conglomerates and other leading business houses. They deal with commercial display of advertisement by way of hoardings in the town of Rourkela, which is under the jurisdiction of the Rourkela Municipality. Such display of hoardings was to be facilitated by payment of necessary licence fee and obtaining requisite permits from the Rourkela Municipality to utilize the earmarked sites for putting up their hoardings. Rourkela Municipality on 04.01.2011 issued the impugned Rourkela Municipality Regulations of Tax on Advertisement, 2010 (for short, “Regulations, 2010”.) under Section 388(30) of the Orissa Municipal Act, 1950 of the Act, 1950. According to the 3 petitioners, the said Regulations are violative of the Constitution of India and also ultra vires the Act, 1950, hence null and void.
3. The Regulations, 2010 have been issued in exercise of powers conferred under Section 388(30) of the Act, 1950. Regulation 2 provides that no person shall erect, exhibit, fix or retain upon or over any land, building, wall, hoarding, frame, post, kiosks, structure, vehicle, neon sign or sky sign, any advertisement or display any advertisement of public view in any manner whatsoever in any place within the jurisdiction of the Municipality, without prior written permission of the Executive Officer of the Municipality. Under Regulation 3 there is a prohibition on erection, exhibition, fixing, retention or display of any advertisement so as to damage the amenities or obstruct the view of any historical building or buildings of national importance, monument or public garden, etc. Regulation 4 contains a total prohibition on the display, etc of advertisements in certain places. Regulation 5 provides that no vehicle used for the purpose of advertisement shall display an advertisement different from what is approved by the Executive Officer of the Municipality. Regulation 6 pertains to prohibition of defacement of signs on the advertisement which have been put by the Executive Officer. Regulations 7 and 8 regulate the size, placement, etc of the hoardings. The petitioners having not been satisfied with the Regulations have filed this writ petition”
4. Mr. J.Das, learned Senior Advocate submitted that the impugned Regulations are ex facie violative of Articles 14, 19(1)(a), 243X, 285, 300A of the Constitution and also ultra vires the Act, 1950 and liable to be set aside. It is further submitted that in view of the provisions contained in Article 243X of the Constitution, the Municipality can levy, collect appropriate taxes, duties, tolls and fees, provided that it is so authorized by the legislature of the State, by law, and provided further that such levy is in accordance with such procedure and subject to such limits as are specified in law. Referring to Section 388(30) of the Act, 1950, Mr. Das submitted that this Section only permits the Municipality to make regulations or bye-laws for prohibition and to regulate advertisements in public roads or parks and does not pertain to powers to levy taxes. Law is well settled that the power to tax must be specified in the Statute itself and cannot be inferred. As far as Municipality’s power to tax is concerned, Article 243X clearly states that this power can only be conferred on the Municipality by the State Legislature by law. In fact, no conferment of power on Municipality is there in provisions of the Act, 1950 and hence, the levy of tax in question is ultra vires the Act, 1950. Thus, it is submitted that the Regulations are ultra vires the Act, 1950. Section 388(3) pertains to powers of taxation and provides that Municipality can make regulations only for the regulation of the time and mode of collecting taxes under this Act. Thus, levy is under the Act and the Municipality has no powers to levy the tax on its own. Placing reliance upon the judgment of the Hon’ble 5 Supreme Court in the case of Bimal Chandra Banerjee vs. State of M.P., (1970) 2 SCC 467.it is submitted that no tax can be imposed by any byelaw or rule or regulation unless the statute under which the subordinate legislation is made specifically authorizes the imposition even if it is assumed that the power to tax can be delegated to the executive. The basis of the statutory power conferred by the statute cannot be transgressed by the rule-making authority. A rule making authority has no plenary power. It has to act within the limits of the power granted to it.
5. Referring to the case of Ahmedabad Urban Development Authority vs. Sharadkumar Jayantikumar Pasawalla and others, (1992) 3 SCC 285.Mr. Das submitted 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. 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. Further it is submitted that the entire purpose of the impugned Regulations is to tax advertisements, which power is not vested in the Municipality. Therefore, in entirety the Regulations are ultra vires the Act, 1950 and unconstitutional under Article 243X of the Constitution.
