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RESERVED

AFR

Case:- WRIT - C No 9389 of 2017

U P Advertisers Association through its President & 13 Ors

Vs

State of U P & 2 Ors

Appearance:

For petitioners : Mr W H Khan, Senior Advocate, assisted by

Mr Gulrez Khan, Advocate

For respondents: Mr Anil Tiwari, Advocate

Hon'ble Dilip B Bhosale, Chief Justice

Hon'ble Yashwant Varma, J

(Per Dilip B Bhosale, CJ)

This writ petition under Article 226 of the Constitution of India, filed

by U P Advertisers Association and the Advertising Agencies, has sought the

following reliefs:

“I. Issue a writ, order or direction in the nature of

certiorari quashing Nagar Nigam (Vigyapan Par Kar

Nirdharan, Pratishodh Viniyman Va Vigyapan Kar

Vasooli Upvidhi, 2016 published in the official gazette

U.P. on 2.4.2016 (Annexure-1 to the writ petition).

(II) Issue a writ, order or direction in the nature of

mandamus commanding the respondents not to interfere

in petitioner nos. 1 to 10 carrying on the business of

advertising and charge only the tax and fees etc. which

the respondents were charging from the petitioners

before the enforcement of Rules, 2016.

(III) Issue a writ, order or direction in the nature

of mandamus commanding the respondents not to

enforce the aforesaid Rules of 2016 and the amount

realized by the respondents from the petitioners under

new Rules, 2016 be directed to be refunded to the

petitioners.”

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2.Though, in the prayer clause as also in the body of the writ petition,

“Rules, 2016” are referred to as Rules, which are placed on the record as

Annexure-1, from a perusal thereof, it is clear and is also not in dispute that

these are not Rules framed under Section 540 of the Uttar Pradesh

Municipal Corporation Act, 1959 (for short, “Act, 1959”) but are Bye-laws

made under Section 541 being the Kanpur Nagar Nigam Vigyapan Par Kar

Nirdharan, Pratisedh, Viniyaman Va Vigyapan Kar Vasooli Upvidhi, 2016

(for short, “Bye-laws, 2016”).

3.Section 540 of the Act, 1959 empowers the State Government to make

rules or model rules to carry out the purpose of the Act, whereas Section 541

confers powers on the Corporation to make bye-laws, not inconsistent with

the Act and the rules, with respect to the matters mentioned therein,

including in relation to fixing of fees for any licence, sanction or permission

to be granted by or under the Act, regulating the charges for services

rendered by any municipal authority, and prohibition and regulation of

advertisements. The procedure for making rules by the State Government

under Section 540 and Bye-laws by the Corporation under Section 541 is

also prescribed under the provisions of the Act. We would make reference

thereto a little later and at an appropriate stage.

4.It is clear that the Bye-laws, 2016, impose an advertisement tax as

contemplated by Section 172 read with Section 192 of the Act, 1959.

Section 172 deals with the taxes to be imposed under this Act and subject to

the provisions thereof and of Article 285 of the Constitution of India. Under

this provision, the Corporation is conferred with the power to impose two

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kinds of taxes. The first part [sub-section (1)] lays down that the Corporation

“shall” impose a tax on trades, professions, transfer of property, tax on

vacant land and so on. The second part [sub-section (2)] lays down that the

Corporation “may” impose a tax in addition to the taxes specified in sub-

section (1) for the purposes of the Act and subject to the provisions thereof,

including a tax on advertisements, as contemplated by clause (h) of sub-

section (2) of Section 172. Further reference to Section 172, we propose to

make a little later. In this backdrop, the questions that fall for our

consideration are - whether the Municipal Corporation is competent to

impose an advertisement tax as contemplated by clause (h) of sub-section

(2) of Section 172 of the Act, 1959 by making Bye-laws in exercise of its

powers under Section 541 thereof, and whether the procedure for framing

the bye-laws as contemplated under this Act has been followed. In other

words, whether the procedure for making the bye-laws in exercise of the

powers under Section 541 of the Act, 1959 is mandatory in nature and, if so,

whether the procedure contemplated under the provisions of the Act and the

relevant rules was followed and, if not, whether the Bye-laws under

challenge deserve to be struck down as ultra vires the provisions of this Act.

5.The first petitioner is an association of advertisers of Kanpur.

Petitioner nos 2 to 10 claim that they look after the interest of the advertisers

of Kanpur and represent them in various matters concerning imposition and

collection of advertisement tax before the State Government and Kanpur

Nagar Nigam and its authorities. They are also advertising agencies and

carry on business of advertisement within the limits of the Nagar Nigam,

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Kanpur Nagar by displaying hoardings, kiosks, glow signs etc at the Nagar

Nigam sites and private sites in accordance with the provisions of the Act,

1959. Petitioner nos. 11 to 13 are owners of the buildings/sites who have let

out their land/building to the petitioner – advertiser under agreements to

install hoardings and display advertisements on rent. They are not directly

engaged in the business of advertisement.

6.Before the Bye-laws, 2016 were framed, the State Government, in

pursuance of powers conferred under Section 227 read with Section 192,

219, sub-section (1) of Section 540 and Section 550 of the Act, 1959 and

Section 21 of the Uttar Pradesh General Clauses Act and in supersession of

all previous rules and orders with regard to advertisements, had notified the

Municipal Corporation (Assessment and Collection of Tax on

Advertisement) Rules, 2009 (for short, “Rules, 2009”) on 27 February 2008.

The Rules, 2009 were enforced from the date of its publication in the

Official Gazette and were extended to every Municipal Corporation of Uttar

Pradesh. Those Rules imposed an advertisement tax and also provided the

mode of recovery and initiation of penal action, in the event of contravention

of those Rules by the advertising agencies as well as other related persons. A

bunch of writ petitions were filed by the advertising agencies challenging

the Rules, 2009 mainly on the ground that the Rules were ultra vires the

constitutional mandate enshrined under Articles 19(1)(a) and 19(1)(g) of the

Constitution of India. The Rules were also challenged on the ground that

those were framed in contravention of statutory provisions contained in the

Act, 1959. While dealing with similar challenge, two Division Benches of

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this Court expressed differing views/opinions and, in view thereof, a

reference was made by a Division Bench of this Court vide order dated 28

October 2010 passed in a bunch of writ petitions the leading one of which

was Purvanchan Advertising Association & Ors Vs State of U P & Ors,

2011 (2) ADJ 161 (DB) (LB) expressing disagreement with the judgment of

another Division Bench whereby a similar challenge in a writ petition was

dismissed in Taj Advertising & Ors Vs State of U P & Ors, [2010 (5) ADJ

272 (DB)]. The Full Bench in Anurag Bansal Vs State of U P & Ors,

[2011 (5) ADJ 879 (LB) (FB)], after considering the scheme of the Act and

the relevant Rules, upheld the challenge to the Rules affirming the view

expressed by the Division Bench in Purvanchan Advertising Association

(supra), and disagreeing with the opinion expressed by the Division Bench

in Taj Advertising (supra). It held that the State Government has got the

legislative competence to frame Rules but subject to fulfilment of necessary

conditions and procedures prescribed under Chapter IX. It was further held

that the Government could not have framed the Rules, 2009 for all the

Municipal Corporations without taking recourse of not only Section 206 of

the Act, 1959 but also the other statutory provisions contained in Chapter IX

of the Act, 1959. Thus, the Full Bench declared the Rules, 2009 as invalid

and ultra vires the Act having been framed without following the provisions

of Sections 199 to 203 of the Act and other statutory provisions discussed in

the body of the judgment. It was also declared that the provisions contained

in the Rules, 2009, requiring the owner of the buildings to face penal

consequences, as invalid and violative of Section 195 of the Act.

