TaxTMI 
TaxTMI 
2016 (8) TMI 1460
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.... expiry of the concession period. The petitioner was given right to display advertisements. 3. It was argued that the petitioner was earlier issued letters dated 5.1.2015, 22.1.2015, 8.4.2015 and 17.8.2015 raising illegal demand of advertisement tax. Those were impugned by filing CWP No. 20050 of 2015. The writ petition was disposed of on 21.9.2015 with a direction to the authorities to decide the legal notice dated 19.8.2015 got served by the petitioner by passing a speaking order. The petitioner was further directed to deposit Rs. 25,00,000/-. The needful was done. The legal notice was disposed of by respondent No. 3 by passing order dated 22.1.2016, which has been impugned in the present petition. 4. Learned counsel for the petitioner, while challenging the aforesaid order, submitted that Section 90 of the Punjab Municipal Corporation Act, 1976 (for short, 'the Act') provides for taxes, which can be imposed by the Corporation. It includes tax on advertisement. Sub-section (3) thereof provides that taxes as specified in sub-sections (1) and (2) shall be levied at such rates as may, from time to time, be specified by the Government by notification and shall be assess....
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..... It also provides for mode of allotment thereof. 9. In the aforesaid factual matrix, the contention is that the demand and recovery of tax under any statute will arise only after the procedure for filing of return, assessment, appeals, penalties, interest and consequence of default are provided. In the absence of these machinery provisions, direct demand raised by respondent No. 3 is violative of Article 265 of the Constitution of India. Without affording proper opportunity of hearing and framing any assessment of tax, directly demand notice was issued. It was further argued that even the order now passed is on the legal notice got served by the petitioner, on a direction issued by this court earlier. Otherwise, the provisions of the Act do not provide for passing of any order. The order refers to size of advertisement as per agreement without even ensuring actual size and number of advertisements and as to whether those advertisements were in place or not. Merely because a right had been given in the concession agreement, the same would not mean that all the advertisements had been put in place. The tax could possibly be levied only if the advertisement was there and not merel....
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....sement has not been paid. It further provides that permission is to be granted only for the period for which tax has been paid. Section 126 of the Act provides for powers of the Commissioner in case any advertisement is displayed in violation of the provisions of Section 123 of the Act. Such an advertisement can be directed to be removed immediately. The provisions of the Act, in fact, are self assessment provisions. It is only on failure of a person liable to pay tax that a bill is sent in terms of the provisions of Section 135 of the Act. It provides the particulars of the tax and the period for which the same is demanded. Sub-section (4) of Section 135 of the Act provides that the tax, if not paid, after it becomes due, the Commissioner may issue a notice of demand. Section 138 of the Act provides for procedure for recovery of tax, if not paid. Section 146 of the Act provides for appeal against any levy or assessment of tax, whereas Section 147 of the Act provides for precondition for entertainment of appeal. It was submitted that complete machinery has been provided under the Act for levy, the person liable to pay tax, incidence of tax and rate of tax. Further procedure for ass....
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....ments other than advertisements published in newspapers; xx xx xx (3) The taxes specified in sub-section (1) and sub-section (2) shall be levied at such rates as may, from time to time, be specified by the Government by notification and shall be assessed and collected in accordance with the provisions of this Act and the bye-laws made thereunder. xx xx ....
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....isplayed in any manner whatsoever in any place within the City without the written permission of the Commissioner granted in accordance with bye-laws made under this Act. (2) The Commissioner shall not grant such permission, if- (a) the advertisement contravenes any bye-law made under this Act; or (b) the tax, if any, due in respect of the advertisement has not been paid. (3) Subject to the provisions of sub-section (2), in the case of an advertisement liable to the advertisement tax, the Commissioner shall grant permission for the period to which the payment of the tax relates and no fee shall be charged in respect of such permission. xx xx xx 126. Pow....
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....bsp; xx xx 138. Manner of recovering tax.-- Any sum due on account of tax payable under this Act may be recovered, together with costs of recovery, through the following processes by the Competent Authority,- (a) by service of writ of demand on the defaulter; (b) by distraint and sale of a defaulter's movable property; (c) by the attachment and sale of defaulter's immovable property; (d) in the case of octroi and toll, by the seizure and sale of goods and vehicles; and (e) in the case of taxes on land and buildings, by the attachment of rent due in respect of the property or any other property owned by the defaulter. xx  ....