6. Mr. Das submitted that imposition of penalty under Regulation 12 is ultra vires Section 389 of the Act, 1950. While Regulation 12 provides for penalty at Rs.50 per square feet per day, the Municipality cannot levy penalty beyond the powers conferred on it by the Municipal Law. Therefore, 6 imposition of penalty by the Regulations is far in excess of what is permitted under the Act, 1950 and hence is invalid and not est. Many actions of the Executive Officer under the Regulations need not even be preceded by notice or any opportunity of hearing to the advertisers. Therefore, the imposition of penalty, without notice and without hearing is extremely arbitrary and unreasonable and unsustainable under Article 14 of the Constitution.
7. Mr. Das further emphatically submitted that the impugned Regulations to the extent they govern private spaces, are bad in law, being ultra vires the Act, 1950 and also violative of Articles 14 and 300A of the Constitution of India. Referring to Section 388 of the Act, 1950, it was submitted that power is conferred only to make Regulations with respect to “public roads”. and “parks”.. The said clause does not even cover public buildings, vehicles, tanks etc., which have been brought within the scope of the Regulations. In any event, it is abundantly clear that Section 388(3) of the Act, 1950 does not in any manner cover private buildings or private spaces. Regulation 8(c) provides that permission for roof-top hoardings only on private buildings/institutions shall be considered subject to verification of structural stability, no objection from the concerned authorities undertaking on factor of safety of the structure. Therefore, Mr. Das submitted that while advertisement over the private institutions/buildings requires prior permission of the Executive Officer just like government buildings and to additionally get verification of structural stability and no 7 objection from the concerned authorities on the safety of the structure, no such requirement is imposed on the hoardings. To the extent, the Regulations result in restriction on use of private land for advertisement, they violate Article 300A of the Constitution.
8. Referring to Article 19(1)(a) of the Constitution and placing reliance upon the judgment of the Hon’ble Supreme Court in the case of Tata Press Ltd. Vs. Mahanagar Telephone Nigam Ltd., (1995) 5 SCC 139.Mr. Das submitted that the impugned Regulations are contrary to the fundamental rights of the advertisers and of the general public/consumers. There being no guideline in the Regulation on the basis of which the Executive Officer is required to exercise his discretionary power, the Executive Officer, who is the author of the Regulations, is left with unguided discretion and uncanalised powers, so as to give him a carte blanche to discriminate. Further there is no provision for an appeal from the order of the Executive Officer. This renders the entirety of the Regulations violative of Article 14 of the Constitution being unreasonable and arbitrary.
9. It was further submitted that removal of hoardings and cancellation of licence without any notice is violative of Article 14 of the Constitution of India. It is further submitted that since the Regulations in question propose to tax all advertisements, including those by the Union on Union property and hence violate Article 285 of the Constitution. It is further submitted that there are two kinds of provisions contained under 8 Regulation i.e. permission for an advertisement and a licence for the site of the hoarding. The tax under Regulation 9(d) is contemplated on the advertisement. The Regulations don’t provide for a situation where the same hoarding may have multiple advertisements in the course of a year. From the impugned Regulations it appears that tax will be levied multiple times on each hoarding, as there is a change in the advertisement. Under the Regulations, tax is required to be paid in advance. Regulation 11(c) provides that a licensee or advertiser shall before displaying or causing the display of advertisements, satisfy himself that the tax due thereon has been paid to the Municipality and the Executive Officer. Tax is attracted under the Regulations even if advertisement refers to the trade or business carried on within the building, and even if it is self advertisement, or the board refers to the name of the person or occupier of the building, or the name of the building.
10. Mr. Das further submitted that fearing removal of the advertisements, billboards, petitioner no.1 had approached this Court in W.P.(C) No.25026 of 2011 which was disposed of with a direction to the petitioner to file a representation highlighting its grievance and on such representation being made if other agencies are being allowed to advertise it would not be proper to restrict petitioner No.1. However, the said representation was rejected by a cryptic order.