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7.In Anurag Bansal (supra), the Full Bench considered, in depth, the

relevant provisions of the Act, Rules and the Constitution and, in paragraphs

67 and 68, observed thus:

“67. Accordingly, the power conferred on the

State Government under Section 540 of the Act is

subject to Sections 172, 192, 193, 194, 195 and 196 and

199 of the Act. However, the government has right to

frame model rules or issue direction under Section 206

of the Act to impose certain taxes by publication in

official gazette. Thus, the impugned rules seem to have

been framed in contravention of statutory provision

contained in the Act. Hence, the judgment in Taj

Advertising (supra) seems to not lay down a correct law.

68. The other aspect of the matter is that the

provisions contained in the Act with regard to

imposition of tax seem to be an instance of conditional

legislation. Consistent with their sovereign character,

Legislatures in India have been held to possess wide

power of delegation. This power is, however, subject to

one important limitation. The Legislation cannot

delegate essential legislative functions which consist in

the determination or choosing of the legislative policy

and of formally enacting that policy into a binding rule

of conduct vide in re: Article 143, Constitution of India

in Vasanlal Maganbhai Sanjawala v. State of Bombay,

AIR 1961 SC 4, p. 7 (para 4). However, the delegation

may be valid only when the legislative policy and

guidelines to implement it are adequately laid down and

the delegatee is only empowered to carry out the policy

within the guidelines laid down by the Legislature vide

AIR 1972 SC 1917, p. 1922, Tata Iron & Steel Co. v.

Workmen, (1972) 1 SCC 383; Gwalior Rayon Mills v.

Asstt. Commr., Sales Tax, AIR 1974 SC 1660, p. 1669

(para 22) : (1974) 4 SCC 98; P.N. Kaushal v. Union of

India, AIR 1978 SC 1457, p. 1472 : (1978) 3 SCC 558;

Ajoy Kumar Banerjee v. Union of India, (1984) 3 SCC

127, pp. 147, 148 : AIR 1984 SC 1130; A.S.

Barasuraman v. State of Tamil Nadu, AIR 1990 SC 40,

p. 43 : (1989) Supp (1) SCC 430; Agriculture Market

Committee v. Shalimar Chemical Works, AIR 1997 SC

2502, p. 2507 : (1997) 5 SCC 516.

In view of above, delegation of unfettered powers

to the Municipal Commissioner to impose tax in the

form of penalty seems to be an instance of excessive

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delegation, contrary to the statutory provisions (supra).

7.1The observations made in paragraphs 82 to 85 are also relevant, which

read thus:

“82. Keeping in view the statutory provisions

contained in the Act under Section 172 read with

Section 199 of the Act and other provisions, ultimate

power to impose tax vests in the Corporation i.e. in its

general body or Board constituted by the elected

representatives. The Corporation can modify the

proposal of executive body under Section 202 of the Act

even after sanction of tax proposal by the State

Government. It shall be necessary to place the matter for

approval before the Corporation and the Corporation

shall take final decision by special resolution with

regard to imposition of tax. The State Government has

got power under Section 205 of the Act to abolish or

modify the tax imposed by the the Corporation. It does

not mean that the State Government lacks power with

regard to tax matter. Power conferred on the State

Government is general power which may be exercised

without affecting the statutory power provided to

Corporation to impose and regulate tax within its

jurisdiction. The government may, by notification, under

Section 206 of the Act by general or special order

published in official gazette, required corporations to

impose any tax mentioned in sub-section (2) of Section

172 of the Act, not already imposed at a specified rate.

The Government may also increase, modify or vary the

rate of tax in case the Corporation fails to carry out the

order.

83. The Government may pass suitable order

imposing, increasing, modifying, or varying the tax

thereupon and in such event the order of the State

Government shall operate as if it had been a resolution

duly passed by the Corporation.

84. In view of above, the tax imposed by the State

Government straightaway without exercising the power

conferred by the Act i.e. issuance of direction by

notification in gazette to impose tax seems to be an act

of exceeding of jurisdiction. Impugned Rules have been

framed by the Government in contravention of statutory

provisions (supra) contained in the Act. By framing the

impugned Rules, the State Government seems to have

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acted treating the Corporations of the State as its

department which seems to not the aim and object of

Article 243 (Q) of the Constitution.

85. It is a recognized canon of construction that

an expression used in a rule, bye-law or form made in

exercise of a power conferred by a statute must unless

there is anything repugnant in the subject or context

have the same meaning as is assigned to it under the

statute vide Onkarlal Nandlal v. State of Rajasthan,

(1985) 4 SCC 404. However it is subject to rider that the

rules should be consistent with the provisions of the Act,

and if a rule goes beyond what the Act contemplates, the

rule must yield to the Act vide Central Bank of India v.

Their Workmen, AIR 1960 SC 12, p. 23; Babaji Kondaj

v. Nasik Merchants Co-operative Bank Ltd., (1960) 1

SCR 200; and Luckwood's case (1984) 2 SCC 50, p.63 :

AIR 1984 SC 192 : (1894) AC 347, p. 360 (HL).”

