2018 (5) TMI 170 - HC - GST

Tender Notice Halted: Challenging Advertisement Tax Levy Under GST and Municipal Corporation Regulations

HC stayed tender notice for advertisement tax due to potential legal irregularities in GST and municipal corporation acts. Court granted respondents time ... Power to levy advertisement tax - pre-emption by Goods and Services Tax - effect of omission of municipal provisions on levy of local tax - scope of Section 173 of the U.P. Goods and Service Tax Act, 2017 - interim stay of administrative proceedingsPower to levy advertisement tax - pre-emption by Goods and Services Tax - effect of omission of municipal provisions on levy of local tax - scope of Section 173 of the U.P. Goods and Service Tax Act, 2017 - Validity of the impugned tender notice dated 31.03.2018 for realising advertisement tax in view of alleged omission of provisions of the U.P. Municipal Corporation Act, 1959 and the applicability of GST. - HELD THAT: - The Court recorded that petitioners contend that clause (b) of sub Section (2) of Section 172 and Sections 192 and 193 of the U.P. Municipal Corporation Act, 1959 have been omitted in view of Section 173 of the U.P. GST Act, 2017, and that consequently the Municipal Corporation lacks power to levy advertisement tax and the tender impugned is bad in law. The Court observed that the matter prima facie requires scrutiny and has not been finally determined. Respondents were permitted time to file a counter affidavit and petitioners to file a rejoinder, so that the controversy on the legal competence of the Municipal Corporation and the effect of the GST enactment can be considered on merits after pleadings and submissions.The question of the validity of the tender and the Municipal Corporation's power to levy advertisement tax is not finally adjudicated and is left for fresh consideration after the filing of counter and rejoinder affidavits.Interim stay of administrative proceedings - power to levy advertisement tax - Whether further proceedings, including auction pursuant to the impugned tender dated 31.03.2018, should be stayed pending adjudication of the legal controversy. - HELD THAT: - On the material placed before it and in view of the prima facie need for scrutiny of the legal issue raised by the petitioners, the Court granted interim relief to preserve the status quo. The Court recorded service and allowed respondents a specified period to file a counter affidavit and afforded petitioners time for rejoinder, fixing the matter for further listing after those pleadings are exchanged. The interim order explicitly restrained further steps under the tender until the next date of listing.Further proceedings, including the auction under the impugned tender dated 31.03.2018, are stayed until the next date of listing.Final Conclusion: Proceedings under the impugned tender are stayed as an interim measure; the substantive question concerning the Municipal Corporation's authority to levy advertisement tax in the light of the U.P. GST Act, 2017 is deferred for adjudication after respondents file counter affidavit and petitioners file rejoinder. Issues:Challenge to the validity of a tender notice issued by the Municipal Corporation for realizing advertisement tax post the omission of certain sections under the U.P. Goods and Service Tax Act and the U.P. Municipal Corporation Act.Analysis:The petitioners argue that due to the omission of specific sections under the U.P. Goods and Service Tax Act and the U.P. Municipal Corporation Act, the Municipal Corporation lacks the authority to levy advertisement tax. They contend that only GST should be applicable, rendering the tender notice for advertisement tax invalid. The court acknowledges the need for a detailed examination of this issue, indicating the complexity and importance of the legal question raised.The respondent's counsel is granted three weeks to file a counter affidavit, indicating a fair opportunity for the opposing party to present their arguments and evidence. Following this, the petitioners are given two weeks to file a rejoinder affidavit, ensuring a balanced exchange of information and legal arguments between the parties. The court schedules the next hearing after the specified time frame, demonstrating a structured and procedural approach to the case.During the interim period until the next hearing, all further proceedings related to the auction in response to the impugned tender notice issued by the Nagar Nigam, Gorakhpur are stayed. This stay order prevents any immediate actions based on the tender notice, maintaining the status quo until the court can thoroughly examine the legal issues raised. The stay order signifies the court's cautious approach to prevent any potential irreparable harm or legal complications during the ongoing legal proceedings.