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of <h1>Court Upholds Indore Municipal Corp Ad Tax on Signage, Cites Procedural Flaws; Future Compliance Required Per 1978 Byelaws.</h1> <h3>HAVELLS INDIA LTD., INDORE, M/s. SANGHI BROTHERS (INDORE) PVT. LTD, M/s. HARSH AUTOMOBILES PVT. LTD Versus INDORE MUNICIPAL CORPORATION AND TWO OTHERS, THE COMMISSIONER, INDORE MUNICIPAL CORPORATION, INDORE AND ANOTHER</h3> HAVELLS INDIA LTD., INDORE, M/s. SANGHI BROTHERS (INDORE) PVT. LTD, M/s. HARSH AUTOMOBILES PVT. LTD Versus INDORE MUNICIPAL CORPORATION AND TWO OTHERS, ... Issues Involved:1. Imposition of advertisement tax by Indore Municipal Corporation.2. Validity of resolutions and work orders related to advertisement tax.3. Authority of private contractors to collect advertisement tax.4. Procedural requirements for imposing and collecting advertisement tax.5. Classification of glow-sign boards and neon signs as advertisements.6. Compliance with the Madhya Pradesh Municipal Corporation Act, 1956 and related byelaws.Issue-wise Detailed Analysis:1. Imposition of Advertisement Tax by Indore Municipal Corporation:The petitioner challenged the imposition of advertisement tax by the Indore Municipal Corporation on glow signs and neon signs displayed by dealers, distributors, and retailers. The court upheld the imposition of the tax, referencing Section 132(6)(l) of the Madhya Pradesh Municipal Corporation Act, 1956, which empowers the Corporation to levy a tax on advertisements other than those published in newspapers.2. Validity of Resolutions and Work Orders Related to Advertisement Tax:The petitioner contested the validity of Resolution No.167 dated 24.08.2011 and Resolution No.233 dated 13.10.2011, along with the work order dated 20.10.2011 issued to M/s. Shauryaditya Advertise for the collection of advertisement tax. The court found no grounds to quash these resolutions and work orders, stating that they were in accordance with the statutory provisions and byelaws.3. Authority of Private Contractors to Collect Advertisement Tax:The court examined whether the Municipal Corporation could delegate the collection of advertisement tax to a private contractor. It was held that while Section 189-A of the Act of 1956 permits leasing out the recovery of taxes, the assessment and levy must still be conducted by the Municipal Corporation. The contractor is authorized to collect the tax but cannot take coercive action for recovery, which remains the responsibility of the Municipal Corporation.4. Procedural Requirements for Imposing and Collecting Advertisement Tax:The court emphasized that the procedural requirements under the Byelaws of 1978 must be followed. This includes issuing a bill, allowing objections, and providing a quasi-judicial process for assessment and collection. The court found that the Municipal Corporation had not followed these procedures, leading to the quashing of the demand notices issued by the contractor. The Municipal Corporation was directed to reissue demands following the correct procedure.5. Classification of Glow-Sign Boards and Neon Signs as Advertisements:The court addressed the argument that glow-sign boards and neon signs are not advertisements but merely name boards. It was determined that these signs fall under the definition of advertisements as per the Act and Byelaws, and thus, are subject to advertisement tax.6. Compliance with the Madhya Pradesh Municipal Corporation Act, 1956 and Related Byelaws:The court found that the Municipal Corporation must comply with the Act of 1956 and the Byelaws of 1978 when imposing and collecting advertisement tax. This includes the need for a quasi-judicial process for assessment and the prohibition of coercive recovery actions by private contractors.Conclusion:The court upheld the imposition of advertisement tax by the Indore Municipal Corporation but quashed the demand notices due to procedural non-compliance. The Municipal Corporation was directed to follow the prescribed procedures under the Byelaws of 1978 for future assessments and collections. The authority of private contractors to collect tax was affirmed, but their ability to take coercive action was restricted. The classification of glow-sign boards and neon signs as advertisements was confirmed, subjecting them to the advertisement tax.
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