8.We have heard learned counsel for the parties and, with their

assistance, gone through the entire material placed before us and also the

relevant provisions of the Act and the Rules. Mr W H Khan, learned Senior

Counsel, at the outset, submitted that the Corporation has no authority in law

to impose an advertisement tax specified in clause (h) of sub-section (2) of

Section 172 by framing bye-laws. He submitted that the procedure

contemplated under Sections 199 to 206 for framing Rules to impose taxes

under Section 172(2) being mandatory in nature and since the Corporation

has not made Rules by following the said procedure, the bye-laws under

which tax has been imposed cannot be sustained in law. In support of this

proposition, he placed reliance upon the judgments of the Supreme Court, to

which we propose to make a reference at an appropriate stage in the latter

part of this judgment. He further submitted that the Bye-laws as a whole

under which the impugned advertisement tax has been imposed deserve to

be set aside being ultra vires the provisions of the Act. He submitted that the

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procedure contemplated under Sections 542 to 544 for making bye-laws was

admittedly not followed by the Corporation. He submitted that the draft bye-

laws were not placed before the Corporation by the Municipal

Commissioner as contemplated by Section 542. He then invited our attention

to Section 543 to submit that the objections were not heard by the

Corporation but were heard and decided by a Sub-Committee consisting of

officers of the Corporation which is not permissible in law. He, therefore,

submitted that even the Bye-laws deserve to be set aside being ultra vires the

mandatory provisions of the Act. Learned Senior Counsel for the petitioner

did not make any other submissions though, in the writ petition, he has made

reference to several rules to demonstrate on merits that the Bye-laws deserve

to be set aside. He did not make any submissions and confined his challenge

only on the ground as aforestated.

8.1On the other hand, Mr Anil Tiwari, learned counsel appearing for the

Nagar Nigam fairly submitted that the procedure contemplated under the

provisions of Sections 199 to 206 of the Act, 1959 was not followed for

making rules to impose a tax specified in sub-section (2) of Section 172. He

submitted that for framing the Bye-laws, the procedure contemplated under

this provision was followed and, therefore, the Corporation was justified in

imposing tax by framing bye-laws under Section 541 of the Act, 1959. With

his assistance, we have gone through the counter affidavit and the other

material, to which he invited our attention in support.

9.We now proceed to look into the relevant provisions of the Act, 1959.

Chapter IX of the Act, 1959 dealing with corporation taxation consists of

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Sections 172 to 227. Before we look into all relevant provisions, it would be

relevant to have a glance at Sections 172 and 192 at this stage. Sections 172

and 192 read thus:

“172. Taxes to be imposed under this Act. - (1) For

the purposes of this Act and subject to the provisions

thereof and of Article 285 of the Constitution of India the

Corporation shall impose the following taxes, namely,-

(a) property taxes;

(b) a tax on vehicles other than mechanically

propelled vehicles, and other conveyances plying

for hire or kept within the City or on boats

moored therein;

(c) a tax on helicopters or any other type of

planes, when they land on or take off from the

helipads, airports, airstrips or places made for this

purpose situated within the Corporation. The tax

so imposed shall be paid by the airport authority

or person or persons, or managers, or director or

institution or department or agency involved in

the maintenance, management and supervision of

the airport, airstrip, helipad or the place as the

case may be;

(d) a tax on trades and professions;

(e) a tax on deeds of transfer of immovable

property situated within the city;

(f) a tax on vacant land situated within the city;

(2) In addition to the taxes specified in sub-section

(1) the Corporation may for the purposes of this Act and

subject to the provisions thereof impose any of the

following taxes, namely, -

(a) a tax on callings and on holding a public or

private appointment;

(b) [* * *]

(c) [* * *]

(d) [* * *]

(e) a tax on dogs kept within the City;

(f) a betterment tax;

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(g) [* * *]

(h) a tax on advertisements not being

advertisements published in newspapers;

(i) a theatre tax; and

(j) [* * *]

[* * *]

(3) The Corporation taxes shall be assessed and

levied in accordance with the provisions of this Act and the

rules and bye-laws framed thereunder.

(4) Nothing in this section shall authorize the

imposition of any tax which the State Legislature has no

power to impose in the State under the Constitution of

India:

Provided that where any tax was being lawfully

levied in the area included in the City immediately before

the commencement of the Constitution of India such tax

may continue to be levied and applied for the purposes of

this Act until provision to the contrary is made by

Parliament.

192. Tax on advertisements. - Where a Corporation

imposes a tax mentioned in clause (h) of sub-section (2) of

Section 172, every person who erects, exhibits, fixes or

retains upon or over any land, building, wall, hoarding or

structure any advertisement or who displays any

advertisement to public view in any manner whatsoever, in

any place whether public or private, shall pay on every

advertisement which is so erected, exhibited, fixed,

retained or displayed to public view, a tax calculated at

such rates and in such manner and subject to such

exemptions as may be provided by the Act or rules made

thereunder:

Provided that no tax shall be levied under this

section on any advertisement or a notice-

(a) of public meetings, or

(b) of an election to any legislative body or

the Corporation,

(c) of a candidature in respect of such an election:

Provided also that no such tax shall be levied on any

advertisement which is not a sky-sign and which-

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(a) is exhibited within the window of any

building, or

(b) relates to the trade or business carried on

within the land or building upon or over which

advertisement is exhibited, or to any sale or

letting of such land or building or any effects

therein or to any sale, entertainment or meeting to

be held upon or in the same, or

(c) relates to the name of the land or building

upon or over which the advertisement is

exhibited, or the name of the owner or occupier of

such land or building, or

(d) relates to the business of any railway

administration, or

(e) is exhibited within any railway station or upon

any wall or other property of a railway

administration except any portion of the surface

of such wall or property fronting any street.

Explanation 1.- The word “structure” in this section

shall include any movable board on wheels used as an

advertisement or an advertisement medium.

Explanation 2. - “Public place” shall, for the purpose

of this section, mean any place which is open to the use and

enjoyment of the public, whether it is actually used or

enjoyed by the public or not.”

10.As seen earlier, Section 172 which empowers the Corporation to

impose a tax, speaks of two types of taxes, namely obligatory taxes, which

the Corporation must impose under Section 172 (1), and optional taxes,

which a Corporation may impose under Section 172 (2). We are concerned

with the optional taxes under Section 172 (2) of the Act, 1959. Sub-section

(3) of Section 172 states that the Corporation taxes shall be assessed and

levied in accordance with the provisions of the Act, 1959, the Rules and

Bye-laws framed thereunder. The provisions of sub-section (3), however, do

not specify which of the taxes are to be assessed and levied, in accordance

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with Rules and which of the taxes by Bye-laws. It would, therefore, become

necessary to examine whether an advertisement tax could be assessed and

levied in accordance with the Bye-laws, 2016. In other words, whether

advertisement tax could be imposed by framing bye-laws.