11. Mr R.K. Mohapatra, learned counsel appearing for Rourkela Municipality submitted that the petitioners’ prayer for declaration of 9 Regulations issued by the Rourkela Municipality to be unconstitutional and ultra vires the Act, 1950 is not correct. The petitioner has not brought any material before this Court to indicate that the said enactment, though validly enacted, is violative of Articles 14, 19, 243X, 300-A of the Constitution of India. The said notification dated 04.01.2011 has been made in exercise of power conferred by sub-Section (30) of Section 388 of the Act, 1950, after following due procedure as prescribed in the Act, 1950. The notification was published as required by Section 392 of the Act in two local newspapers inviting objections and suggestions from all persons likely to be affected thereby till expiry of a period of thirty days from the date of publication of the said notification. No objections and suggestions were received during the stipulated period; particularly the petitioners have not made any suggestions not have filed any objections and in such view of the matter the writ application is liable to be dismissed by this Court and the petitioners are estopped to assail the legality and validity of the Regulations, 2010. The enactment, in question, having been enacted as per provisions of the Act, 1950 with statutory approval of the State Government which has been enacted by the State Legislature is not open to challenge on the ground of constitutionality. The imposition of tax is in the nature of regulatory fee, duly authorized by the Act and the Constitution of India. Use of the word “tax”. cannot make it anything other than a regulatory fee which is within the competence of the Municipal Council as per sub-Section (3) of Sectio”
388. of the Act, 1950. Regulations 2010, are neither unconstitutional not violative of Articles 14, 19, 242X, 285 and 300A of the Constitution of India as well as the provisions of the Act, 1950. Since the petitioners applied for permission under Regulations, 2010, they were instructed to assail the legality and validity of the Regulations, 2010.
12. It was submitted that in exercise of power conferred under Article 243X of the Constitution, the State Legislature has framed the Act, 1950. Section 131 of the Act, 1950 confers powers on the Municipality to impose taxes. Clauses (g) and (k) of sub-Section (1) of Section 131 of the Act, 1950 are relevant for adjudication of the present lis. Article 285 of the Constitution of India is not violated. The word ‘Regulation’ must depend upon the context in which it is used in the Act, 1950 and the object sought to be achieved by the Legislature. Power to regulate carries with it the full power over the thing subject to regulation and in absence of restrictive words, the power must be regarded as plenary over the entire subject. Subsection (3) of Section 388 of the Act, 1950 should not be given a restricted meaning to make the same redundant. The provisions of Section 388(30) of the Act, 1950 have to be read along with other Clause (k) of sub-Section (1) of Section 131 of the Act, 1950. Bare reading of the aforesaid provision makes it clear that the Municipality is the competent authority to tax on advertisements within the Municipal area. The tax on advertisements is in accordance with sub-Section (30) of Section 388 of the Act, 1950 read with Clause (k) of sub-Section (1) of Section 131 of the Act, 1950. Mr. 11 Mohapatra, learned counsel for opposite party Nos.2 and 3 placing reliance upon the judgment of the Hon’ble Supreme Court in the case of Novva Ads vs. Secretary, Department of Municipal Administration and Water Supply and another, (2008) 8 SCC 42.submitted that Regulations, 2010 are not violative of Article 19(1)(a) of the Constitution as it cannot be said that there is infringement of freedom of speech and expression.
13. Mr. Mohapatra submitted that the decisions of the Hon’ble Supreme Court in the case of Bimal Chandra Banerjee (supra) and Saradkumar Jayantikumar Pasawalla (supra) are wholly misconceived as the said judgments have no application to the facts of the present case. The Municipality is the competent authority to tax advertisements within the Municipal area. Section 3(29) of the Act, 1950 defines “Public Road”. which is an inclusive definition which includes all roads within the territorial limits of any municipality.
14. It was submitted that it is not correct to say that the imposition of penalty under Regulation 12 of the Regulations, 2010 is ultra vires Section 389 of the Act, 1950. Section 389 is only an enabling provision and it authorizes the Municipal Council to provide penalty for violation of the provisions of the Bye-laws and the Regulations framed by the Municipality. In exercise of power under Section 389 of the Act, 1950, Regulation 12 of the Regulations, 2010 provides for imposition of penalty for violation of the provision of Regulations, 2010. The assertion that the imposition of penalty under Regulation 12 is extremely onerous and amounts to largely affecting 12 the trade and business of advertisers is wholly misconceived and false. The decision of the Hon’ble Supreme Court in the case of State of U.P. and others vs. Sitapur Packing Wood Suppliers and others, (2002) 4 SCC 56.is wholly misconceived and no way applicable to the facts and circumstances of the present case. Imposition of penalty under Regulation 12 is in consonance with Section 389 of the Act, 1950. Articles 14 and 300A of the Constitution are not violated. The decision of the Hon’ble Supreme Court in Tata Press Limited (supra), is incorrect and wholly misconceived as the said judgment has no application to the facts of the present case and the said judgment had been rendered by the Hon’ble Supreme Court in a different context. The Executive Officer has not been given any unguided or uncanalized power; the Regulations have been passed by the Municipal Council in exercise of its Rule making power as provided in the statute. The decision of the Hon’ble Supreme Court in the case of J.Jayalitha vs. Union of India and another, (1999) 5 SCC 13.has no application to the present case. The assertion of the petitioners that the Regulations give the Executive Officer untrammeled discretion to decide the matters of policy is wholly misconceived. The decision of the Hon’ble Supreme Court in Hari Chand Sarda Vs. Mizo District Council; (1967) 1 SCR 101.is also not applicable to the facts of the present case.
