Whether Municipal Corporation can collect license fees for erection of the advertisement hoardings?

The petitioner has also sought declaration that after the introduction of the Goods and Service Tax (for short "the GST") with effect from 1st July 2017 in light of the 101st Amendment of the Constitution, the respondent Corporation cannot collect any tax on advertisement hoardings in the private properties and consequently cannot collect any license fees in garb of tax for the advertisement hoardings in the private properties. {Para 4}

5. The petitioner has also challenged the constitutional validity of the Section 386(2) of the Gujarat Provincial Municipal Corporation Act, 1949 (for short "the GPMC Act") and sought declaration that the said provision is ultra vires to the Article 243X of the Constitution of India.

37. In view of the above dictum of law, provisions of Sub-section-2 of Section 386 of the GPMC Act is constitutionally valid as per Etnry-5 read with Entry-66 of list-II of the VIIth Schedule and deletion of Entry-55 of list-2 cannot be said to have any effect on the power to levy fees as provided by Section 386(2) of the GPMC Act.

 Whereas in the facts of the present case, section 386(2) of the GPMC Act provides for levy of license fees for license to place advertising hoardings in private properties for license to be issued as per provisions of the GPMC Act and hence the same can never be considered as tax because the person who is granted license will have privilege to place advertising hoarding in private property and for granting such privilege fees is levied.

45. As we are of the opinion that the license fee levied for granting license for placing advertising hoardings in private property is "fee" and not "tax". 

Gujarat High Court

Selvel Media Services Private limited vs The Municipal Corporation Of The city of Ahmedabad... on 20 October, 2020

Bench: J.B.Pardiwala, Bhargav D. Karia

   C/SCA/4538/2019      

Read full Judgment here: Click here

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