2016 (9) TMI 715 - HC - Indian Laws

Court rules demand for advertisement tax under outdated Rules, 2005 without jurisdiction; Orders refunds.

The court held that the demand for advertisement tax under the Agra Nagar Nigam Rules, 2005 was without jurisdiction as they were superseded by the Rules, ... Demand of advertisement tax - whether Rules, 2005 after having been superseded and repealed by Rules, 2009 would not revive after Rules, 2009 are declared ultra vires and, therefore, any demand of advertisement tax for the period of 2010-11 and subsequent thereto would be illegal and without jurisdiction? - Held that:- The power of State Government to abolish or modify a tax imposed by Government has validly been recognized but advertisement tax imposed by Rules, 2009 by State Government has been struck down for not complying with Section 206 of Act, 1959 and also without following the provisions of Sections 199 and 203 of Act, 1959. Thus aforesaid judgment in Anurag Bansal (2011 (4) TMI 1416 - ALLAHABAD HIGH COURT) has nowhere declared that Rules, 2009, in so far as in initial part of notification, supersedes existing rules and orders, lacks authority and that part will not be operated. Legislative intention is clear that existing rules and orders in respect of advertisement tax were superseded. New set of Rules, which have been struck down, would not render revival of supersession already done by Rule framing authority and that be so in our view Rules, 2005 shall not revive. Sri Rahul Sahai, learned counsel appearing for respondent-Nagar Nigam, when confronted with aforesaid authorities, could not place any authority before us so as to pursue to take a different view in the matter.The authorities, therefore, committed a manifest error in proceeding to demand advertisement tax under Rules, 2005 on the assumption that after judgment in Anurag Bansal (supra) striking down Rules, 2009, earlier Rules, 2005 would stand revive. This is neither legally permissible nor otherwise valid. In view of above, all these writ petitions are allowed. The orders and demand notices impugned in all these writ petitions are hereby quashed. It is held that respondents shall not be entitled to realize any amount under orders impugned in this writ petition, which are quashed by this judgment. If any, amount has been deposited by petitioners pursuant to impugned orders or realized by respondents by coercive method or otherwise, same shall be refunded to petitioners without any further delay. However, we make it clear that this judgment shall not preclude Competent Rule making authority from promulgating new set of rules in accordance with law. Issues Involved:1. Validity of the demand for advertisement tax under the Agra Nagar Nigam (Samachar Patro Me Prakashit Vigyapano Par Kar Ka Nirdharan Karna Aur Use Vasool Karna) Niyamawali, 2005 ('Rules, 2005').2. Impact of the U.P. Municipal Corporation (Assessment and Collection of Tax On Advertisement) Rules, 2009 ('Rules, 2009') being declared ultra vires.3. Whether the Rules, 2005 revive after the Rules, 2009 are struck down.4. Legality of the demand notices issued by Nagar Nigam, Agra (NNA) for advertisement tax for the year 2010-11.Detailed Analysis:1. Validity of the Demand for Advertisement Tax under Rules, 2005:The petitioners challenged the demand for advertisement tax under the Rules, 2005 on the grounds that these rules were not in existence during the year of demand (2010-11). The Rules, 2005 were superseded by the Rules, 2009, which came into effect on 24.12.2009. Thus, the demand under the Rules, 2005 was argued to be without jurisdiction and illegal.2. Impact of the Rules, 2009 Being Declared Ultra Vires:The Rules, 2009 were challenged and declared ultra vires by a Full Bench of the High Court in the case of Anurag Bansal and others Vs. State of U.P. and others, 2011(5) ADJ 879. The court held the Rules, 2009 invalid as they were framed without following the mandatory procedure prescribed in the U.P. Municipal Corporation Act, 1959 ('Act, 1959'). The declaration of the Rules, 2009 as ultra vires led to the question of whether the superseded Rules, 2005 would automatically revive.3. Whether the Rules, 2005 Revive After the Rules, 2009 Are Struck Down:The court examined whether the Rules, 2005 would revive after the Rules, 2009 were struck down. It was established that once the Rules, 2005 were superseded by the Rules, 2009, they ceased to exist. The court referred to various precedents, including Firm A. T. B. Mehtab Majid and Co. v. State of Madras AIR 1963 SC 928, which held that once a rule is substituted by a new rule, it does not automatically revive when the new rule is declared invalid. The court concluded that the Rules, 2005 would not revive after the Rules, 2009 were struck down.4. Legality of the Demand Notices Issued by NNA for Advertisement Tax for the Year 2010-11:The court found that the demand notices issued by NNA for advertisement tax under the assumption that the Rules, 2005 had revived were legally impermissible. The authorities committed a manifest error in demanding advertisement tax under the Rules, 2005. Consequently, the court quashed the orders and demand notices impugned in the writ petitions and held that the respondents were not entitled to realize any amount under these orders. Any amount deposited by the petitioners or realized by the respondents was ordered to be refunded without delay.Conclusion:The court allowed all the writ petitions, quashed the impugned orders and demand notices, and directed the respondents to refund any amounts collected. The judgment clarified that the competent rule-making authority could promulgate new rules in accordance with the law. No costs were awarded.