15. Mr. Mohapatra, submitted that the case of the petitioners is that they entered into a contract/agreement with the Municipality to advertise by installing Hoardings for a particular period. After expiry of 13 such period, petitioners cannot claim any right in perpetuity to carry out a particular business without giving opportunity to others. The schedule appended to the Regulations, 2010 clearly provides what is permitted and what are the charges thereof. The judgment of the Hon’ble Supreme Court in the case of Raj Restaurant and another vs. Municipal Corporation of Delhi, (1982) 3 SCC 33.is wholly misconceived as the said judgment has no application to the facts of the present case. The sole intention of the petitioners is only to make monopoly and to display the advertisements everywhere without payment of anything to the State exchequer.
16. The petitioners are collecting huge amounts from respective parties in the name of the advertisements within the Municipal Area. By virtue of the Regulations, 2010, opposite party Nos.2 and 3 are liable to impose tax on any advertisements displayed within the Municipal area as defined in Section 3(17-a) of the Act, 1950. The assertion that under the impugned Regulations tax will be levied multiple times on each hoarding is without any basis, wholly misconceived, contrary to Regulations. The assertions with regard to no provision for refund of tax collected and refund of excess tax collected are incorrect, wholly misconceived, contrary to the Schedule appended to the Regulations, 2010. The Schedule appended to the Regulations, 2010 clearly prescribes what are the charges to be paid for what item. Regulation 11(c) has to be read along with Regulation 10 and the Schedule appended to the Regulations gives a clear meaning of the Regulation regarding payment of tax. Hence, there is no question of any 14 excess collection by opposite party Nos. 2 and 3. Since the petitioners have already applied for registration on 30.03.2011 under the Regulations, 2010, they are estopped to assail the legality and validity of the Regulations, 2010. Concluding his argument, Mr. Mohapatra submitted that the petitioners are not entitled to any relief sought for in this writ petition and the same is liable to be dismissed.
17. On the rival factual and legal contentions of the parties, the following questions fall for consideration by this Court: (i) Whether the Regulations, 2010 dated 04.01.2011 issued by the Rourkela Municipality is unconstitutional being violative of Articles 14, 19, 243X, 285 and 300A of the Constitution of India and also ultra vires the Act, 1950?. (ii) Whether Section 131 of the Act, 1950 confers power on Municipality to make regulation for imposition of tax on advertisements?. (iii) Whether imposition of penalty under the Regulations, 2010 is ultra vires Section 389 of the Act, 1950?. (iv) Whether the impugned Regulations, 2010 to the extent they govern private spaces are bad in law and ultra vires the Act, 1950 and also violative of Articles 14 and 300A of the Constitution?. (v) Whether the impugned Regulations are contrary to the fundamental right of the advertisers and of general public/consumers under Article 19(1) of the Constitution?. (vi) Whether the Regulations are violative of Article 14 of the Constitution being unreasonable and arbitrary inasmuch as the Executive Officer, who is the author of the 15 Regulations, is left with unguided discretion and uncanalised powers, so as to give him a carte blanche to discriminate as well as there is no provision of appeal from the order of the Executive Officer?. (vii) Whether the Regulations in question propose to tax on all advertisements, including those on Union property and hence violate Article 285 of the Constitution?.
