M/S. PIONEER PUBLICITY CORPORATION PVT. LTD. vs. THE MUNICIPAL CORPORATION OF PUNE AND ORS

Subject:- Regarding the License fee by the Skysign and License Department. On the date 20/04/2013, a meeting with representatives of various Advertising Agencies was held at Savarkar Bhavan. In the said meeting, the representatives of the Advertising Agencies made enquiry as to whether the advertisement license of Rs. 222/- is per sq. mtr. or per sq. ft. Under Outward No. M. C./Encroachment/399, dated 18/09/2012, the Agenda regarding the renewal of the hoardings was placed before the Standing Committee, for approval. At Sr. No. 3 in the said Agenda, the rate of the amount of Rs. 222/- per sq. ft. was proposed. Moreover, in the matter under subject, the Municipal Commissioner, vide Resolution No. 6/302/402 dated 14/02/2013, has granted approval to the fee proposed at the rate of Rs. 222/- per sq. ft., in the aforesaid Agenda. Therefore, the fee for hoarding renewal license should be charged at the said rates. (Signature )

Additional Municipal Commissioner (Estates) Pune Municipal Corporation.”

(emphasis supplied) PVR/PSV/VSA Page 121 of 217

WP10684_2018 & Ors.docx

WP10684_2018 & Ors.docx Committee was placed before the General Body of the Municipal Corporation. The said letter of the State Government was replied by the Additional Municipal Commissioner (Estates) by communication dated 19 May, 2014 inter alia stating that the decision of the Standing Committee was not placed before the General Body of the Municipal Corporation and that if the decision of the Standing Committee is implemented, it would result into decrease in the revenue of the Municipal Corporation. The said communication of the Additional Municipal Commissioner (Estates) dated 19 May, 2014 reads thus; (Translation of a photocopy of a LETTER, typewritten in Marathi) EXHIBIT ‘F-5’ License and Skysign Department, Pune Municipal Corporation, Outward No.Addl. C. M.(E.)/ L/236, Date: 19.5.2014. To, The Section Officer, Urban Development Department, Government of Maharashtra, U. D./22, Mantralaya, Mumbai. Subject :- Regarding cancellation of Resolution No. 1196 dated 15.10.2012 of the Standing Committee of Pune Municipal Corporation. References :- 1) Resolution No. 1196 dated 15.10.2012 passed by the Standing Committee of Pune Municipal Corporation. 2) Resolution No. 6/402 dated 14.2.13 passed by the Municipal Commissioner. 3) Office Circular bearing Outward No. M.C./E./1594, dated 18.2.13. 4) Outward No. M.C/L/1047, dated 18.1.14. 5) Letter bearing No. PMC/3014/M.No.110/ U.D./22 dated 25.3.14 from the Office of Urban Development Department, Mantralaya, Mumbai. Sir, The representation under the abovementioned Reference at Sr. No. 4 has been submitted for the cancellation of Resolution No. 1196 dated PVR/PSV/VSA Page 123 of 217

WP10684_2018 & Ors.docx 15.10.2012 passed by the Standing Committee of the Pune Municipal Corporation. A Letter in respect thereof from your Office has been received under the abovementioned Reference at Sr. No.5 and pursuant thereto, the information is as under:- As the rates for charging advertisement fee from License and Sky Sign Department of the Pune Municipal Corporation are to be increased, this proposal was submitted by the administration before the Standing Committee. However, the Standing Committee instead of accepting the said proposal as per the new rates as submitted by the administration, approved the same for charging fee by enhancing the old rates by 15%. However, if the advertisement fee charged as approved by the Standing Committee, it will cause a financial loss to the Municipal Corporation and as the advertisers are ready to pay the fees at the new rate of Rs. 222/-, the Municipal Commissioner, vide Resolution No. 6/402 dated 14/2/2013, granted approval to charge the fee at the new rate of Rs. 222/- instead of implementing Resolution No. 1196 dated 15/10/2012 passed by the Standing Committee and accordingly, charging the advertisement fee has been started and from the date 1/4/2013, the advertisers are even paying the fee at the new rates. On account of all the abovementioned facts, Resolution No. 1196 dated 15/10/2012 passed by the Standing Committee, was not placed before the General Meeting, for seeking approval thereto. Moreover, if the Resolution of the Standing Committee is implemented, then the same will

result in a decrease in the income of the Municipal Corporation and will cause financial loss to the Municipal Corporation and therefore, instead of implementing the Resolution of the Standing Committee, the advertisement fee have been charged by the aforesaid approval of the Commissioner. (Signature ) 19/05/2014 Additional Municipal Commissioner (Estates) Pune Municipal Corporation.” (emphasis supplied)

WP10684_2018 & Ors.docx

“1. Learned advocate appearing for the Pune Municipal Corporation was apprised of the communication from the Department of Urban Development, Government of Maharashtra dated 21st March, 2018. A copy of the communication from the State Government to the Commissioner, Pune Municipal Corporation dated 21st March, 2018, is taken on record and marked "X" for identification. PVR/PSV/VSA Page 125 of 217

WP10684_2018 & Ors.docx

WP10684_2018 & Ors.docx was recorded that no sky sign or advertisements or hoarding structures will be disturbed by the municipal authorities. Accordingly, it was directed that the General Body shall take necessary decision in regard to the approval of revised rental fee. The said order is required to be noted which reads thus: “On March 23, 2018, we passed the following order:

“1. Learned advocate appearing for the Pune Municipal Corporation was apprised of the communication from the Department of Urban Development, Government of Maharashtra dated 21st March, 2018. A copy of the communication from the State Government to the Commissioner, Pune Municipal Corporation dated 21st March, 2018, is taken on record and marked "X" for identification.

WP10684_2018 & Ors.docx not accepted the decision taken by the Municipal Commissioner of fixing the advertisement fees at Rs.222/- per square feet. The Pune Municipal Corporation administration thereafter had referred to the resolution of the Standing Committee, suggesting 15% increase in the previous rate, to the State of Maharashtra, under Section 451 of the Bombay Provincial Municipal Corporation Act/Maharashtra Municipal Corporation Act, 1949. The earlier communication, which is referred in the above order, has been expressly referred in paragraph 6 of this affidavit. Thereafter, there is an opinion recorded and possibly of the Municipal Commissioner with regard to which, presently, we say nothing. We are not required to make any observations, leave alone, render any final conclusion as to whether there is any power in the Municipal Commissioner to revise the rates or terms and conditions with regard to payment of fees for display of sky signs and advertisements on the hoarding structures.

powers of the Municipal Commissioner or the General Body with regard to the determination of rates or revision thereof, are kept open for being considered at an appropriate stage. PVR/PSV/VSA Page 128 of 217

WP10684_2018 & Ors.docx

WP10684_2018 & Ors.docx RESOLUTION OF THE MEETING OF MUNICIPAL CORPORATION Meeting No.:- 53 Date:- 28.9.2018 Item No.:- 410

RESOLUTION NO.:- 667 Chamber:- Municipal Commissioner. References:- 1) Letter bearing No. M. C./L./45, dated 03.05.2018 from the Municipal Commissioner. 2) Municipal Corporation Resolution No. 188 dated 19.07.2018. --------- Taking into consideration the grounds mentioned and the recommendation made in the letter of the Hon’ble Municipal Commissioner:- Considering the Items mentioned on the Agenda of the Office of the Municipal Commissioner, as per the directions of the Section Officer, Urban Development Department, Government of Maharashtra and pursuant to the Order dated 02.04.2018 of the Hon’ble Bombay High Court, it is necessary to place the Resolution No.1196 dated 15.10.2012 passed by the Standing Committee, before the General Meeting for seeking approval thereto. However, considering the monitory interest of the Pune Municipal Corporation, it is necessary to grant ex-post-facto approval of the General Meeting for charging Advertisement fees that is being charged with effect from the date 01.04.2013 pursuant to the Approval/Resolution No.6/402 dated 14.02.2013 passed by the then Municipal Commissioner instead of the Standing Committee Resolution No. 1196. Therefore, ex-post-facto approval is granted for charging Advertisement Fees at the rate of Rs.222/- per sq. ft. per year being charged with effect from the date 01.04.2013 pursuant to the then Municipal Commissioner’s Resolution No.6/402 dated 14.02.2013 instead of charging Advertisement Fees by enhancing by 15%, the Advertisement Fees being charged at the rate of Rs.85/- per sq. ft. per year heretofore as mentioned in Clause No. 3 of the Standing Committee Resolution No. 1196 dated 15.10.2012. (Signature ) Deputy Municipal Secretary Pune Municipal Corporation.” (emphasis supplied)

WP10684_2018 & Ors.docx sq.ft./per year with retrospective effect, the present batch of petitions came to be filed in this Court inter alia assailing the said levy on the different grounds as noted by us hereinabove.