11.Section 192 states that where a Corporation imposes a tax, mentioned

in clause (h) of sub-section (2) of Section 172, every person who erects,

exhibits, fixes or retains upon or over any land, building, wall, hoarding or

structure, any advertisement or who displays any advertisement to public

view in any manner whatsoever, in any place, whether public or private,

shall pay, on every such advertisement, a tax calculated at such rates and in

such manner and subject to such exemptions as may be provided by the Act

or rules made thereunder. The expression used in Section 192 “as may be

provided by the Act or rules”, if read with the expression “in accordance

with the provisions of this Act and the Rules and bye-laws framed

thereunder” in sub-section (3) of Section 172, makes it clear that a tax

should be calculated at such rates and in such manner as may be provided by

the Act or Rules made thereunder. Insofar as advertisement tax under

Section 172 (2) (h) is concerned, the legislature has consciously deleted the

word “bye-laws” from Section 192 of Act, 1959 thereby making its intent

clear, that such a tax cannot be imposed by framing bye-laws. Section 193

empowers the Municipal Commissioner not to grant any permission in case

an advertisement contravenes any bye-law made by the Corporation. Section

194 provides that a permission granted under Section 193 shall be void in

case it contravenes any bye-law made by the Corporation. Section 196

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provides that for contravention of any provision contained in the Act, as

provided under Sections 192 and 193, the beneficiaries shall be held

responsible for whom or for whose purpose the advertisement has been

erected.

12.The legislature has delegated powers to the Corporation in respect of

taxes mentioned in Section 172 of the Act, 1959. The delegation made to the

Corporation under this provision is within the permissible limits of

delegation. The Corporation is expected to impose taxes as may be provided

by the Act and rules made thereunder which should be consistent with the

law under which it is made and cannot go beyond the limits of the policy

and the standards laid down therein (See: Delhi Municipal Corporation of

Delhi Vs Birla Cotton, Spinning and Weaving Mills, AIR 1968 SC 1232).

The Constitution confers a power and imposes a duty on the legislature to

make laws. In turn, it is open to the legislature to delegate its power to

impose taxes in accordance with the provisions of the Act and the Rules

framed thereunder. When powers are delegated by the legislature to local

authorities such as a Corporation, it is expected to work within the four

corners of the law, under which the power is delegated, more particularly

when the delegate deals with the subject-imposition of taxes. In other words

so long as the law provides a method/procedure by which the local body

should act, it cannot deviate from the procedure contemplated under the said

legislation and it is the bounden duty of the local body to observe the

procedure while exercising the delegated powers in case of taxation. It is

therefore necessary in the present case to find out what is the procedure

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provided for in the Act either for framing rules or for framing bye-laws and

then to consider the questions formulated by us in the earlier part of the

judgment.

13.The provisions of Section 199 to Section 206 under the heading

Imposition of Taxes in Chapter IX of the Act, 1959 provide the procedure to

be adopted for imposition of taxes, for framing of proposal, subsequent

procedure which is to be adopted after framing of a proposal, and also

confers power on the State Government to reject, sanction or modify the

proposal. The power has been conferred on the State Government to modify,

abolish or decline the proposal of the Corporation with regard to imposition

of taxes. The State Government has also been conferred the power under

Section 206 to require a Corporation to impose taxes. In short, the

provisions of Sections 199 to 206 prescribe the procedure for making rules

contemplated under Section 540 in Chapter XXIII of the Act, 1959. At this

stage, it would be relevant to reproduce Section 540, which reads thus:

“540. Making of rules by State Government. - (1)

In addition to the power conferred upon the State

Government under the preceding Chapters of this Act to

make rules the State Government may make rules to carry

out the purposes of the Act and may also make model rules

for the guidance of a Corporation in any matter connected

with the carrying out of the provisions of this or any other

enactment.

Explanation.- The power conferred by this sub-

section includes the power to make rules regulating the

holding of meetings of the Corporation and its Committees

and the conduct of business at such meetings till bye-laws

are framed under the Act for the purpose.

(2) The power of the State Government to make rules

under this Act shall be subject to the condition of the rules

being made after previous publication and of not taking

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effect until they have been published in the official Gazette.

(3) Any rule made by the State Government may be

general for all Corporations or may be special for any one

or more Corporations to be specified.

(4) [* * *]”

13.1This provision of the Act, 1959 provides that the State Government

may frame Rules for the purposes of this Act or may make model rules to be

adopted by Corporations of the State. Section 219 in Chapter IX provides for

regulating by rules matters such as assessment, collection and other matters

as provided for under the said provision, whereas Section 227 confers a

power on the State Government to make rules for the purpose of carrying

into effect the provisions of Chapter IX and may provide for matters referred

to in Section 219. Section 219 does not speak about imposition of taxes

under Section 172, including an advertisement tax. The expression 'rules'

used in Section 192 means the rules made by the State Government after

following the procedure as contemplated under Section 199 to 206. The

relevant Sections under the heading 'Imposition of Tax' in Chapter IX read

thus:

“199. Framing of preliminary proposals.- (1) When

a Corporation desires to impose a tax specified in sub-

section (2) of Section 172 it shall by resolution direct the

Executive Committee to frame proposals specifying-

(a) the tax, being one of the taxes described in

sub-section (2) of Section 172 which it desires to

impose;

(b) the persons or class of persons to be made

liable, and the description of property or other

taxable thing or circumstances in respect of which

they are to be made liable, except where and in so

far as any class or description is already

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sufficiently defined under clause (a) or by this

Act;

(c) the amount or rate leviable from each such

person or class of persons;

(d) any other matter referred to in Section 219

which the State Government requires by rule to

be specified.

(2) Upon a resolution being passed under sub-section

(1) the Executive Committee shall frame the proposals and

also prepare a draft of the rules which it desires the State

Government to make in respect of the matters referred to in

Section 219.

(3) The Executive Committee shall, thereafter, publish

in the manner prescribed by rule the proposals framed under

sub-section (1) and the draft rules framed under sub-section

(2) along with a notice in the form to be prescribed by rule.

200. Procedure subsequent to framing proposals.-

(1) Any inhabitant of the City may, within two weeks from

the publication of the said notice, submit to the Corporation

an objection in writing to all or any of the proposals framed

under the preceding section, and the Corporation shall take

any objection so submitted into consideration and pass

orders thereon by special resolution.

(2) If the Corporation decides to modify the proposals

of the Executive Committee, or any of them the Municipal

Commissioner shall publish the modified proposals and, if

necessary, revise draft rules along with a notice indicating

that the proposals and rules (if any) are in modification of

proposals and rules previously published for objection.

(3) Any objections which may be received to the

modified proposals shall be dealt with in the manner

prescribed in sub-section (1).

(4) When the Corporation has finally settled its

proposals, the Municipal Commissioner shall submit them

along with the objections (if any) made in connection

therewith to the State Government.

201. Power of State Government to reject, sanction

or modify proposal.- Upon receipt of the proposals and

objection under the preceding section the State Government

may either refuse to sanction the proposals or return them to

the Corporation for further consideration or sanction them

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without modification or with such modification not

involving an increase of the amount to be imposed, as it

seems fit.

202. Resolution of Corporation directing

imposition of taxes.- (1) When the proposals have been

sanctioned by the State Government, the State Government,

after taking into consideration the draft rules submitted by

the Corporation, shall proceed forthwith to make such rules

in respect of the tax as for the time being it considers

necessary.

