M/S Dm Advertisers Agency Thru. Its Managing Partner And 7 Ors. vs. State Of U.P. And 3 Ors.

Held

The Court held that the Mathura Vrindavan Nagar Nigam (Vigyapan Kar Ka Nirdharan and Wasuli Viniyaman) Upvidhi, 2017, were ultra-vires. The reasoning was twofold: Firstly, Entry 55 of List II of the VIIth Schedule to the Constitution, which empowered the State Government to legislate on taxes on advertisement, was deleted by Section 17 of the Constitution (101st Amendment) Act, effective September 16, 2016. Secondly, Section 172(2)(h) of the U.P. Municipal Corporation Act, which authorized the framing of bye-laws for advertisement tax, was omitted by virtue of Section 173 of the U.P. GST Act, effective July 1, 2017. Therefore, on the date the bye-laws were promulgated (January 6, 2018), the Municipal Corporation lacked the necessary legislative competence. The Court relied on a previous judgment of a Division Bench of the same High Court in M/s. Pankaj Advertising Vs. State of U.P., which had similarly struck down bye-laws for advertisement tax on identical grounds. The bye-laws were struck down as ultra-vires, and the writ petition was allowed. The operative direction was the allowance of the writ petition and striking down of the bye-laws.

Facts

The petitioners, M/s Dm Advertisers Agency and 7 others, challenged the vires of the Mathura Vrindavan Nagar Nigam (Vigyapan Kar Ka Nirdharan and Wasuli Viniyaman) Upvidhi, 2017. They argued that these bye-laws, notified and enforced from January 6, 2018, were beyond the authority of the Municipal Corporation. The core of their argument was that the power to levy advertisement tax had been removed from the U.P. Municipal Corporation Act, 1959, and the Constitution prior to the bye-laws' enforcement. Specifically, Section 172(2)(h) of the U.P. Municipal Corporation Act, which enabled the imposition of advertisement tax, was deleted by Section 173 of the U.P. GST Act effective July 1, 2017. Furthermore, Entry 55 of List II of the VIIth Schedule of the Constitution, which empowered the State to legislate on advertisement tax, was deleted by the Constitution (101st Amendment) Act, 2016, effective September 12, 2016.

Key Issues

1. Whether the Mathura Vrindavan Nagar Nigam (Vigyapan Kar Ka Nirdharan and Wasuli Viniyaman) Upvidhi, 2017, are ultra-vires to the U.P. Municipal Corporation Act, 1959, the Central GST Act, and the U.P. GST Act, and Articles 14 and 19 of the Constitution of India. Petitioner's arguments: The petitioners contended that the bye-laws were ultra-vires because the authority to levy advertisement tax had been removed. They argued that Section 172(2)(h) of the U.P. Municipal Corporation Act was deleted by Section 173 of the U.P. GST Act, effective July 1, 2017. Additionally, they asserted that Entry 55 of List II of the VIIth Schedule of the Constitution, granting the State power over advertisement tax, was deleted by the Constitution (101st Amendment) Act, 2016, effective September 12, 2016. Consequently, the Municipal Corporation lacked the legislative competence to frame and enforce the bye-laws on January 6, 2018, violating Article 265 of the Constitution which mandates taxation only by authority of law. Respondent's arguments: The judgment records no specific arguments from the respondents (State of U.P. and Mathura Vrindavan Nagar Nigam) beyond their appearance and representation.