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....ys of the date on which an amendment is finally made under Section 103, and, in the case of any other tax, within thirty days next after the date of the receipt of the notice of assessment or of alteration of assessment or, if no notice has been given, within thirty days after the date of service of the first notice of demand in respect thereof: Provided that an appeal may be admitted after the expiration of the period prescribed therefor by this section if the appellant satisfies the appellate authority that he had sufficient cause for not preferring the appeal within that period. (b) the amount, if any, in dispute in the appeal has been deposited by the appellant in the office of the Corporation. 399. Powers to make bye-laws.- (1) Subject to the provisions of this Act the Corporation may in addition to any bye-laws which it is empowered to make by any other provision of this Act, make bye-laws to provide for all or any of the following matters, namely,-- A. Bye-laws relating to taxation; xx &nb....
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....bye-laws, to be made in this behalf. It is not in dispute that no bye-laws have been framed under the provisions as none were referred to at the time of hearing. 17. Section 123 of the Act prohibits erection, exhibition etc. of any advertisement without written permission of the Commissioner, which is not to be granted, inter-alia, in case the tax, if any, due in respect of the advertisement has not been paid. The rates of advertisement tax, as envisaged in Section 122 of the Act have been specified by the Government vide notification dated 17.5.2005 (Annexure P-8). It mentions the size of the advertisement and the rate of tax. Sub-section (3) of Section 123 of the Act provides that in case of an advertisement liable to tax, the Commissioner shall grant permission for the period to which the payment of the tax relates. 18. Section 126 of the Act provides that in case any advertisement is exhibited or retained in contravention of the provisions of Section 123 of the Act, the Commissioner may require the owner or occupier to remove the same. On failure, he can get it dismantled or removed. 19. Section 135 of the Act provides that in case tax on advertisement has become due, ....
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....rovided is that in case any one erects or exhibits any advertisement in contravention to the provisions of Section 123 of the Act, which prohibits advertisements without permission of the Commissioner, which can be granted only on payment of tax, is that the person concerned can be directed to remove the same or it can be got removed by the Commissioner. No provision of the Act or bye-laws have been referred to, which provide for assessment and collection of tax that too after affording opportunity of hearing. Section 135(4) of the Act provides for issuance of demand notice directly without there being any provision for show cause notice and hearing before passing order of assessment and consequently demand notice. Even the number of instalments for payment of tax in advance, as are to be specified by framing bye-laws in terms of Section 122(2) of the Act, have also not been referred to. Appeal is also maintainable against levy or assessment of tax. One of the stringent condition laid down in Section 147 of the Act is that amount in dispute has to be deposited before the appeal can be entertained. In the absence of any assessment or levy, no appeal can possibly be maintained. 25....
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.... of tax which in the absence of a prescribed machinery and the prescribed procedure would partake of the character of a purely administrative affair can, in a proper sense, be challenged as contravening Article 19(1)(f)." (Emphasis supplied) 27. In Rai Ramkrishna v. State of Bihar, AIR 1963 SC 1667, Hon'ble the Supreme Court was examining the constitutional validity of the Bihar Taxation on Passengers and Goods (Carried by Public Service Motor Vehicles) Act, 1961. Reiterating the view taken in Kunnathat Thathunni Moopil Nair's case (supra), Hon'ble the Supreme Court held that a statute is not beyond the pale of limitations prescribed by Articles 14 and 19 of the Constitution and that the test of reasonableness prescribed by Article 304(b) is justiciable. However, in cases where the statute was completely discriminatory or provides no procedural machinery for assessment and levy of tax or where it was confiscatory, the Court would be justified in striking it down as unconstitutional. In such cases the character of the material provisions of the impugned statute may be such as may justify the Court taking the view that in substance the taxing statute is a cloak adop....
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....nstitution for inequality was writ large on the Act and inherent in the very provisions under the taxing section thereof. Having said so, this Court also noticed that the Act was silent as to the machinery and the procedure to be followed in making the assessment. It was left to the executive to evolve the requisite machinery and procedure thereby making the whole thing, from beginning to end, purely administrative in character completely ignoring the legal position that the assessment of a tax on person or property is a quasi-judicial exercise." 30. All the aforesaid judgments were referred to with approval by Hon'ble the Supreme Court in M/s Larsen & Toubro Ltd.'s case (supra), where charge of service tax on the indivisible works contracts prior to 1.6.2007 was set aside as the Finance Act, 1994 did not lay down charge or machinery provisions to levy and assess service tax on these transactions. 31. In the case in hand, the Company which entered into the concession agreement with the petitioner is a company in which the Corporation itself holds majority shares. It had granted permission for display of advertisements. Initially, the letter was sent to the petitioner ....