(2) When the rules have been made the order of

sanction and a copy of the rules shall be sent to the

Corporation, and thereupon the Corporation shall by special

resolution direct the imposition of the tax with effect from a

date to be specified in the resolution.

203. Imposition.- (1) A copy of the resolution passed

under Section 202 shall be submitted to the State

Government.

(2) Upon receipt of the copy of the resolution the

State Government shall notify in the official Gazette, the

imposition of the tax from the appointed date, and the

imposition of tax shall in all cases be subject to the

condition that it has been so notified.

(3) A notification of the imposition of a tax under

sub-section (2) shall be conclusive proof that the tax has

been imposed in accordance with the provisions of this Act.

204. Procedure for altering taxes.- The procedure

for abolishing a tax, or for altering a tax in respect of the

matters specified in clauses (b) and (c) of sub-section (1) of

Section 199 shall, so far as may be, be the procedure

prescribed by Sections 199 to 202 for the imposition of a

tax.

205. Power of State Government to remedy or

abolish tax.- (1) Whenever it appears, on complaint made

or otherwise to the State Government, that the levy of any

tax is contrary to the public interests or that any tax is

unfair in its incidence, the State Government may, after

considering the explanation of the Corporation concerned,

by order require such Corporation to take measures within

a time to be specified in the order, for the removal of any

defect which it considers to exist in the tax or in the method

of assessing or collecting the tax.

19

(2) Upon the failure or inability of the Corporation to

comply, to the satisfaction of the State Government, with

an order made under sub-section (1), the State Government,

may by notification, suspend the levy of the tax, or of any

portion thereof, until the defect is removed, or may abolish

or reduce the tax.

206. Power of State Government to require

Corporation to impose taxes.- (1) The State Government

may, by general or special order, published in the official

Gazette, require a Corporation to impose any tax

mentioned in sub-section (2) of Section 172 not already

imposed, at such rate and within such period as may be

specified in the notification, and the Corporation shall

thereupon act accordingly.

(2) The State Government may require a Corporation

to increase, modify or vary the rate of any tax already

imposed and thereupon the Corporation shall increase,

modify or vary the tax as required.

(3) If the Corporation fails to carry out the order

passed under sub-section (1) or (2), the State Government

may pass suitable order imposing, increasing, modifying or

varying the tax and thereupon the order of the State

Government shall operate as if it had been a resolution

duly passed by the Corporation.”

13.2Section 199 provides that when a Corporation desires to impose a tax

specified in sub-section (2) of Section 172, which also includes an

advertisement tax, it shall, by resolution, direct the Executive Committee to

frame proposals and also draft rules in respect thereof. Sub-section (2) of

Section 199 provides that upon a resolution being passed under sub-section

(1), the Executive Committee is empowered to frame the proposals and also

prepare a draft of the “rules” which it desires the State Government to make

in respect of the matters referred to in Section 219. From a bare perusal of

sub-section (1) and sub-section (2), it is clear that proposals specifying the

tax being one of the taxes prescribed in sub-section (2) of Section 172,

which it desires to impose, the rules are required to be made by the State

20

Government. Sub-section (3) provides that the Executive Committee shall

thereafter publish, in the manner prescribed by the rule, the proposals

framed under sub-section (1) and the draft rules framed under sub-section

(2) along with a notice in the form to be prescribed by the rules. Sub-section

(1) of Section 200 provides for the procedure to invite objections and that

the Corporation shall take the objections so submitted into consideration and

pass orders thereon by special resolution. It is open to the Corporation to

modify the proposals of the Executive Committee and then publish the

modified proposals and, if necessary, revise the draft rules along with a

notice indicating that the proposals and rules, if any, are in modification of

the proposals and rules previously published. If any objections are received

to the modified proposals, they are required to be dealt with in the manner

prescribed in sub-section (1) of Section 200. When the Corporation finally

settles its proposal, the Municipal Commissioner is authorised to submit

them with the objections, if any, made in connection therewith to the Sate

Government. The State Government under Section 201 is empowered to

either reject, sanction or modify the proposals submitted by the Corporation

or return them for further consideration or sanction without modification or

with such modification, not involving an increase in the quantum of tax to

be imposed, as it deems fit. Thereafter, when the proposals have been

sanctioned, the State Government, after taking into consideration the draft

rules submitted by the Corporation, shall proceed forthwith to make such

rules in respect of the tax as, for the time being, it considers necessary.

When the rules have been made, the order of sanction and a copy of the

rules is required to be sent to the Corporation, and thereupon the

21

Corporation under sub-section (2) of Section 202 shall, by special

resolution, direct imposition of the tax with effect from a date to be specified

in the resolution. A copy of the resolution passed under Section 202, as

provided for under Section 203, shall be submitted to the State Government

which, in turn, shall notify the same in the Official Gazette and the

imposition of the tax from the appointed date, shall, in all cases, be subject

to the condition that it has been so notified. A notification of the imposition

of a tax under sub-section (2) shall be conclusive proof that the tax has been

imposed in accordance with the provisions of this Act. In the present matter,

we are not concerned with Sections 204, 205 and 206 though we have

reproduced them to only indicate the scheme of the provisions regarding

imposition of taxes.

13.3From the language employed in these provisions, in particular

Sections 199, 200 and Section 202, which also uses the word “shall”, the

intent of the legislature is clear. By its very nature, it is mandatory and it is

necessary to be complied with strictly before any tax under sub-section (2)

of Section 172 can be imposed. In other words, the procedure specified in

these provisions is mandatory considering its language, the purpose for

which it has been enacted, the setting in which it appears and the intention of

the legislature which, in our opinion, obviously is that no tax should be

imposed without hearing the taxpayers. In any case, there is no serious

general inconvenience or injustice to any one if the procedure under these

provisions is held to be mandatory. On the other hand, it will be unjust to

taxpayers if they are held to be directory.