WP10684_2018 & Ors.docx (b) all proceeds of the disposal of property by or on behalf of the Corporation, (c) all rents accruing from any property of the Corporation, (d) all moneys raised by any tax levied for the purposes of this Act, (e) all fees and fines payable and levied under this Act or under any rule, by-law, regulation or standing order other than fines imposed by a Court, (f) all moneys received by way of compensation or for compounding offences under the provisions of this Act, (g) all moneys received by or on behalf of the Corporation from the Government or public bodies, private bodies or private individuals by way of grant or gift or deposit, subject, however, to the conditions, if any, attached to such grant, gift or deposit, and (h) all interest and profits arising from any investment of, or from any transaction in connection with, any money belonging to the Corporation, shall be credited to a fund which shall be called “ the Municipal Fund” and which shall be held by the Corporation in trust for the purposes of this Act, subject to the provisions herein contained. Section 127. Taxes to be imposed under this Act.— (1) For the purposes of this Act, the Corporation shall impose the following taxes, namely :— (a) property taxes ; (b) a tax on vehicles, boats and animals. (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 :— …… …… (c) a tax on dogs ; (d) a theatre tax ; (e) a toll on animals and vehicles, entering the City ; (f) any other tax (not being a tax on profession, trades, callings and employments), which the State Legislature has power under the Constitution to impose in the State. (2A) Notwithstanding anything contained in sub-section (1) or sub- section (2), no tax or toll shall be levied on motor vehicles save as provided in section 20 of the Bombay Motor Vehicles Tax Act, 1958. (3) The Municipal taxes shall be assessed and levied in accordance with the provisions of this Act and the rules. (4) Nothing in this section shall authorise the imposition of any tax which the State Legislature has no power to impose in the State under the Constitution.” PVR/PSV/VSA Page 132 of 217

WP10684_2018 & Ors.docx (Note : There is no provision for imposition of an “advertisement tax”). Section 244. Regulations as to sky-signs. (1) No person shall, without the written permission of the Commissioner, erect, fix or retain any sky-sign of the kind prescribed by rules whether existing poster depicting any scene from a cinematographic film, stage play or other on the appointed day or not. [Where a sky-sign is a stage performance, such permission shall not be granted, unless prior scrutiny of such poster is made, by the Commissioner and he is satisfied that the erection or fixing of such poster is not likely to offend against decency or morality. A permission under this section] [may be granted or renewed for a period not exceeding two years) from the date of each such permission or renewal, subject to the condition that such permission shall be deemed to be void if,- (a) any addition is made to the sky-sign except for the purpose of making it secure under the direction of the City Engineer; (b) any change is made in the sky-sign, or any part thereof; (c) the sky-sign or any part thereof fall either through accident, decay or any other cause; (d) any addition or alteration is made to, or in, the building or structure upon or over which the sky-sign is erected, fixed or retained, involving the disturbance of the sky-sign or any part thereof; (e) the building or structure upon or over which the sky-sign is erected, fixed or retained becomes unoccupied or be demolished or destroyed. (2) Where any sky-sign shall be erected, fixed or retained after the appointed day upon or over any land, building or structure, save and except as permitted as hereinbefore provided, the owner or person in occupation of such land, building or structure shall be deemed to be the person who has erected, fixed or retained such sky-sign in contravention of the provisions of this section, unless he proves that such contravention was committed by a person not in his employment or under his control, or was committed without his connivance. (3) If any sky-sign be erected, fixed or retained contrary to the provisions of this section, or after permission for the erection, fixing or retention thereof for any period shall have expired or become void, the Commissioner may, by written notice, require the owner or occupier of the land, building or structure, upon or over which the sky-sign is erected, fixed or retained, to take down and remove such sky-sign. Section 245. Regulation and control of advertisement. (1) The Commissioner may, by notice in writing, require the owner or the person in occupation of any land, building, wall, hoarding or structure to take down or remove, within such period as is specified in the notice, any advertisement upon such land, building, wall, hoarding or structure. (2) If the advertisement is not taken down or removed within such period, the Commissioner may cause it to be taken down or removed, and PVR/PSV/VSA Page 133 of 217

WP10684_2018 & Ors.docx the expenses reasonably incurred on the taking down or removal thereof shall be paid by such owner or person. (3) [Except in case of posters depicting any scene from a cinematographic film, stage play or other stage performance, the provisions of this section] shall not apply to any advertisement which,- (a) is exhibited within the window of any building; (b) relates to the trade or business carried on within the land or building upon which such 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; (c) relates to the business of any railway administration; (d) 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. Section 386. General provisions regarding grant, suspension or revocation of licences and written permissions and levy of fees, etc. (1) Whenever it is provided by or under this Act that a licence or a written permission may be given for any purpose, such licence or written permission shall specify the period for which, and the restrictions and conditions subject to which, the same is granted and the date by which an application for the renewal of the same shall be made and shall be given municipal officer under the signature of the Commissioner or of a empowered under section 69 to grant the same. (2) Except as may otherwise be provided by or under this Act, for every such licence or written permission a fee may be charged at such rate as shall from time to time be fixed by the Commissioner, with the sanction of the Corporation. (3) Subject to the provisions of the proviso to sub-section (1) of section 378, any licence or written permission granted under this Act may at any time be suspended or revoked by the Commissioner, if he is satisfied that it has been secured by the holder through misrepresentation or fraud or if any of its restrictions or conditions is infringed or evaded by the person to whom the same has been granted, or if the said person is convicted of an infringement of any of the provisions of this Act or of any rule, by-law or standing order in any matter to which such licence or permission relates. (4) When any such licence or written permission is suspended or revoked, or when the period for which the same was granted has expired, the person to whom the same was granted shall, for all purposes of this Act, be deemed to be without a licence or written permission, until the Commissioner's order for suspending or revoking the licence or written permission is cancelled by him or until the licence or written permission is renewed, as the case may be : Provided that, when an application has been made for the renewal of a licence or permission by the date specified therein, the applicant shall be entitled to act as if it has been renewed, pending the receipt of orders. PVR/PSV/VSA Page 134 of 217

WP10684_2018 & Ors.docx (5) Every person to whom any such licence or written permission has been granted shall, at all reasonable times, while such written permission or licence remains in force, if so required by the Commissioner, produce such licnece or written permission. (6) Every application for a licence or permission shall be addressed to the Commissioner. (7) The acceptance by or on behalf of the Commissioner of the fee for a licence or permission shall not in itself entitle the person paying the fee to the licence or permission.” (emphasis supplied)

WP10684_2018 & Ors.docx made under sub-section (1) is confirmed the State Government may direct that the resolution or order of the Corporation or its authority in respect of which suspension order was made under sub-section (1) shall be deemed to be rescinded. (4) Where any order is made by the State Government under sub- section (3), it shall be the duty of every Councillor and the Corporation and any other authority or officer concerned to comply with such order.” (emphasis supplied)

WP10684_2018 & Ors.docx public place; (d) any notice of land or buildings to be sold, or let, placed upon such land or buildings.”