18. Question Nos.(i) and (ii) being interlinked, they are dealt with together.
19. To deal with the above questions, it is relevant to knot what is contemplated under Article 243X of the Constitution and Sections 131, 388(3) and 388(30) of the Act, 1950, which read thus: Article 243X of the Constitution: “243X. Power to impose taxes by, and funds of, the Municipalities.— The Legislature of a State may, by law— (a) authorize a Municipality to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits; (b) assign to a Municipality such taxes, duties, tolls and fees levied and collected by the StateGovernment for such purposes and subject to such conditions and limits; (c) provide, for making, such grants-in-aid to the Municipalities from the Consolidated Fund of the State; and (d) provide for constitution of such Funds crediting all money receiving respectively, by or on behalf of the Municipalities and also for the withdrawal of such moneys therefrom, as may be specified in law.”
. Sections 131, 388(3) and 388(30) of the Act, 1950:
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“131. Power to impose tax-(1) The Municipality may from time to time, at a meeting convened expressly for the purpose of which due notice shall have given subject to the provisions of this Act impose within the limits of the Municipal area the following taxes and fees or any of them : (a) a tax on holding situated within the Municipality assessed on their annual value; (b) a latrine tax on the annual value of holdings; (c) a water-tax on the annual value of holdings; (d) a lighting tax on the annual value of the holdings; (e) a drainage tax on the annual value of holdings; (f) a tax on carriages, carts, horses and other animals named in the Third Schedule; (g) a tax on profession, art and callings as may be prescribed; (h) a poll tax subject to such maximum and minimum rates, as may be prescribed, on animals, carts and carriages other than motor vehicles carrying goods or passenger and entering the Municipality where a festival or fair is held and notified by the Municipality for the purpose; (i) a fee on registration of dogs; (j) a fee on vessels moved within the limits of the Municipal area at ghats or lending places constructed and maintained by the Municipality; (k) any other tax which the Municipality is empowered to impose under any law for the time being in force; (kk) an octroi on goods brought within the limits of a Municipal area for consumption, use for sale therein (l) any other fee for service rendered by the Municipality under the Act for the health, safety and convenience of residents: xx xx xx”.
“388. Powers of Municipality to make bye-laws and regulations.— The Municipality may make regulations or bye-laws not inconsistent with this Act or the rules made thereunder or with any other law to providexx xx xx (3) to this regulation of the time and mode of collecting the taxes under this Act;”. xx xx xx 17 (30) for the prohibition and regulation advertisement in public roads or parks.”
20. of Article 243X of the Constitution provides that the Legislature of a State may, by law authorize the Municipality to levy, collect, and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits, as may be specified in law. The Regulations, 2010 in question provides to levy tax on advertisements in the Municipality. Such Regulations have been made by Rourkela Municipality in exercise of the powers conferred by Section 388(30) of the Act, 1950. Section 388 empowers the Municipal Council to make Regulation or Byelaws not inconsistent with this Act or the Rules made thereunder or with any other law. Section 388(30) of the Act, 1950 also provides for prohibition and regulation of advertisements in public roads or parks. Therefore, Section 388(30) permits the Municipality to make Regulations to regulate advertisements in public roads or parks and does not authorize the Municipality to levy taxes. Thus, Section 388(30) does not pertain to power to levy tax. Municipality’s power to tax is traceable to Article 243X of the Constitution which clearly states that the State Legislature may by law authorize the Municipality to levy, collect and appropriate taxes.
21. Petitioners’ further case is that there is no provision in the Act, 1950 which empowers the Municipality to levy tax on advertisement and in absence of such provision, the present Regulations, 2010 are ultra vires 18 Article 243X of the Constitution. According to Mr. Mohapatra, learned counsel for opposite party nos.2 and 3 in exercise of power conferred under Article 243X of the Constitution, the State Government has framed the Act, 1950 and Section 131 of the said Act confers power on the Municipality to impose tax. Clauses (g) and (k) of Sub-Section (1) of Section 131 of the Act, 1950 are relevant for adjudication of the present lis. Section 131 of the Act, 1950 empowers the Municipality to impose taxes. It also states that the Municipality may, from time to time, at a meeting convened expressly for the purpose of which due notice shall have to be given subject to the provisions of the Act, 1950 impose, within the limits of the Municipal area, the taxes and fees or any of them enumerated in the said Section. According to Mr. Mohapatra, the power of Municipality to levy tax on advertisements is traceable to Section 131(1)(g) and (k). Section 131 (g) speaks of a tax on profession, art and callings as may be prescribed. Levy of tax on advertisements is certainly not covered under Section 131(g). Section 131(k) empowers the Municipality to impose any other tax which the Municipality is empowered to impose under any law for the time being in force. There is no other law as required under Section 131(k) of the Act, 1950 by which the Municipality is empowered to levy tax on advertisements.