22

14.At this stage, let us have a look into the counter affidavit filed on

behalf of the Nagar Nigam to ascertain the procedure followed for making

Bye-laws, 2016. The respondent – Kanpur Nagar Nigam through its Tax

Officer filed a counter affidavit dated 28 March 2017 and placed the

supporting material on record. In the counter affidavit, the detailed

procedure that was followed for framing the Rules, 2016 has been narrated

by the deponent. He has stated that draft rules were prepared under the

authority of a resolution dated 19 July 2014 adopted by the Corporation as

provided for under Section 199 of the Act, 1959 and were placed before the

Executive Committee on 30 August 2014. The Executive Committee

thereafter invited objections to the bye-laws by issuing an advertisement in

daily newspapers Hindustan and Amar Ujala and also uploaded the same on

the website of the Nagar Nigam. It is further stated that 29 objections were

received and to deal with those objections, the deponent (Tax Officer) had

constituted a Committee vide Office Memorandum/order dated 14 January

2015 consisting of the Upper Mukhya Ayukt 'Pratham' as its President;

Mukhya Nagar Lekha Pareekshak, Executive Engineer (Traffic), Chief Tax

Assessing Officer as its Members and the Officer Incharge (Advertisement)

as Member Secretary. The Committee in its meeting dated 16 January 2015

decided to provide an opportunity of hearing to the objectors. The notices

were accordingly served to all the persons who raised objections and after

hearing them, the modified rules were placed before the Executive

Committee on 26 February 2015. The Executive Committee considered the

modified rules and resolved to constitute a three Member Sub-Committee

for revising the rates. The Sub- Committee submitted its report to the

23

Executive Committee which, in turn, placed the modified rules with the

revised rates before the Corporation on 25 March 2015. The draft rules were

accordingly placed before the special meeting of the Corporation which vide

its resolution dated 1 May 2015 again decided to place the draft rules before

the Executive Committee. The Executive Committee thereafter once again

on 21 May 2015 considered all the proposals and suggestions and ultimately

decided to place the same before the Corporation. The Corporation

ultimately accepted the proposal/draft rules in its meeting held on 21

November 2015 and forwarded the same to the State Government for

seeking its approval with its letter dated 18 January 2016. The affidavit

states that the State Government has approved the rules vide its order dated

28 January 2016.

14.1We have perused both the letters dated 18 January 2016 and 28

January 2016. Both the letters, as seen earlier, do not make any reference to

'Rules' as such and what was forwarded by the Corporation to the

Government and what was considered by the State Government was the

Bye-laws. From a perusal of the letter dated 28 January 2016, it appears that

the Government did not grant approval as such but it simply conveyed its No

Objection to the implementation of the impugned Bye-laws in place of the

2014 Bye-laws.

14.2It is, thus, clear from the sequence of events that the Corporation

purportedly made Bye-laws and not rules and claimed that for making the

bye-laws, they followed the procedure contemplated under the provisions of

Sections 199 to 206. Mr Anil Tiwari, learned counsel appearing for the

24

Nagar Nigam fairly admitted that what was passed by the Corporation were

Bye laws as contemplated under Section 541 of the Act, 1959 and not rules.

This being so, it cannot be stated that the procedure which we have held to

be mandatory for making rules to impose taxes specified in sub-section (2)

of Section 172 was followed and no rules were framed for imposing

advertisement tax. Even if it is assumed that the procedure contemplated

under Sections 199 to 206 could be followed even for making bye-laws,

still, it cannot be stated that the procedure prescribed under Sections 199 to

206 was followed. It is a well settled principle of law that where a power is

given to do a certain thing in a certain manner, the thing must be done in that

way or not at all. (See Dhanajaya Reddy Vs State of Karnataka, (2001) 4

SCC 9; Commissioner of Income Tax, Mumbai Vs Anjum M H

Ghaswala & Ors, (2002) 1 SCC 633; Captain Sube Singh & Ors Vs Lt

Governor of Delhi & Ors, (2004) 6 SCC 440; Competent Authority Vs

Barangore Jute Factory & Ors, (2005) 13 SCC 477, and State of

Jharkhand & Ors Vs Ambay Cements & Anr, (2005) 1 SCC 368. The

provisions of Sections 199 to 206 specify/prescribe the procedure for

framing rules by the State Government and on the face of it, is mandatory in

nature and, therefore, for imposing taxes under sub-section (2) of Section

172 of the Act are required to be followed scrupulously. It is, thus, clear that

a failure to comply with any mandatory provision prescribing the procedure

for imposing a tax would vitiate the tax, though a minor and trivial deviation

from the procedure to be complied with might not be considered as fatal.

This principle is reiterated by the Supreme Court in Dhrangadhra

Chemical Works Ltd Vs State of Gujarat & Anr, (1973) 2 SCC 345.

25

15.The observations made by the Supreme Court in Municipal Council,

Khurai & Anr Vs Kamal Kumar & Anr, AIR 1965 SC 1321 which are

also relevant, read thus:

“In view of the fact that the resolution of March 3,

1963 on the basis of which the list was published had been

revoked, the particulars mentioned in the second and the

third of the above items would necessarily be different

from those which would be arrived at after taking into

account the resolution of April 28, 1963. Under Art. 265 of

the Constitution no tax shall be levied or collected except

by authority of law. This clearly implies that the procedure

for imposing the liability to pay a tax has to be strictly

complied with. Where it is not so complied with the

liability to pay the tax cannot be said to be according to

law. The objections which the assessees had filed in

pursuance of the notification actually published by the

Chief Municipal Officer were based upon the list published

under S. 136 and not in pursuance of what the liability

would be under the Resolution of the Municipal Council,

dated April 28, 1963. Therefore, it cannot he said that the

opportunity as contemplated by the Act was at all given to

the assessees for lodging their objections as required by S.

137 of the Act. Moreover, Mr. Setalvad was not able to

point out to us any provision of the Act or of the rules,

except S. 78, whereunder the Council could delegate its

function of hearing and deciding objections to a Sub-

Committee. Section 78 reads thus:

"Any powers or duties or executive functions

which may be exercised or performed by or on

behalf of the Council may, in accordance with the

rules made under this Act, be delegated by the

Council to the President or Vice-President or to the

Chairman of the Standing or other Committees, or

to one or more stipendiary or honorary officers, but

without prejudice to any powers that may have

been conferred on the Chief Municipal Officer by

or under section 92."

Even assuming that under this provision the power

of the Council of hearing objections could be delegated,

the delegation can presumably be only in favour of the

persons mentioned in S. 78 quoted above. It cannot be in

favour of a Sub-Committee or a Committee. It is true that

the Convener of the Sub-Committee appointed by the

Council was the Vice-President but the delegation was not

26

to him alone but to the Sub-Committee. The two are not

the same thing because while in one case the right to

decide an objection would be solely exercisable by the

Vice-President in the other it will be exercisable by the

Sub-Committee as a whole. If there is unanimity amongst

the members of the Sub-Committee no prejudice may be

caused. But if the Vice- President is of one opinion and the

other two members are of a different opinion the decision

of the Sub-Committee cannot be said to be that of the

Vice-President at all. But to the contrary.”

16.Admittedly, in the present case, the objections were not heard either

by the Executive Committee or by the Corporation consisting of the elected

members of the Corporation. As observed by the Supreme Court in

Municipal Council, Khurai (supra), the Corporation cannot delegate its

power to hear objections to a Sub-Committee. In any case, the Corporation

cannot impose taxes specified in sub-section (2) of Section 172 by framing

bye-laws. The procedure for making rules for imposing an advertisement tax

as contemplated under this provision are mandatory and, therefore, the

provisions imposing a tax under the Bye-laws deserve to be declared ultra

vires the provisions of the Act, 1959, in particular the provisions contained

in Chapter IX thereof.