” means and includes any representation in any

manner such as announcement or direction by words, letters, models, signs by means of any device or posters, hoarding boards, banners, temporary arches, illuminated signs, name boards, direction boards, small advertisement boards on existing poles, balloons, etc.; and the term “advertising” shall be construed accordingly; (3) "agency" means a person, being an individual and includes a body of persons, whether incorporated or not, making application for advertisement: 4) "Appendix" means appendix to these rules; (5) "approved" means approved by the Commissioner: ……. (14) “hoarding” means any surface of structure erected on ground or any portion of a roof of a building at, on or above the parapet, with characters, letters or illustrations applied thereto and displayed in any manner whatsoever, for purpose of advertising; Rule 4. Procedure for obtaining permission and renewal of permission (1) No agency shall put up an advertisement without permission in writing from the Commissioner. PVR/PSV/VSA Page 137 of 217

WP10684_2018 & Ors.docx (2) Any agency intending to erect any type of hoarding, or an advertisement on rotaries and traffic island, guard rails, tree guards or sky- signs or balloons, shall make an application in the Form "A" or in case of renewal of permission in Form "B", in duplicate, together with such fees as may be determined by the Commissioner from time to time. (3) The application shall be accompanied by the following documents, namely:- (i) written permission of the owner of the land, where the land on which the hoarding is to be erected; (ii) three copies of site plan showing location of advertisement or hoarding proposed to be erected; (iii) design of the advertisement by a structural engineer except advertisement in case of banners or posters or balloons; (iv) the No Objection Certificate from the Traffic Department of local Police shall be called by the Commissioner, if necessary; (4) An applicant shall conform to the general guidelines described in Appendix 1. (5) A separate application shall be necessary for each location and type of advertisement specified in Appendix 2. (6) Every application received as per provisions of sub-rules (3) to (5), shall be acknowledged and the decision thereon shall be communicated by the Commissioner to the applicant in writing, within 45 days from the date of receipt of the application. If the decision on such application is not communicated to the applicant within the specified period, the permission shall be deemed to have been granted: Provided that, while deciding the application the Commissioner shall be bound by the guidelines specified in Appendix 2. 7) On the permission being granted or deemed to have been granted under sub-rule (6), the agency shall within fifteen days thereof, pay the rent and or, as the case may be, the fees, or both. If the agency fails to pay the same, the permission shall stand cancelled after the expiry of the period of said fifteen days. (8) On the permission being granted the Commissioner shall issue the licence in, Form-C. (9) A permission for advertisement at a particular location may be granted for a period not exceeding two years. The rental charges and or fees shall be collected from the agency as per the rate decided by the Commissioner, from time to time, and shall be binding on the agency. The rent or fees shall be paid-by-the-agency to the Corporation, in advance for six months as advance to the Corporation. PVR/PSV/VSA Page 138 of 217

WP10684_2018 & Ors.docx Rule 7. Powers of the Commissioner to regularise advertisements or Hoarding The Commissioner may, in his own discretion, and by an order in writing. regularise the installation of any hoarding that may have been installed without permission, by charging a compounding fee not exceeding five times of chargeable fee provided such hoarding or advertisement is in accordance with the provisions of these rules. Rule 8. General conditions The permission for advertisements shall be guided by the following guidelines and the same shall be treated as additional conditions and be part of a permission:- (a) No substantial additions or modifications shall be permitted during the period of contract without prior permission therefor by the Commissioner. (b) If the Commissioner, for reasons to be recorded in writing, requires removal of the advertisements, it shall be removed forthwith, failing which the Commissioner may get the advertisement removed at the risk and cost of the agency. (c) The advertisement must be maintained in a clean, tidy and safe condition to the satisfaction of the Commissioner.

(emphasis supplied) FORM A [(See rule 4(2)] Licence & Sky-Sign Licence & Sky – sign Department No. ………………. (Price - …………………….. ) Municipal Corporation of ……………………... Application Form [(See rule 4(2)] (See section 244 in the B.P.M.C. Act, 1949) To, Municipal Commissioner, Municipal Corporation of …………………..

WP10684_2018 & Ors.docx

WP10684_2018 & Ors.docx No. Size Period Rate of fees Monthly fees Total fees Remark The Advertisement is covered under the provisions of Section 244 of B.P.M.C. Act, 1949. Sanction may please be accorded for accepting the fee. Inspector of Licence & Sky-Sign Chief Inspector of Licence and Sky-Sign Municipal Corporation Order Sanction is hereby accorded to accept fee from the applicant and to grant permission. Competent Authority Municipal Corporation Advertisement Fee Rs. Challan No. …………….. dated ……………….. Licence No. …………….. dated ……………….. Register Page No. …………………. Chief Inspector of Licence and Sky-Sign Municipal Corporation Inspector of Licence & Sky-Sign

FORM B [(See rule 4 (2)] Sky-Sign Department Advertisement Licence Form For Renewal (1) Name of applicant and address : …………………………………….. (2) Details of Advertisement :……………………………………………. (3) Place : ………………………………………………………………… (4) Sanctioned size and type : ……………………………………………. (5) Illuminated/Non-Illuminated : ………………………………………. (6) Upto which date last renewal is done : ……………………………….. (7) Next period of renewal : ……………………………………………… PVR/PSV/VSA Page 141 of 217

WP10684_2018 & Ors.docx (8) Whether the property owner / has given No Objection for further renewal of sanctioned hoarding …………………………… Date : / /2025

Signature of applicant _____________________________________________________________ (For office use) Inspection report : I have visited personally to the advertisement site mentioned in application. There are no changes in size as well as type or whatsoever. The hoarding structure is in safe and stable condition. Hence renewal of hoarding as mentioned in the application is recommended. Date : / /2025 Licence Inspector Chief Inspector of Licence and Sky-Sign Sanctioned Municipal Corporation Municipal Corporation of --- Licence fee Rs. ………………. Total Rs. ………………… Challan No. ……... Dated : / /202 is deposited in Municipal Treasury. Licence No. ………. Dated : / /202 is allotted. Register No. & Page No. ……………. Date : / /202 Inspector of Licence & Sky-Sign Chief Inspector of Licence and Sky-Sign Municipal Corporation”

WP10684_2018 & Ors.docx

WP10684_2018 & Ors.docx

WP10684_2018 & Ors.docx (4) Where an amount collected as tax levied by a State under article 246A has been used for payment of the tax levied under clause (1), such amount shall not form part of the Consolidated Fund of the State. (5) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.]

WP10684_2018 & Ors.docx

WP10684_2018 & Ors.docx also prescribes that a permission under the said provision ‘may be granted’ or ‘renewed’ for a period not exceeding two years from the date of each such permissions or renewal. Further, Section 245 provides for regulation and control of advertisement thereby empowering the Commissioner to take action against a sky-sign/hoarding on any land, building, wall, hoarding or structure and order to take down or remove the same within such period as is specified in the notice. These two provisions indicate a complete control and regulation of the Municipal Commissioner over the erection, fixing and retaining of any sky-signs and hoardings.

WP10684_2018 & Ors.docx ordains that, except as may otherwise be provided by or under the MMC Act, for ‘every such license’ or ‘written permission’ a fee may be charged at such rate as shall from time to time be fixed by the Commissioner, with the sanction of the Corporation. Coupled with the said substantive provisions of the MMC Act also the statutory rules, namely, the 2003 Rules clearly provide that a sky-sign/ hoarding can be put up only after written permission is granted by the Municipal Commissioner for displaying the advertisement, and that the Municipal Commissioner exercises control over such matters. It is thus quite clear that the Municipal Commissioner, acting on behalf of the Municipal Corporation, has the power to issue licenses or written permissions on payment of fees, which may be charged at such rates as are fixed by the Commissioner from time to time and as sanctioned by the Municipal Corporation. The power is not only to grant licences upon levy of fees, but also to renew such licenses on payment of fees as fixed from time to time and approved by the Municipal Corporation. There is no challenge to the constitutional validity of these provisions, under which the law authorizes the levy of license fees for grant and/or renewal of licenses. The petitioners contention that a distinction between the term sky-sign and advertisement for the purpose of levy of a license fee is wholly misconceived and in fact in the teeth of the Rules (supra). It is an unwarranted hair-splitting. The first question, therefore, would be required to be answered in affirmative that the Municipal Commissioner/Municipal Corporation has authority in law to levy fees for granting permissions/licenses. PVR/PSV/VSA Page 148 of 217

WP10684_2018 & Ors.docx As to Question (ii) and (iii)

WP10684_2018 & Ors.docx Act are concerned, these provisions draw a clear distinction between the Municipal Corporation’s power to levy taxes and its power to levy other charges or fees. On this basic premise, the provisions conferring powers to charge license fees do not fall within the ambit of the powers of the municipal corporation to levy tax. On the plain purport and applicability of the provisions of MMC Act, the levy of license fee as a tax is per se not recognized by the legislation. Thus, there is no intention of the legislature to label the license fee to be even remotely a tax. This is the position which is clearly reflected on the face of the legislation.

WP10684_2018 & Ors.docx advertisements. Thus, per se the charging section which empowers the Municipal Corporation to levy different taxes does not provide for any tax to be levied on advertisements/sky signs/hoardings etc.

WP10684_2018 & Ors.docx namely Section 127 of the MMC Act itself does not confer any authority for levy of a tax on advertisement as the advertisement tax is not one of the ingredients / included under the provisions of Section 127, which authorizes the municipal corporation to levy different taxes. Secondly, even otherwise, in view of the deletion of Entry 55 from List II of the Seventh Schedule, the legislature itself does not have any authority to legislate in regard to imposition of advertisement tax. Once such authority is not available with the legislature, Section(s) 244, 245 read with Section 386(2) stand impliedly repealed, hence, there would be no question of the municipal corporation insisting that it can nonetheless levy a tax on hoardings, sky signs and that too under the garb of license fee. The petitioners, however, may not be correct in such contention.