22. Article 265 of the Constitution provides that no tax shall be levied or collected except by authority of law. Thus, Article 265 requires that (i) there must be a law, (ii) the law must authorize the tax; and (iii) the 19 tax must be levied and collected according to the law. In the instant case, ingredients of Article 265 are not satisfied. Further, Regulations, 2010 which provides for levy of tax on advertisement by the Municipality is not traceable to any of the provisions of the Act, 1950 which authorizes the Municipality to levy such tax. Therefore, by virtue of the Regulations, 2010, the petitioners will be required to pay tax on advertisements which is not traceable to any of the provision of the Act, 1950. Further, Article 300A of the Constitution provides that no person shall be deprived of his property save by authority of law.
23. The other stand of opposite party nos.2 and 3 that Regulations, 2010 have been made after complying with the provisions of Section 392 of the Act, 1950 and objection/suggestion none of the petitioners has filed any before opposite party Nos.2 and 3 pursuant to publication of notice dated 26th May, 2009 and therefore, the petitioners are estopped from assailing the legality, and validity of Regulations, 2010. This stand of opposite party Nos.2 and 3 will not save them from the attack on Regulations, 2010 in question on the ground of constitutional validity and vires of the Regulations.
24. At this juncture, it will be beneficial to refer to some of the decisions of the Hon’ble Supreme Court. It is settled law that a Municipality cannot levy tax on its own unless such power is conferred by the Statute. In Bimal Chandra Banerjee (supra), the Hon’ble Supreme Court has held as under:
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“14. No tax can be imposed by any bye-law or rule or regulation unless the statute under which the subordinate legislation is made specially authorises the imposition even if it is assumed that the power to tax can be delegated to the executive. The basis of the statutory power conferred by the statute cannot be transgressed by the rule-making authority. A rule-making authority has no plenary power. It has to act within the limits of the power granted to it.”
25. In the case of Ahmedabad Urban Development Authority vs. Sharadkumar Jayantikumar Pasawalla(supra), the Hon’ble Supreme Court has held as under:
“7. … 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…”.
26. In view of the reasons stated above, the Regulations, 2010 which have been made by the Rourkela Municipality to impose tax on advertisements are ultra vires the Act, 1950 as well as the Constitution of India. Hence, the Regulations, 2010 are liable to be quashed and accordingly we quash the same.
27. Question No.(iii) is with regard to validity of Regulation 12 of the Regulations, 2010. 21 Regulation 12 of Regulations, 2010 provides for penalty @ Rs.50/- per square feet per day. According to the petitioner, imposition of such penalty is extremely onerous and the amount will be extremely large, affecting the trade and business of advertisers. Some of the petitioners have been informed that penalty is proposed to be levied on them and the quantum of penalty would be 10-12 times of their annual turnover. To deal with this question, it is necessary to knot what is contemplated in Section 389 of the Act, 1950 which is extracted below:
“389. In making a bye-law or regulations, municipal council may provide that a breach thereof shall be punishable(a) with fine which may extend to fifty rupees and in the case of continuing breach, with fine which may extend to fifteen rupees for every day during which the breach continues after conviction for the first breach; or (b) with fine which may extend to ten rupees for every day during which the breach continues after receipt of notice from the Chairman or Executive Officer of a Municipal council to discontinue such breach.”
. Thus, Section 389 of the Act, 1950 provides for maximum penalty of Rs.50/- per day whereas Regulation 12 of the Regulations, 2010 provides for penalty of Rs.50/- per square feet/per day.
28. The Hon’ble Supreme Court in the case of Sitapur Packing Wood Suppliers and others (supra), held that the penalty, however, cannot be beyond what is permissible in the Act. Thus, Regulation 12 provides levy of penalty at Rs.50/- per day per square feet is beyond maximum total penalty provided under Section 389 of the Act, 1950. 22 Therefore, we are of the view that no penalty can be imposed beyond the permissible limit provided under the Statute.