17.The Constitution Bench of the Supreme Court in R B Sugar Co Vs

Rampur Municipality, AIR 1965 SC 895, considering the question

whether a particular provision of a statute which on the face of it appears

mandatory inasmuch as it uses the word "shall" or is merely directory,

observed that the issue cannot be resolved by laying down any general rule

and depends upon the facts of each case and for that purpose the object of

the statute in making the provision is the determining factor. The purpose for

27

which the provision has been made and its nature, the intention of the

legislature in making the provision, the serious general inconvenience or

injustice to the persons resulting from whether the provision is read one way

or the other, the relation of the particular provision to other provisions

dealing with the same subject and other considerations which may arise on

the facts of a particular case including the language of the provision, have all

to be taken into account in arriving at a conclusion whether a particular

provision is mandatory or directory. Applying this principle laid down by the

Constitution Bench of the Supreme Court, we are satisfied that the

procedure contemplated under the provisions of Sections 199 to 203 of the

Act, 1959 is mandatory in nature.

18.The observations made by the Supreme Court in Visakhapatnam

Municipality Vs Kandregula Nukaraju & Ors, (1975) 2 SCC 773 while

considering the provisions of the Andhra Pradesh Municipalities Act, 1965,

read thus:

“11. Imposition of certain kinds of taxes is an

obligatory function of municipal councils, under the Act.

Section 81(1)(a) provides that every council shall, by

resolution, levy a property tax, a profession tax, a tax on

carriages and carts and a tax on animals. Under Section 81

(2) a resolution of a council determining to levy a tax shall

specify the rate at which and the date from which the tax

shall be levied. The first proviso to this sub-section

requires that "before passing a resolution imposing a tax

for the first time" or increasing the rate of an existing tax,

the council shall publish a notice in the prescribed manner

declaring the requisite intention. The council has further to

invite objections and it is under an obligation to consider

the objections received within the stipulated time. By

Section 83, when a council determines, subject to the

provisions of Section 81, to levy any tax for the first time

or at a new rate, the Secretary shall forthwith publish a

notification in the prescribed manner specifying the rate at

28

which, the date from which and the period of levy, if any,

for which, such tax shall be levied. Section 83 is thus

expressly subject to Section 81 and under the latter

provision no tax can be imposed "for the first time" unless

the procedure prescribed therein is followed. Since the

procedure prescribed by the first proviso to Section 81 (2)

was not followed in regard to the period prior to October 1,

1970 the levy of property tax on the properties of

respondents nos. 1 to 36 for that period is without the

authority of law and consequently illegal.

12. It was urged on behalf of the appellant that the

first proviso to Section 81 (2) would apply only when a tax

was imposed “for the first time” and since the appellant

was levying properly tax long before its imposition on the

properties of respondents 1 to 36, it was unnecessary to

follow the procedure prescribed by the proviso. It is not

possible to accept this submission. The municipality might

have been levying property tax since long on properties

situated within its limits but until April 1, 1966 the villages

of Ramakrishnapuram and Shriharipuram were outside

those limits. Qua the areas newly included within the

municipal limits, the tax was being imposed for the first

time and therefore it was incumbent on the municipality to

follow the procedure prescribed by the first proviso to

Section 81 (2). Residents and taxpayers of those areas, like

respondent nos. 1 to 36, never had an opportunity to object

to the imposition of the tax and that valuable opportunity

cannot be denied to them. It is obligatory upon the

municipality not only to invite objections to the proposed

tax but also to consider the objections received by it within

the specified period. Such period has to be reasonable, not

being less than one month. The policy of the law is to

afford to those likely to be affected by the imposition of the

tax a reasonable opportunity to object to the proposed

levy.”

19.We also would like to look at the provisions prescribing the procedure

for framing rules under Section 540 from another angle. If the provisions of

Sections 199, 200, 201 and 203 are seen carefully, it is left completely to the

elected body of the Corporation to make rules. In other words, the

delegation of imposition of tax and even to make a proposal to the State

Government for framing rules has been made to an elected body responsible

29

to the people including those who pay taxes, may be because councillors

have to go for election every five years. This means that if they behave

unreasonably and the inhabitants of the area so consider it, they can be

thrown out at the ensuing elections. As a matter of fact, making the

procedure mandatory, in our opinion, is a great check on the elected

councillors acting unreasonably and fixing unreasonable rates of taxation.

This is a democratic method of bringing to book the elected representatives

who have acted unreasonably in such matters [See Municipal Corporation

of Delhi Vs Birla Cotton, Spinning and Weaving Mills, Delhi & Anr,

AIR 1968 SC 1232. Also see R B Sugar Co (supra)].

20.In the present case, apart from the fact that no rules as contemplated

under Section 540 have been framed, it is also pertinent to note that the

objections for making even Bye-laws 2016, were received and heard by a

Committee of the officers of the Corporation and not by the elected

members of the Corporation or the Executive Committee or any other

Committee of councillors. The Supreme Court in Municipal Council,

Khurai (supra) considered this aspect of the matter and clearly held that

powers to hear objections cannot be delegated to a Sub-Committee.

21.Article 265 of the Constitution provides that no tax shall be levied or

collected except by authority of law. This itself clearly implies that the

procedure for imposing the liability to pay a tax has to be strictly complied

with. Where it is not so complied, the liability to pay tax cannot be said to be

according to law. That apart, in the present case, no rules are framed for

imposing an advertisement tax as contemplated under clause (h) of sub-

30

section (2) of Section 172 and, in the absence thereof, the Corporation has

no powers to impose a tax in view of the opinion expressed by us earlier in

the foregoing paragraphs, under the bye-laws. We have, therefore, no

hesitation in holding that the procedure is mandatory, considering its

language, the purpose for which the provisions have been enacted, the

setting in which it appears and the intention of the legislature which

obviously is that no tax should be imposed without hearing taxpayers.

22.Thus, it is clear that to impose a tax specified under sub-section (2) of

Section 172, the procedure contemplated under Sections 199 to 203 requires

to be followed scrupulously and a deviation therefrom is not permissible and

if there is any, the rules framed would be rendered illegal or ultra vires the

procedure contemplated under these provisions. We are not entering into

such controversy since, in the present case, there are no rules at all before us

that have been framed and approved, published or notified in the Official

Gazette by the State Government.