WP10684_2018 & Ors.docx reading of Section 244, 245 and 386(2) vis-a-vis Section 127 would not permit license fee to be a tax, hence, such contention cannot be accepted. Further, the intention of the legislature becomes clear when we read Section 82 of the MMC Act, which categorically provides that all monies including any money received by the municipal corporation towards license fee would form part of the municipal fund, with a specific incorporation and recognition of “fees” being collected by the municipal corporation, as recognized by Section 82(e). Section 82 which deals with municipal funds once takes within its ambit all such sources of revenue, which includes fees as also other charges, taxes etc. to form the revenue of the municipal corporation. Such being the intention of the legislature, namely, whichever be the source of such earning of the municipal corporation, it would form part of the revenue of the municipal corporation, it cannot be accepted that contrary to what has been provided under Section 386(2), a license fee be nonetheless regarded as tax. In our opinion, a contrary proposition being canvassed on behalf of the petitioners in drawing distinction between fee and tax as laid down in the decision of the Constitution Bench of the Supreme Court in Shirur Mutt (supra) is not tenable in the facts and circumstances of the present case.

WP10684_2018 & Ors.docx general revenue, which when collected, forms a part of the public revenues of the State. It was also held that the object of a tax is not to confer any special benefit upon any particular individual, as there is no element of quid pro quo between the taxpayer and the public authority. Insofar as the ‘fee’ is concerned, it was held that a 'fee' is generally defined to be a charge for a special service rendered to individuals by some governmental agency, and that the amount of fee levied is supposed to be based on the expenses incurred by the Government in providing the service. It was also held that a fee is regarded as a sort of return or consideration for services rendered, and that it was absolutely necessary that the levy of fees should, on the “face of the legislative provision”, be correlated to the expenses incurred by the Government in rendering the services. The Court held that if the money raised by levy of the contribution is not earmarked or specified for defraying the expenses that the Government has to incur in performing the services, it is the material fact in regard to the characteristic of a fee.

WP10684_2018 & Ors.docx vs. State of Haryana35, State of Uttarakhand Vs. Kumaon Stone Crusher36; tax and a fee, being that “a tax” is a compulsory exaction of money by the State for public purposes and it is not payment for some specific services rendered, and insofar as the “fee” is concerned, it is a charge for a special service rendered by some governmental agency, was subject matter of consideration in several decisions. In Vijayalashmi Rice Mills & Ors. Vs. Commercial Tax Officers, Palakol & Ors.38 the Supreme Court held that the earlier view to the effect that to sustain the validity of a fee, some specific service must be rendered to the particular individual from whom the fee was sought to be realized, had undergone a sea change. It was held that in regard to the concept of a fee, it was no longer regarded necessary that some specific service must be rendered to the particular individual or individuals from whom the fee is being realized, and what has to be seen is whether there is a ‘broad and general co-relationship’ between the totality of the fee on the one hand, and the totality of the expenses of the services on the other. It was held that a broad correlation between the two is 35 (2017)12 SCC 1 36 (2018)14 SCC 537 37 (2025)1 SCC 641 38 (2006) 6 SCC 763 PVR/PSV/VSA Page 155 of 217

WP10684_2018 & Ors.docx sufficient to sustain the levy. The relevant observations are required to be noted which read thus:- “15. It is well settled that the basic difference between a tax and a fee is that a tax is a compulsory exaction of money by the State or a public authority for public purposes, and is not a payment for some specific services rendered. On the other hand, a fee is generally defined to be a charge for a special service rendered by some governmental agency. In other words there has to be quid pro quo in a fee vide Kewal Krishan Puri v. State of Punjab [(1980) 1 SCC 416 : AIR 1980 SC 1008] .

WP10684_2018 & Ors.docx Bench of the High Court. In considering the State’s assail of the High Court’s decision, the Supreme Court considered the questions centering around Entries 52, 54 and 97 in List I and Entries 23, 49, 50 and 66 in List II of the Seventh Schedule to the Constitution of India as also the extent and purport of the residuary power of legislation vested in the Union of India. In such determination, considering the provisions of the Seventh Schedule, it was held that the various entries in the three Lists are not 'powers' of legislation but 'fields' of legislation and in doing so, they must receive a liberal construction inspired by a broad and generous spirit and not in a narrow pedantic sense. It was held that the words and expressions employed in drafting the entries must be given the widest possible interpretation. This is because the allocation of the subjects in the lists is not by way of scientific or logical definition but by way of a mere simplex enumeration of broad categories. It was held that a power to legislate, as to the principal matter specifically mentioned in the entry shall also include within its expanse the legislation touching incidental and ancillary matters. Applying such principles, the Court held that general power of 'Regulation and Control' does not include the power of taxation, thereby observing that it is too well settled by a series of decisions that the power of "regulation and control" is separate and distinct from the power of taxation. It was held that such principles have been applied in myriad situations in the context of statutes providing collection of fee. It was not necessary that the services rendered by the fee collected should remain confined to the persons from whom the fee has been collected. Further the PVR/PSV/VSA Page 157 of 217

WP10684_2018 & Ors.docx availability of indirect benefit and a general nexus between the persons bearing the burden of levy of fee and the services rendered out of the fee collected was held to be enough to uphold the validity of the fee charged. Thus, the petitioners contention that as there is no quid pro quo and hence, the license fee ought to be regarded as a tax is not well founded.

WP10684_2018 & Ors.docx a fee has undergone considerable transformation and held that the fees being charged are ‘regulatory fees’ and that the levy does not cease to be a fee merely because there is no element of quid pro quo. In the present case, it is also the petitioners contention that the impugned fee is exorbitant. The following observations as made by the Supreme Court are required to be noted which read thus:

“22. A three-Judge Bench of this Court in B.S.E. Brokers' Forum v. Securities and Exchange Board of India [(2001) 3 SCC 482] after considering a large number of authorities, has held that much ice has melted in the Himalayas after the rendering of the earlier judgments as there was a sea change in the judicial thinking as to the difference between a tax and a fee since then. Placing reliance on the following judgments of this Court in the last 20 years, namely, Sreenivasa General Traders v. State of A.P. [(1983) 4 SCC 353], City Corpn. of Calicut v. Thachambalath Sadasivan [(1985) 2 SCC 112 : 1985 SCC (Tax) 211], Sirsilk Ltd. v. Textiles Committee [1989 Supp (1) SCC 168 : 1989 SCC (Tax) 219], Commr. & Secy. to Govt., Commercial Taxes & Religious Endowments Deptt. v. Sree Murugan Financing Corpn. [(1992) 3 SCC 488], Secy. to Govt. of Madras v. P.R. Sriramulu [(1996) 1 SCC 345],Vam Organic Chemicals Ltd. v. State of U.P. [(1997) 2 SCC 715], Research Foundation for Science, Technology & Ecology v. Ministry of Agriculture [(1999) 1 SCC 655] and Secunderabad Hyderabad Hotel Owners' Assn. v. Hyderabad Municipal Corpn. [(1999) 2 SCC 274] it was held that the traditional concept of quid pro quo in a fee has undergone considerable transformation. So far as the regulatory fee is concerned, the service to be rendered is not a condition precedent and the same does not lose the character of a fee provided the fee so charged is not excessive. It was not necessary that service to be rendered by the collecting authority should be confined to the contributories alone. The levy does not cease to be a fee merely because there is an element of compulsion or coerciveness present in it, nor is it a postulate of a fee that it must have a direct relation to the actual service rendered by the authority to each individual who obtains the benefit of the service. Quid pro quo

in the

strict sense was not always a sine qua non

for a fee. All that is necessary is that

there should be a reasonable relationship between the levy of fee and the services rendered. It was observed that it was not necessary to establish that those who pay the fee must receive direct or special benefit or advantage of the services rendered for which the fee was being paid. It was held that if one who is liable to pay, receives general benefit from the authority levying the fee, the element of service required for collecting the fee is satisfied.” (emphasis supplied) PVR/PSV/VSA Page 159 of 217

WP10684_2018 & Ors.docx

WP10684_2018 & Ors.docx State Legislature had the legislative competence to levy the tax under the relevant provisions. In the context of examining the constitutional challenge, the Court examined the contention on tax and fee. In considering the submissions on behalf of the appellants that the tax which was imposed under the provisions in question was truly speaking of a fee, the Supreme Court referring to the decision in Southern Pharmaceuticals and Chemicals, Trichur v. State of Kerala41 as also Municipal Corporation of Delhi v. Mohd. Yasin42 made the following observations in the context of the distinction between a tax and fee being steadily obliterated:- “61. The distinction between a tax and fee has substantially been effaced in the development of our constitutional jurisprudence. At one time, it was possible for courts to assume that there is a distinction between a tax and a fee : a tax being in the nature of a compulsory exaction while a fee is for a service rendered. This differentiation, based on the element of a quid pro quo in the case of a fee and its absence in the case of a tax, has gradually, yet steadily, been obliterated to the point where it lacks any practical or constitutional significance. For one thing, the payment of a charge or a fee may not be truly voluntary and the charge may be imposed simply on a class to whom the service is made available. For another, the service may not be provided directly to a person as distinguished from a general service which is provided to the members of a group or class of which that person is a part. Moreover, as the law has progressed, it has come to be recognised that there need not be any exact correlation between the expenditure which is incurred in providing a service and the amount which is realised by the State. The distinction that while a tax is a compulsory exaction, a fee constitutes a voluntary payment for services rendered does not hold good. As in the case of a tax, so also in the case of a fee, the exaction may not be truly of a voluntary nature. Similarly, the element of a service may not be totally absent in a given case in the context of a provision which imposes a tax.