29. Question No.(iv) is with regard to validity of Regulations, 2010 regulating private spaces. Section 388(30) of the Act, 1950, under which the Regulations, 2010 have been made, empowers the Municipality to make Regulations for prohibition and regulation of advertisements in public roads or parks. Therefore, under Section 388(30) of the Act, 1950, power is conferred on the Municipality to make regulation only with respect to “public roads”. or “parks”. and it does not in any manner cover the private building or private spaces. Needless to say that when power is delegated on an authority under the Statute then the delegation must be strictly construed and the delegatee cannot exercise the power beyond what has been conferred by the Statute.
30. The Hon’ble Supreme Court in the case of State of M.P. v. Bhola, (2003) 3 SCC 1.held as under:
“20. A delegated legislation can be declared invalid by the court mainly on two grounds: firstly, that it violates any provision of the Constitution and secondly, it is violative of the enabling Act. If the delegate which has been given a rule-making authority exceeds its authority and makes any provision inconsistent with the Act and thus overrides it, it can be held to be a case of violating the provisions of the enabling Act but where the enabling Act itself permits ancillary and subsidiary functions of the legislature to be performed by the executive as its delegate, the delegated legislation cannot be held to be in violation of the enabling Act.”
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31. In the instant case, Regulation 7(e) of the Regulations, 2010 provides that the advertisement of hoardings shall not be put up over rooftop of any Private/Government/Municipality/Institutions buildings without prior permission of Executive Officer of the Municipality. Similarly, Regulation 8(c) provides that permission for roof-top hoarding on private buildings/institutions shall be considered subject to verification of structural stability and no objection from the concerned authorities on factor of safety of the structure. While for advertisement on private building verification of the structural stability and no objection from the concerned authorities on the safety of the structure are required, no such requirement is imposed on the hoardings. Thus, this is a differential treatment so far hoardings on private buildings are concerned which is not permissible under the law.
32. In view of the answers to Question Nos.(i), (ii), (iii) and (iv), there is no need to answer Question Nos.(v), (vi) and (vii), which would amount to mere academic exercise.
33. In the above facts situation, various judicial pronouncements relied upon by Mr. Mohapatra are of no help to the opposite parties.
34. Before parting with the case, we feel it necessary to observe that opposite party Nos.2 and 3-Rourkela Municipality if intends to grant any permission/licence to any person to display hoarding, boards/kiosks in Rourkela Municipal area, they are directed to do the same by public 24 auction or by inviting tender after publishing the same in the widely circulated newspaper and any other modes.
35. At this juncture, it is beneficial to refer to the judgment of the Hon’ble Supreme Court in the case of Nagar Nigam, Meerut Vs. Al Faheem Meat Exports Pvt. Ltd. & Ors., (2006) 13 SCC 382.wherein the Hon’ble Supreme Court held as under:“The law is, thus, clear that ordinarily all contracts by the Government or by an instrumentality of the State should be granted only by public auction or by inviting tenders, after advertising the same in well known newspapers having wide circulation, so that all eligible persons will have an opportunity to bid in the auction, and there is total transparency. In our opinion, this an essential requirement in a democracy, where the people are supreme, and all official acts must be actuated by the public interest, and should inspire public confidence.”
36. It is also open to opposite party Nos.2 and 3-Rourkela Municipality to take action against the petitioners as well as any other parties, who have/are displayed/displaying their hoardings, boards/kiosks after expiry of the period of licence. If the hoardings, boards/kiosks are not removed immediately after expiry of the period of licence, the Rourkela Municipality is not bound by the clause in the agreement to extend further period of licence as the same is impermissible in law being opposed to public policy. It is also open to Rourkela Municipality to recover compensation/damages from the persons who are not removing the 25 hoardings, boards/kiosks after expiry of the period of licence, as such hoardings of licensees including the petitioners will be unauthorized.
37. In the result, the writ petition is allowed and the Rourkela Municipality Regulations of tax on advertisement, 2010 (Annexure-1) is quashed. In the circumstances, we make no order as to costs. ……………………........ B.N.Mahapatra, J.V. Gopala Gowda, C.J.I agree. …....…………………… Chief Justice Orissa High Court, Cuttack Dated 12th December, 2012/skj