LexTHE PATNA MUNICIPAL CORPORATION & ORS. versus M/S TRIBRO AD BUREAU & ORS.
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[2024] 10 S.C.R. 1381 : 2024 INSC 784 The Patna Municipal Corporation & Ors. v. M/s Tribro Ad Bureau & Ors. (Civil Appeal No. 11117 of 2024) 16 October 2024 [Vikram Nath and Ahsanuddin Amanullah,* JJ.] Issue for Consideration The Division Bench of the High Court set aside the judgment of the Single Judge of the High Court and held that the appellant(s) herein could not raise any demand of tax/fee/royalty on advertisement(s) since it has been made without any legislative sanction and is, thus, violative of Article 265 of the Constitution of India. The core question confronting this Court, as it was before the Division Bench, is whether the demand is by way of a tax/levy or simply in the nature of royalty for permission for advertising through hoardings within the limits of the Corporation. Headnotes† Bihar Municipal Act, 2007 – s. 431 – Royalty on advertisements – Power of Corporation to charge royalty – On 29.08.2005, in a meeting it was resolved that if any agency puts up its advertisement(s), the Corporation would charge royalty at the rate of Re.1/- per square foot per year on such hoardings – Thereafter, appellants came out with fresh rates of royalty/ tax on advertisements, the same being Rs.10/- per square foot per year in the case of the respondent, which was made effective from 02.11.2007 – The Municipal Commissioner of the Corporation recommended that all those advertisers who had not paid their dues in terms of the order dated 02.11.2007 would be liable to be charged twice the rate fixed and further that hoardings displayed without permission should be removed and such persons would be charged a penalty five times the amount due from them – A demand was raised towards royalty/fee/tax on the respondent no.1 – A writ petition was filed by the respondent no.1 – The Single Judge of the High Court quashed the order of demand of penalty – However, the Division Bench of the High Court set aside the * Author 1382 [2024] 10 S.C.R. Digital Supreme Court Reports judgment of the Single Judge of the High Court and held that the appellant(s) herein could not raise any demand of tax/fee/ royalty on advertisement(s) since it has been made without any legislative sanction – Correctness: Held: In the instant factual setting, the advertising companies/ respective Respondents No.1 had agreed in the year 2005 to pay a royalty of Re.1 per square foot to the Corporation for putting up hoardings/advertisements – There is no dispute that in the Meeting held on 29.08.2005, the advertising companies did not object to payment of royalty, as sought by the Corporation – Only 2 advertising companies, in praesenti, moved the High Court by way of letters patent appeals, whereas, a majority of the advertising companies complied with making payment(s) @ Rs.10 per square foot subsequent to the decision of the Corporation dated 02.11.2007 – The revision of rate was within the power of the Corporation – The Corporation’s power to charge royalty cannot be interfered with on the ground that the same is not available, either in the Act or in the Regulations concerned, as there is no question of the said ‘royalty’ being a tax – Section 431 of the Act, therefore, would not come into the picture where royalty, that too by way of and under an agreement/understanding is concerned – As royalty and tax cannot be equated – The nomenclatures cannot be used interchangeably in law, both carrying starkly different imports and connotations – As far as enhancement of the rate from Re.1 per square foot to Rs.10 per square foot is concerned, there has been no serious attempt to challenge the enhancement in quantum from Re.1 per square foot to Rs.10 per square foot, hence, this Court refrains from delving into that aspect – The payment of enhanced rate of Rs.10 per square foot was not made retrospective by the Corporation, as it was made effective from November, 2007, this Court does not find any occasion to interfere in such demand from the date it was made effective by the Corporation as there is no element of retrospectivity involved – Therefore, the decision of the Corporation, to charge Rs.10 per square foot with regard to hoarding(s)/advertisement(s) as communicated at the relevant point of time to the concerned parties needs no interference – However, the imposition of penalty for non-payment needs to be interfered with as no such power exists – It is held thus, but with the clarificatory cav
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