WP10684_2018 & Ors.docx 24-25) “24. The distinction between a “tax” and a “fee” is well-settled. The question came up for consideration for the first time in this Court in Commr., Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt [Commr., Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, (1954) 1 SCC 412 : 1954 SCR 1005 : AIR 1954 SC 282] . … 25. “Fees” are the amounts paid for a privilege, and are not an obligation, but the payment is voluntary. Fees are distinguished from taxes in that the chief purpose of a tax is to raise funds for the support of the Government or for a public purpose, while a fee may be charged for the privilege or benefit conferred, or service rendered or to meet the expenses connected therewith. Thus, fees are nothing but payment for some special privilege granted on service rendered. Taxes and taxation are, therefore, distinguishable from various other contributions, charges, or burdens paid or imposed for particular purposes and under particular powers or functions of the Government. It is now increasingly realised that merely because the collections for the services rendered or grant of a privilege or licence, are taken to the consolidated fund of the State and are not separately appropriated towards the expenditure for rendering the service is not by itself decisive. That is because the Constitution did not contemplate it to be an essential element of a fee that it should be credited to a separate fund and not to the consolidated fund. It is also increasingly realised that the element of quid pro quo stricto senso is not always a sine qua non of a fee. It is needless to stress that the element of quid pro quo is not necessarily absent in every tax. We may, in this connection, refer with profit to the observations of Seervai in his Constitutional Law, to the effect : [ H.M. Seervai, Constitutional Law of India, 2nd Edn., Vol. 2, p. 1252, paras 22 & 39.] ‘It is submitted that as recognised by Mukherjea, J. himself, the fact that the collections are not merged in the consolidated fund, is not conclusive, though that fact may enable a court to say that very important feature of a fee was present. But the attention of the Supreme Court does not appear to have been called to Article 266 which requires that all revenues of the Union of India and the States must go into their respective consolidated funds and all other public moneys must go into the respective public accounts of the Union and the States. It is submitted that if the services rendered are not by a separate body like the Charity Commissioner, but by a government department, the character of the imposition would not change because under Article 266 the moneys collected for the services must be credited to the consolidated fund. It may be mentioned that the element of quid pro quo is not necessarily absent in every tax.’ Our attention has been drawn to the observations in Kewal Krishan Puri v. State of Punjab [Kewal Krishan Puri v. State of Punjab, (1980) 1 SCC 416, 425 : (1979) 3 SCR 1217, 1230] : (SCC p. 425, para 8) ‘8. … The element of quid pro quo must be established between the payer of the fee and the authority charging it. It may not be the exact equivalent of the fee by a mathematical precision, yet, by and large, PVR/PSV/VSA Page 162 of 217

WP10684_2018 & Ors.docx or predominantly, the authority collecting the fee must show that the service which they are rendering in lieu of fee is for some special benefit of the payer of the fee.’ To our mind, these observations are not intended and meant as laying down a rule of universal application. The Court was considering the rate of a market fee, and the question was whether there was any justification for the increase in rate from Rs 2 per every hundred rupees to Rs 3. There was no material placed to justify the increase in rate of the fee and, therefore, it partook the nature of a tax. It seems that the Court proceeded on the assumption that the element of quid pro quo must always be present in a fee. The traditional concept of quid pro quo is undergoing a transformation.” (emphasis supplied)

WP10684_2018 & Ors.docx not cease to be of that character merely because there is an element of compulsion or coerciveness present in it, nor is it a postulate of a fee that it must have direct relation to the actual service rendered by the authority to each individual who obtains the benefit of the service. It is now increasingly realised that merely because the collections for the services rendered or grant of a privilege or licence are taken to the consolidated fund of the State and not separately appropriated towards the expenditure for rendering the service is not by itself decisive. Presumably, the attention of the Court in Shirur Mutt case [Commr., Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, (1954) 1 SCC 412 : 1954 SCR 1005 : AIR 1954 SC 282] was not drawn to Article 266 of the Constitution. The Constitution nowhere contemplates it to be an essential element of fee that it should be credited to a separate fund and not to the consolidated fund. It is also increasingly realised that the element of quid pro quo in the strict sense is not always a sine qua non for a fee. It is needless to stress that the element of quid pro quo is not necessarily absent in every tax : Constitutional Law of India by H.M. Seervai, Vol. 2, 2nd Edn., p. 1252, paras 22 & 39.” (See also in this context, the decision in Sirsilk Ltd. v. Textiles Committee [Sirsilk Ltd. v. Textiles Committee, 1989 Supp (1) SCC 168 : 1989 SCC (Tax) 219] .)

WP10684_2018 & Ors.docx “(v)Regulatory fees

v. Sri

Lakshmindra Thirtha Swamiar of Sri Shirur Mutt

[ Commr., Hindu

Religious Endowments

v. Sri Lakshmindra Thirtha Swamiar of Sri

Shirur Mutt

, (1954) 1 SCC 412] , a Constitution Bench explained the

concept of licence fees thus : (SCC pp. 452-53, para 47) “47. … In the first class of cases, the Government simply grants a permission or privilege to a person to do something, which otherwise that person would not be competent to do and extracts fees either heavy or moderate from that person in return for the privilege that is conferred. A most common illustration of this type of cases is furnished by the licence fees for motor vehicles. Here the costs incurred by the Government in maintaining an office or bureau for the granting of licences may be very small and the amount of imposition that is levied is based really not upon the costs incurred by the Government but upon the benefit that the individual receives. In such cases, according to all the writers on public finance, the tax element is predominant [Seligman's Essays on Taxation, p. 409.] , and if the money paid by the licence-holders goes for the upkeep of roads and other matters of general public utility, the licence fee cannot but be regarded as a tax.” In Shirur Mutt [Commr., Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, (1954) 1 SCC 412] , it was held that a fee is money taken by the Government “as the return for the work done or services rendered” [Shirur Mutt case, (1954) 1 SCC 412, para 48] . Therefore, a fee was characterised by an element of quid pro quo between the payer and the public authority.

WP10684_2018 & Ors.docx business, or profession. Because such activities require the State to expend public resources, the State can charge licence fees to defray the administrative costs. The enrolment fee stipulated by Section 24(1)(f) of Advocates Act meets the characteristic of a regulatory fee.” (emphasis supplied)

“27. It is in this jurisprudential context that we must assess the rival PVR/PSV/VSA Page 166 of 217

WP10684_2018 & Ors.docx submissions. There are, Mr. Sakhare says, not just one, but as many as 13 different departments involved at some level or the other in this regulation. To merely say, as the Petitioners do, that the fee is excessive is insufficient. There is no authority, Mr. Sakhare submits, and in our view rightly, that the attendant costs of ancillary or related departments, or the needs of increasing annual establishment expenditure, or even, for that matter, the ‘provision of revenue’, should be entirely disregarded. We agree with Mr. Sakhare that when Mr. Anturkar and Mr. Dhakephalkar seek to dissect the income earned from fees and set this against establishment expenses in so fine-grained and granular a manner, they are demanding that very mathematical exactitude that they agree is not required. … … ..

inter alia

because various PILs in this Court itself required the

Municipal Corporation to take into account a multitude of factors (trees, line of sight, road safety, building regulations) that were not of the same level of importance earlier. Mr. Sakhare submits that the increase in expenses shown on affidavit is a sufficiently broad correlation to meet jurisprudential standards. We agree.

