Uk Advertisers vs. The Shimoga City Corporation

Held

The Court held that the petitioner in WP No. 15016/2019 had made out a case for relief. Consequently, the relief sought in WP No. 9936/2019 and WP No. 15691/2019 was also granted. The Court declared Section 103(b)(vi) and Section 134 of the Karnataka Municipal Corporations Act, 1976, which empower Municipal Corporations to levy tax on advertisements, as unconstitutional and void, striking them down. Similarly, the Court struck down the words "after the levy of the tax and that Section 134 has been determined by the Corporation" found in Sections 135(1), 135(2)(ii), 135(3), 139, and Schedule VIII of the Karnataka Municipal Corporations Act, 1976, along with the relevant Rules/Bye-laws. The Court also declared Section 94(1)(b)(xiii), Section 94(1-B), and related provisions in the Karnataka Municipalities Act, 1964, as unconstitutional and void to the extent they provided for advertisement tax. The demand notices in WP No. 9936/2019 were quashed, and respondents were directed not to raise demands or take coercive action for advertisement tax in WP No. 15691/2019. For refunds, the Court allowed petitioners to represent for refund or adjustment of amounts paid after the 101st Constitutional Amendment.

Facts

These three writ petitions concerned the levy of advertisement tax by Municipal Corporations and Municipal Councils in Karnataka. In WP No. 9936/2019, M/s. Raheel Communication challenged notices dated 26.06.2018 and 03.10.2018 from the Davangere Mahanagara Palike demanding payment of advertisement tax. In WP No. 15016/2019, the Outdoor Advertising Association, Bangalore, challenged the constitutional validity of various sections of the Karnataka Municipal Corporations Act, 1976, and the rules/bye-laws framed thereunder, pertaining to the levy of advertisement tax. In WP No. 15691/2019, several advertising agencies sought directions against Shimoga City Corporation and other municipal bodies not to raise demands for advertisement tax and to refrain from coercive action for non-payment.

Key Issues

1. Whether Section 103(b)(vi), Section 134, and related provisions of the Karnataka Municipal Corporations Act, 1976, and corresponding provisions in the Karnataka Municipalities Act, 1964, empowering Municipal Corporations and Councils to levy tax on advertisements, are constitutional and valid, particularly in light of the omission of Entry 55 of List II of Schedule VII to the Constitution. The petitioner argued that the omission of Entry 55 rendered the levy of advertisement tax by local bodies unconstitutional. The revenue contended that subsequent amendments, including the Karnataka Municipal Corporations (Second Amendment) Act, 2021, which substituted "tax" with "or fee," validated the levy. The petitioner also pointed to amendments in the Panchayath Raj Act and the absence of advertisement tax provisions in the new Bruhat Bengaluru Mahanagara Palike Act, 2020, as evidence of legislative intent to discontinue such levies. The revenue did not record specific arguments beyond the amendment.