23.We would now look into the provisions which provide for the

procedure to be followed for making bye-laws under Section 541. This

provision empowers a Corporation to make bye-laws with respect to the

matters mentioned therein including “prohibition and regulation of

advertisements”. Sections 542, 543 and 544 provide the procedure for

making bye-laws. It would be relevant to reproduce those provisions, which

read thus:

“542. Municipal Commissioner to lay draft bye-

laws before the Corporation for its consideration.- It

shall be the duty of the Municipal Commissioner from time

31

to time to lay before the Corporation for its consideration a

draft of any bye-law which he shall think necessary or

desirable for the furtherance of any purpose of this Act.

543. Hearing by Corporation of objections to

proposed bye-laws.- No bye-law shall be made by the

Corporation unless -

(a) a notice of the intention of the Corporation to

take such bye-law into consideration on or after a

date to be specified in the notice shall have been

given in the official Gazette and in the Bulletin of

the Corporation, if any, before such date;

(b) a printed copy of such bye-law shall have

been kept at the chief Corporation office and

made available for public inspection free of

charge by any person desiring to peruse the same

at any reasonable time from the date of the notice

given under clause (a);

(c) printed copies of such bye-law shall have

been delivered to any person requiring the same

on payment of such fee for each copy as shall be

fixed by the Municipal Commissioner;

(d) all objections and suggestions which may be

made in writing by any person with respect

thereto before the date of the notice given under

clause (a) shall have been considered by the

Corporation.

544. Bye-laws to be published. - The bye-laws

made under Section 541 shall be published in the Official

Gazette.”

24.Section 542 provides that the Municipal Commissioner shall lay

before the Corporation for its consideration a draft of any bye-law which he

shall think necessary or desirable to be made for the furtherance of any

purpose of the Act, 1959. Section 543 provides the further procedure to

make a bye-law. There are four stages, namely clauses (a) to (d) of Section

543 and Section 544 which provides for the publication of the bye-laws in

the Official Gazette. A bare perusal of the two sets of provisions, namely

32

Sections 199 to 206 and Sections 542 to 544, clearly demonstrates the

difference in the procedure contemplated therein. The framing of Bye laws

conceives of the following steps being taken before the Bye laws can take

effect:

A. A notice of the intention of the Corporation to take such bye law

into consideration on or after a date to be specified in the notice to be

published in the Gazette and the Bulletin of the Corporation;

B. A printed copy of the bye laws being kept open to public inspection

at the Corporation office;

C. Copies thereof being furnished to any person desirous thereof and

D. All objections and suggestions having been duly considered by the

Corporation.

It is only thereafter that they come to be published in the Gazette. As would

be evident from the above, the proposal to adopt and frame bye laws is

mooted by the Municipal Commissioner initially. The Corporation is then

obliged to effect notice of its intention to take such bye laws into considera-

tion on or after a date to be specified in the said notice. Objections and sug-

gestions are invited to the same and are to be considered by the Corporation.

It is upon a culmination of the aforesaid processes that a valid bye law

comes into existence and is entitled to be enforced under the provisions of

the Act. From the narration of facts noticed above and the averments taken

in the counter affidavit it is evident that even this procedure was not fol-

lowed. The bye laws dealing with subjects other than the levy of tax must

also fall on this account.

33

25. At the cost of repetition, it needs to be noted that Section 541 of the

1959 Act does not empower the Corporation to frame Bye law levying a tax.

While it enumerates the various subjects in respect of which Bye laws may

be framed, none of them relate to the levy or imposition of a tax. The sub-

ject “prohibition and regulation of advertisements” as contained in sub

clause (48) cannot be read as conferring an authority upon the Corporation

to levy a tax. It is settled law that the power to levy a tax must be specifical-

ly conferred and cannot form part of a power to regulate especially when the

issue is not one relating to the levy of a regulatory fee but a tax. This issue

was eloquently dealt with by the Constitution Bench in State of West Ben-

gal Vs. Kesoram Industries Ltd. [(2004) 10 SCC 201] wherein it was ob-

served:-

“General power of “regulation and control” does not

include power of taxation

77. One thing, which too is well settled by a series of

decisions is that the power of "regulation and control"

is separate and distinct from the power of taxation. How

this principle has been applied in myriad situations may be

illustratively noticed.

98. We are clear in our minds that a power to levy tax or

fee cannot be spelled out from Sections 13, 18 and 25 of

the Act 67 of 1957. It is well settled that power to tax

cannot be inferred by implication; there must be a

charging section specifically empowering the State to levy

tax. Section 18(2)(q) speaks of fee to be paid on

applications for revision and not on minerals, mineral rights

or mining land. Section 25 speaks of “recovery of tax and

fee” amongst others. Two observations are spontaneous.

Firstly, a provision for recovery, being a machinery

provision, cannot be read as empowering the levy of tax or

fee. Secondly, it speaks of tax or fee being due to the

Government without defining the same and without

qualifying the word "Government” with Central or State, A

perusal of several provisions of the Act and in particular

Sections 9A, 15, 15(1-A)(a) and (g), 15(3), 17(3), 21(5) and

34

25 goes to show that the power of recovery is invariably

given to the State Government and obviously the word

“Government” in Section 25 refers to the State

Government, which only is empowered to recover the sums

due as arrears of land revenue.

Power to tax must be express, else no power to tax

104. There is nothing like an implied power to tax. The

source of power which does not specifically speak of

taxation cannot be so interpreted by expanding its width

as to include therein the power to tax by implication or

by necessary inference. States Cooley in Taxation (Vol.

1, 4th Edn.):

"There is no such thing as taxation by implication, the

burden is always upon the taxing authority to point to

the act of assembly which authorises the imposition of

the tax claimed."

107. Power to tax is not an incidental power. According to

Seervai, although legislative power includes all incidental

and subsidiary power, the power to impose a tax is not such

a power under our Constitution. It is for this reason that it

was held that the power to legislate in respect of inter-State

trade and commerce (Entry 42, List I, Schedule 7) did not

carry with it the power to tax the sale of goods in inter-State

trade and commerce before the insertion of Entry 92-A in

List I and Such power belonged to the States under Entry 54

in List II. Entry 97 in List I also militated against the

contention that the power to tax is an incidental power

under our Constitution (See Seervai, H.M.: Constitutional

Law of India, 4th/Sliver Jubilee Edn., Vol. 3, para 22.20).”

(emphasis supplied)

26.In the result, we find ourselves unable to sustain the impugned Bye-

laws, 2016. We accordingly hold and declare that the impugned Bye-laws,

2016, insofar as they impose an advertisement tax, are ultra vires the

provisions of the Act, 1959 having not been framed in accordance with the

provisions contained in Chapter IX thereof. The impugned Bye-laws, 2016

are even otherwise invalid and ultra vires the Act, 1959 having been framed

35

without following the procedure contemplated under Sections 542 to 545.

The writ petition consequently stands allowed in terms of this judgment.

May 4

th

, 2017

AHA

(Dilip B Bhosale, CJ)

(Yashwant Varma, J)