correlation between the rise in expenses and the one-time 80% fee? We do not think so. Conversely, we believe that there is more than enough material to justify it as a one-time fee. What of the proposed 10% annual increase? The challenge on this ground must also fail in our view. The increase is not extortionate or in any sense expropriatory. Given the general annual rise in cost of living, and, therefore, the increased annual burden to the municipal exchequer, the proposed increase is moderate. The impugned increases and the circular are not unreasonable or arbitrary.” (emphasis supplied) PVR/PSV/VSA Page 167 of 217

WP10684_2018 & Ors.docx

WP10684_2018 & Ors.docx and Rs.82.60/- per sq.ft per annum respectively. Thus, the basis of the same was never disputed. What was disputed was only the enhancement of the license fees. The following observations of the Supreme Court, however, are required to be noted, which certainly would not assist the petitioners and in fact would support the Municipal Corporation.:

WP10684_2018 & Ors.docx after taking the boulders to the crushing centre and undertaking the manufacturing process, boulders are converted into a commercial commodity and after it becomes a commercial commodity, it ceases to be a Forest Produce and no transit fee can be charged and recovered thereafter. It is in this context, the Court examined the issue in regard to levy, whether the levy of transit fee was lawful referring to several decisions including in the case of Calcutta Municipal Corpn. v. Shrey Mercantile (P) Ltd. (supra). The Supreme Court held that the crushing of stones, stone boulders into stone grits, stone chips and stone dust does not result into a new commodity different from forest produce. We are at a loss to perceive as to how the observations as made by the Supreme Court in such context would assist the case of the petitioners.

WP10684_2018 & Ors.docx MMC Act squarely become applicable. Thus, there is not a remotest doubt considering the legislative scheme in question of there being any illegality or there being no justification for the municipal corporation to fix and enhance the impugned license fees and levy the same for grant of license or for renewal of license. It may be true that the hoardings / sky signs are installed on private properties, however, considering the several actions to be taken by the Municipal Corporation, which imply regulation and control over the sky-signs and the hoardings, which is not a one time requirement but involving several facets of inspection and regulation throughout the license period, it cannot be said that there is no involvement of the municipal corporation once the license is granted. Thus, merely because the sky-signs/hoardings are installed on private properties, it cannot be said that there is no regulation of such private hoardings/ sky signs / advertisements at the hands of the Municipal Corporation. As noted by us in detail hereinabove, there are clear provisions including under the rules, which authorize the municipal corporation to exercise the powers to regulate the sky- signs and hoardings, which are not only in the interest of safety of the sky-signs and hoardings, but also, on several other public considerations. If such powers of regulation, which involves regular inspection of all kinds, are not to be recognized, a chaotic situation which could be brought about, is just to be imagined, i.e., when sky-signs, hoardings, advertisements are imagined to be displayed at the unfettered discretion of those who intend to install them. This is what the petitioners contend when they label the ‘written permission’/license as PVR/PSV/VSA Page 171 of 217

WP10684_2018 & Ors.docx merely being granted on a piece of paper. Such is not the regime which is either permissible or which could at all be derived from the provisions of the MMC Act and the Rules. Thus, the contention of the petitioners that license fee ought not to be revised, or that it should be revised in the manner the petitioners seek to canvass, in our clear opinion, is wholly not recognized in law. We may also observe that it is not a case that suddenly the municipal corporation has started levying the license fees. The license fees were levied at all relevant times, and it is only when the Municipal Commissioner decided to increase the license fees on the basis of the rate which the market would offer, as taken from the highest bid received by the Pune Municipal Corporation, the petitioners started agitating the issues as if they have no chance to recover the fees from their customers. Further, it appears that the license fees were not enhanced for a substantial period of time,

hence as seen from the rates of the other Municipal Corporations, it is not an unreasonable increase as sought to be contended by the petitioners. This aspect we would discuss hereinafter in some detail, Thus, in our opinion, there is no infirmity, much less illegality, in the decision taken by the municipal corporation.

WP10684_2018 & Ors.docx Maharashtra Goods and Services Tax Act, 2017, namely, Section 173 does not in any manner repeal any of the provisions of the MMC Act, but repeals only the Maharashtra Advertisements Tax Act, 1967. Thus, there being no repeal in regard to any powers conferred under the MMC Act qua charging of licence fee in relation sky-signs and hoardings in no manner stands affected. It thus cannot be said that the municipal corporation would cease to have any power to levy. We may also observe that the Maharashtra Advertisements Tax Act, 1967 as clearly seen from the preamble of the said Act, was enacted for levy of a “tax on advertisements” exhibited by cinematographs at certain places of entertainment in the State of Maharashtra. The present case as also the relevant provisions (supra) subject matter of debate in the present proceedings neither are provisions connected with advertisement tax nor they are provisions something to do with or under the Maharashtra Advertisements Tax Act, 1967. For such reason, the petitioners contention that on deletion of Entry 55 from the State List (List II) of the Seventh Schedule, the power and authority of the municipal corporation to levy license fee is taken away, in our opinion, is a non-starter, for the simple reason that what is not repealed or subsumed would obviously continue to operate and remain legal, valid and subsisting.

Secondly, as observed hereinabove that the license fee for sky-signs/ hoardings as levied by the municipal corporation is a regulatory fee and not a tax under the MMC Act much less an “advertisement tax” falling under the erstwhile Entry-55 of List II. Also, as observed above, Section 386(2) of the MMC Act PVR/PSV/VSA Page 173 of 217

WP10684_2018 & Ors.docx itself provides that it is a license fee. When it comes to the field to legislate, being conferred on the State Legislature, the relevant entry in List II is Entry 66, which provides for “Fees in respect of any of the matters in this List, but not including fees taken in any Court”. Certainly Entry 5 of the State List (List II) becomes relevant, when it defines the legislative competence of the State Legislature to enact laws on matters pertaining to and falling under Entry 5 of the State List (List-II), i.e., by “Local government, that is to say, the constitution and powers of municipal corporations, improvement trusts, districts boards, mining settlement authorities and other local authorities for the purpose of local self-government or village administration”. Hence, for such reason also, the petitioners’ contention, that as the municipal corporation is levying tax, falling within Entry-55 of List II 46 R/SCA/4538/2018 PVR/PSV/VSA Page 174 of 217

WP10684_2018 & Ors.docx the introduction of the Goods and Services Tax with effect from 1 July 2017, in light of the 101st Amendment of the Constitution, the respondent Corporation had no authority to collect any license fees which was in the garb of tax on advertisement hoardings on private properties. Such challenge was repelled by the Division Bench. The Court held that the license fees levied for granting a license for placing advertisement hoardings on private properties were “fees and not tax”. The Division Bench also rejected the petitioner’s challenge that Section 386(2) of the Gujarat Provincial Municipal Corporation Act (GPMC Act), which is pari materia to the MMC Act, was in any manner ultra vires to Article 243X of the Constitution. We are in complete agreement with the observations and the view taken by the Gujarat High Court.

WP10684_2018 & Ors.docx offering advertisement by way of payment of GST on such contract, is in fact on the incidence of services rendered by the advertiser to its client and has nothing to do with the hoardings / advertisements which are permitted under the license granted by the municipal corporation. The relevant observations as made by the Court are required to be noted which read thus:

“17. The GST as stated above is levied on any supply of goods or services. The petitioners carrying on advertisement business it is during the course of the said business that the petitioner is required to collect GST from any of its/their clients and remit it to the authorities. It is not that the petitioners are making payments of GST out of their own pockets. The petitioners supplying services and or goods, on the invoice that the petitioners were to raise on their respective clients the invoice amount would be required to be accompanied by a GST amount on the basis of the categorization of services and or goods under the GST Act. The said GST collected from the client of the petitioners, the amount is required to be remitted by the petitioners to the GST authorities.

WP10684_2018 & Ors.docx to display advertisements of its clients towards which the petitioners charge their client which is a supply of services or goods as regards which the GST is liable to be paid.

WP10684_2018 & Ors.docx provisions of the MMC Act, and all fees and fines payable and levied under this Act or under any rule, bye-law, regulation or standing order, would constitute the fund. This issue has been completely overlooked on behalf of the petitioners, which as explicitly noted from the relevant provisions, finds explicit recognition not only under the provisions of Article 243X of the Constitution but also the MMC Act itself, providing a wholesome sanctity to the funds and taxes as collected by the municipal corporation to constitute municipal funds. Thus, the petitioners contention that the fee being collected by the municipal corporation in the absence of quid pro quo is for the purpose of revenue and would cease to be a fee, as it would partake the character of the Corporation’s revenue, stands completely negated not only on the clear implication as brought about by Article 243X of the Constitution read with Section 82 of the MMC Act as all such amounts would constitute municipal funds and municipal funds are necessarily the revenue of the municipal corporation.

WP10684_2018 & Ors.docx respondents had filed writ petitions under Article 226 of the Constitution before the High Court, assailing the action of the State to recover the fees as a development fund under the said Act, assailing the notices issued under the State legislation requiring them to pay the fees assessed under the said Act. It is in such context, the Supreme Court considered the contention as to whether the “said State Act” was rendered ineffective in view of a subsequent central enactment, namely, the Mines and Minerals (Regulation and Development) Act, 1957 (Act 67 of 1957). The Court had held that on the Central Act being brought into force, the Orissa Act ceased to be operative by reason of the withdrawal of legislative competence by force of the entry in the State List, being subject to the Parliamentary declaration and the law enacted by Parliament. The High Court held that for this reason, the State Act should be deemed to be non- existent as and from June 1, 1958 for every purpose, with the consequence that there was lack of power to enforce and realize the demands for the payment of the fee at the time when the demands were issued and were sought to be enforced. It is in such context, the observations as made by the Supreme Court in this decision are required to be considered and more particularly when the Supreme Court delved on the issue of the power to levy a fee relevant to the subject matter. The following observations as made by the Supreme Court would assist the respondents, rather than the petitioners:- “16. It was next urged that under the scheme of the legislative entries under the Constitution, as previously under the Government of India Act, 1935 the power to levy a fee was an independent head of legislative power under each of the three legislative Lists and not merely an incidental power PVR/PSV/VSA Page 179 of 217

WP10684_2018 & Ors.docx flowing from the grant of power over the subject-matter in the other entries in the List. From this it was sought to be established that even if the Union could levy a fee under the Central Act it would not affect or invalidate a State legislation imposing a fee for a similar service. This argument again proceeds on a fallacy. It is, no doubt, true that technically speaking the power to levy a fee is under the entries in the three lists treated as a subject- matter of an independent grant of legislative power, but whether it is an incidental power related to a legislative head or an independent legislative power it is beyond dispute that in order that a fee may validly be imposed the subject-matter or the main head of legislation in connection with which the fee is imposed is within legislative power. The material words of the Entries are:“Fees in respect of any of the matters in this List.” It is, therefore, a prerequisite for the valid imposition of a fee that it is in respect of “a matter in the list”. If by reason of the declaration by Parliament the entire subject-matter of “conservation and development of minerals” has been taken over, for being dealt with by Parliament, thus depriving the State of the power which it theretofore possessed, it would follow that the “matter” in the State List is, to the extent of the declaration, subtracted from the scope and ambit of Entry 23 of the State List. There would, therefore, after the Central Act of 1957, be “no matter in the List” to which the fee could be related in order to render it valid.”

The petitioners’ endeavour to draw an analogy from the aforesaid decision to the effect that by virtue of deletion of Entry 55 from List II of the Seventh Schedule by the 101st Constitutional Amendment Act, advertisement tax is no more the field of legislation available to the State and once such subject itself is not available, there is no question of applying the residuary entry, namely, Entry 66, or for that matter, Entry 5 would not be available, in our opinion, is not well founded. The reason being that when the license fee is levied on sky-signs and hoarding, as held by us it is not a tax but a regulatory fee. Hence, deletion of Entry 55 from the State List (List-II) is not relevant to the present issue, as the power of the State can be clearly derived from the other entries in list-II. Further while considering the issue of implied repeals, the Supreme Court observed that applying the principles on which the saving clause in Section 6 of the General PVR/PSV/VSA Page 180 of 217

WP10684_2018 & Ors.docx Clauses Act was enacted, namely, that every later enactment which supersedes an earlier one or puts an end to an earlier state of the law is presumed to intend the continuance of rights accrued and liabilities incurred, under the superseded enactment, unless the later enactment contains sufficient indications-express or implied showing an intention to completely obliterate the earlier state of the law. However, we do not find that such logic of the applicability of the doctrine of implied repeal, as sought to be canvassed on behalf of the petitioners, would in any manner be applicable in the present situation, as the MMC Act cannot be attributed limited to only Entry 55 of List II of the Seventh Schedule of the Constitution. In any event, the legislative source supporting the legislation to fix the fees is under Entry 66 read with Entry 5. It is not the petitioners’ case that the Goods and Services Tax Act has extinguished the entire powers available with the municipal corporation to levy taxes and fees. The only contention, however, is that the provisions of Sections 244 and 245, read with Section 386(2), have been impliedly repealed following the deletion of Entry 55 from List II (State List).

WP10684_2018 & Ors.docx entries in the list, being legislative heads, are enabling in character. It is a settled principle of interpretation that legislative entries are required to be liberally interpreted and none of the items in the lists are to be read restrictively and a general word used in an entry must be construed to extend to all ancillary or subsidiary items which can fairly and reasonably be held to be apprehended in it. Further, competing entries, if any, are required to be read harmoniously. It is well settled that each of the legislative entries should be given the widest scope. (See: Maharashtra50). In such context, we find that the respondents’ reliance on the decision of the Supreme Court in Bimolangshu Roy (Dead) thr. LR v. State of Assam & Anr51  is well founded. The Supreme Court in regard to the interpretation of powers to legislate observed thus:- “23. The authority to make law flows not only from an express grant of power by the Constitution to a legislative body but also by virtue of implications flowing from the context of the Constitution is well settled by the various decisions of the Supreme Court of America in the context of American Constitution. A principle which is too well settled in all the juri ictions where a written Constitution exists. The US Supreme Court also recognised that the Congress would have the authority to legislate with reference to certain matters because of the fact that such authority is inherent in the nature of the sovereignty. The doctrine of inherent powers was propounded by Justice Sutherland in the context of the role of the American Government in handling foreign affairs and the limitations thereon. [United States v. Curtiss-Wright Export Corpn., 1936 SCC OnLine USSC 158 : 81 L Ed 255 : 299 US 304 (1936)] …...

WP10684_2018 & Ors.docx of 1968), observed: (SCC p. 174, para 8)“8. … Before construing these entries it is useful to notice some of the well-settled rules of interpretation laid down by the Federal Court and by this Court in the matter of construing the entries. The power to legislate is given to the appropriate legislature by Article 246 of the Constitution. The entries in the three lists are only legislative heads or fields of legislation, they demarcate the area over which the appropriate legislatures can operate.”Union of India v. Harbhajan Singh Dhillon, (1971) 2 SCC 779, SCC p. 792, para 22.“22. It must be remembered that the function of the lists is not to confer powers; they merely demarcate the legislative field. The Federal Court, while interpreting the Government of India Act in Governor-General-in- Council v. Raleigh Investment Co. Ltd., 1944 SCC OnLine FC 10 : (1944) 6 FCR 229 observed: (SCC OnLine FC)‘… It would not be right to derive the power to legislate on this topic merely from the reference to it in the List, because the purpose of the Lists was not to create or confer powers, but only to distribute between the Federal and the Provincial Legislatures the powers which had been conferred by Sections 99 and 100 of the Act.’”(emphasis supplied)Synthetics and Chemicals Ltd. v. State of U.P., (1990) 1 SCC 109: (SCC p. 151, para 67)“67. …The power to legislate is given by Article 246 and other articles of the Constitution. The three lists of the Seventh Schedule to the Constitution are legislative heads or fields of legislation. These demarcate the area over which the appropriate legislatures can operate. It is well settled that widest amplitude should be given to the language of the entries in three lists but some of these entries in different lists or in the same list may override and sometimes may appear to be in direct conflict with each other, then and then only comes the duty of the court to find the true intent and purpose and to examine the particular legislation in question. Each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be comprehended in it.”(emphasis supplied)] that the entries in the various lists of the Seventh Schedule are not sources of the legislative power but are only indicative of the fields w.r.t. which the appropriate legislature is competent to legislate. ……. .. .. .

WP10684_2018 & Ors.docx basis of any other entry within the legislative competence of the legislature. It is not necessary for the State to show that the legislature, in enacting the law, consciously applied its mind to the source of its own competence. Competence to legislate flows from Articles 245, 246, and the other articles following, in Part XI of the Constitution. In defending the validity of a law questioned on ground of legislative incompetence, the State can always show that the law was supportable under any other entry within the competence of the legislature. Indeed in supporting a legislation sustenance could be drawn and had from a number of entries. The legislation could be a composite legislation drawing upon several entries. Such a “ragbag” legislation is particularly familiar in taxation.” As to Question no. (iv)

WP10684_2018 & Ors.docx divided into four zones for the purpose of license of sky-signs and hoardings and under which tenders were invited from the advertisers to bid for the four zones (See: paragraph 105). The highest bid which was received was of Rs.222/- per sq.ft. p.a. There were resistance proceedings before the State Government as also the litigation on such enhancement as noted by us hereinabove. It so happened that in the intervening period the Municipal Commissioner accepted the applications applying the license fees at Rs.222/- per sq. ft. per year and the same was in fact voluntarily paid by many and in some cases without prejudice to the rights and contentions of the advertisers. Also, as noted hereinabove, in this regard there were meetings held between the parties minutes of which were recorded, to which we have already made reference. Finally, by the impugned Resolution No.667 of the General Body of PMC dated 28 September 2018, the Municipal Corporation exercising powers under Section 386(2) retrospectively approved the levy of license fee at the rate of Rs.222/- per sq.ft. p.a.

WP10684_2018 & Ors.docx which provides that for every such license or written permission a fee may be charged at such rate as shall from time to time be fixed by the Commissioner, “with the sanction of the Municipal Corporation”. Once the wordings of the Section is “with the sanction of the municipal corporation”, the General Body of the municipal corporation needs to approve the decision of the municipal commissioner to levy the license fee, the implication is that even if it was retrospective, it would be required to be held to be a valid sanction. Such sanction apart from being retrospective, would also be required to be held to be retroactive, [more particularly as in the present case, the license fees are paid at the enhanced rate by the petitioners in seeking renewal of license]. This is clear from the plain meaning required to be attributed to the word ‘sanction’. In such context, we may note that the wording of the provision, namely, Section 386(2) uses the word “sanction” which would mean ratification and not “prior sanction”. The word ‘sanction’ as understood in the legal context is as follows:- (i) The Stroud’s Dictionary defines “sanction” as under: “Sanction” not only means prior approval; generally, it also means ratification (Re De La Warr, 16 Ch D. 587) (ii) The Webster’s Dictionary defines ‘sanction’ as under: “Sanction” sancire, make sacred, establish as inviolable, ordain, ratify (pp. Sanctus, often as adj. Sacred, holy: cf. Saint, sanctity, and sanctum), akin to L. sacer, sacred, holy: cf sacre.) Authoritative permission; countenance or support given to an action; an official confirmation or ratification of some specific action. Law, a provision of a law which enacts a penalty for disobedience of that law or provides a reward for obedience to it; the penalty or reward. Binding force given, or something which gives binding force as to an oath; usu. pl. a method often adopted by a group of nations to force another nation to desist in its violation of some particular international law; as, sanctions of boycotting; - v.t. To ratify or confirm; as, to sanction a law or a covenant; to authorie, countenance, or approve.” (emphasis supplied) PVR/PSV/VSA Page 186 of 217

WP10684_2018 & Ors.docx

WP10684_2018 & Ors.docx

“61. From what has been narrated above, one of the principal questions to be considered is seen to be whether the Reserve Bank of India had the power or authority to give ex post facto permission under Section 29(1)(b) of the Foreign Exchange Regulation Act for the purchase of shares in India by a company not incorporated in India or whether such permission had necessarily to be “previous” permission. … …

WP10684_2018 & Ors.docx in Sections 13(2), 19(1), 19(4), 20, 21(3), 24, 25, 28(1) and 29, the expressions “permission” and “general or special permission” remain unqualified. The distinction made by Parliament between permission simpliciter and previous permission in the several provisions of the same Act cannot be ignored or strained to be explained away by us. That is not the way to interpret statutes. The proper way is to give due weight to the use as well as the omission to use the qualifying words in different provisions of the Act. The significance of the use of the qualifying word in one provision and its non-use in another provision may not be disregarded. In our view, the Parliament deliberately avoided the qualifying word previous in Section 29(1) so as to invest the Reserve Bank of India with a certain degree of elasticity in the matter of granting permission to non-resident companies to purchase shares in Indian companies. The object of the Foreign Exchange Regulation Act, as already explained by us, undoubtedly, is to earn, conserve, regulate and store foreign exchange. The entire scheme and design of the Act is directed towards that end. Originally the Foreign Exchange Regulation Act, 1947 was enacted as a temporary measure, but it was placed permanently on the Statute Book by the Amendment Act of 1957. The Statement of Objects and Reasons of the 1957 Amendment Act expressly stated, “India still continues to be short of foreign exchange and it is necessary to ensure that our foreign exchange resources are conserved in the national interest”. In 1973, the old Act was repealed and replaced by the Foreign Exchange Regulation Act, 1973, the long title of which reads:“An Act to consolidate and amend the law regulating certain payments, dealings in foreign exchange and securities, transactions indirectly affecting foreign exchange and the import and export of currency and bullion, for the conservation of foreign exchange resources of the country and the proper utilisation thereof in the interest of the economic development of the country.” We have already referred to Section 76 which emphasises that every permission or licence granted by the Central Government or the Reserve Bank of India should be animated by a desire to conserve the foreign exchange resources of the country. The Foreign Exchange Regulation Act is, therefore, clearly a statute enacted in the national economic interest. When construing statutes enacted in the national interest, we have necessarily to take the broad factual situations contemplated by the Act and interpret its provisions so as to advance and not to thwart the particular national interest whose advancement is proposed by the legislation. Traditional norms of statutory interpretation must yield to broader notions of the national interest. If the legislation is viewed and construed from that perspective, as indeed it is imperative that we do, we find no difficulty in interpreting “permission” to mean “permission”, previous or subsequent, and we find no justification whatsoever for limiting the expression “permission” to “previous previous'” only. In our view, what is necessary is that the permission of the Reserve Bank of India should be obtained at some stage for the purchase of shares by non-resident companies.”

WP10684_2018 & Ors.docx context. Hence, the principles of contextual interpretation assume significance. The principle of law in this regard are well-settled. We may usefully refer to the whether the effect of the proviso below sub-section (1) of Section 2 would apply in the context of the definition of Court defined under Section 2(1)(e)(ii)of the said Act. The following observations of the Court need to be noted:

“19. Now the question remains is ‘whether section 2(1)(e)(ii) when it defines “court” to mean the High Court having juri iction to decide the question forming the subject matter of the arbitration would create any impediment preventing the petitioner to invoke Section 9 before this Court. In my opinion, a cumulative reading of the amended provisions would not create such a hurdle for the petitioner to invoke the juri iction of this Court and maintain this petition. The reason being that Section 2 the definition clause begins with the words “In this Part, unless the context otherwise requires-”. The definition of “Court” as contained in Section 2(1)(e)(ii), in the present context would create a incongruity to enforce the provisions Section 9 of the Act as made applicable by the 2015 Amendment Act. This inasmuch as the petitioner would be prevented to seek interim measures in enforcing the money award, when the money is lying within the territorial juri iction of the Courts only for the reason that it is not the subject matter of arbitration. This is opposed to the plain and clear intention of the legislature as incorporated by the 2015 Amendment Act as noted above. It cannot be conceived that on the one hand the legislature permits a party holding a foreign award to invoke Section 9 of the Act and further permit invoking of the provisions of Sections 47 to 49 of the Act to enforce the foreign awards, and for that matter to approach the appropriate court having juri iction to decide the question forming the subject matter of arbitral award, as if the same had been the subject matter of the suit as the explanation to Section 47 would provide. However, on the other hand at the same time, when it comes to adopting proceedings under Section 9 to secure the sums awarded being the money to secure the award is available within the juri iction of the Court, it would render the Court lacking such juri iction by application of Section 2(1)(e)(ii). This is surely not the intention of the legislature. Any interpretation which would defeat the intention of the legislature is required to be avoided. Thus, in 53 2017 SCC OnLine Bom 8676 PVR/PSV/VSA Page 190 of 217

WP10684_2018 & Ors.docx my opinion, considering the amended provisions and in the facts of the present case when the petitioner is holding a foreign award and when the money is available within the juri iction of this Court as contained in the bank accounts of the respondent at Mumbai, the principles of “contextual interpretation” of Section 2(1)(e)(ii) would be required to be adopted considering the opening words of Section 2(1) “In this Part, unless the context otherwise requires—” and adverting to this principle of interpretation it would be required to be held that the “Court” as defined under the explanation to Section 47, would be the appropriate court when the petitioner is seeking interim reliefs under Section 9 of the Act pending the enforcement of the foreign award.