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2000 DIGILAW 200 (GAU)

Selvel Advertising Pvt. Ltd. v. State of Assam

2000-06-06

BRIJESH KUMAR, D.BISWAS

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Brijesh Kumar, C.J.— This appeal is preferred against the judgment and order dated 14.5.96 passed in Civil Rule No.924 of 1989 by which the civil rule preferred by M/s Selvel Advertising and another namely, the present appellants was dismissed and demand of hoarding tax as raised by the Silchar Municipal Board was upheld. 2. We have heard Shri BD Das, learned counsel appearing for the appellants, Shri BK Das, Senior Advocate appearing for the respondent Nos 2 and 3 and Shri BC Das, learned Additional Senior Govt. Advocate, Assam. 3. The facts briefly indicated are that the petitioner/appellants have been fixing hoardings at different places including over land of the Silchar Municipal Board as well as on the private land under some agreements. In all it is indicated that there were 16 such hoardings as allowed by the Silchar Municipal Board in respect whereof they raised demand for payment of hoarding taxes. The petitioner/ appellants challenged the validity of imposition and demand of hoarding tax. It was mainly challenged on two grounds that no hoarding tax was imposed in accordance with the provisions contained under section 68 of the Assam Municipal Act, 1956, nor the Government accorded any sanction for imposition of such tax. 4. It would be appropriate to see certain provisions as contained in the Assam Municipal Act, 1956, particularly section 68 of the Act. The relevant part of section 68 reads as under - “68. Taxes. (1) Subject to the provisions of this Act and the rules made thereunder the Board may from time to time, at a meeting convened expressly for the purpose, of which due notice shall have been given, impose within the limits of the municipality the following taxes, fees and tolls, or any of them; .... .... “ (n) with the sanction of the State Government any other tax, toll, rate or fee; provided - (i) that both the taxes mentioned in clauses (a) and (f) shall not be imposed in respect of the same premises; (ii) that when the Board has taken a loan from or guaranteed by the State Government, the Board shall not, without the previous sanction of the State / Government, make any alteration in respect of any tax which may have the effect of reducing the income of the Board; and (iii) the State Govt. may, by order, exempt from the payment of any rate, tax, toll or fee payable under the provisions of this Act any diplomatic or consular mission or a foreign State and the diplomatic and consular officers of such mission........” 5. It is undisputed between the parties that the 'hoarding tax' is not covered under any of the clauses (a) to (m) of section 68 (1) but according to the respondent Municipal Board, it is submitted that it is covered under clause (n) of section 68 (1) as quoted above. On behalf of the petitioner it is submitted that no sanction has been taken from the State Government as required under clause (n). Yet another submission is that according to section 68 a meeting has to be convened expressly for the purpose with due notice, to impose within the limit of municipality any tax as may be intended under the provision. Therefore, there should have been a meeting convened particularly for the purpose of imposition of hoarding tax, in which on consideration of such an agenda, a decision could be taken by the Board to impose the tax with sanction of the State Government. There has not been any compliance of the above provision. 6. On behalf of the respondents it has vehemently been urged that budget estimate was prepared by the Municipal Board, Silchar which was also notified, containing accounts and the budget estimate and sanction was accorded by the Director of Municipal Administration under Rule 16 of the Assam Municipal Accounts and Budget Estimate Rules. As such a sanction accorded by the Director, Municipal Administration would amount to sanction by the State Government. The argument hardly impresses us. However, we may deal with the argument as placed before us. In this connection our attention has been drawn to section 3 clause (46) of the Act which defines the word 'Director' it reads as follows : “3. (46) 'Director' means the Director of Municipal Administration appointed by the Government of Assam for performing the functions and exercising powers provided in this Act.” Thereafter section 296A of the Act has been referred to, which reads as under - “296A. Control over proceedings of Municipal Boards. (1) The State Government, the Commissioner of Division and the Deputy Commissioner shall see that the proceedings of the Municipal Boards are in conformity with law. Control over proceedings of Municipal Boards. (1) The State Government, the Commissioner of Division and the Deputy Commissioner shall see that the proceedings of the Municipal Boards are in conformity with law. (2) The State Government may, by order in writing, annul any proceedings which it considers not to be in conformity with the law and may do all things necessary to secure such conformity : Provided that no such order shall be made without giving the Board an opportunity of expressing its views on the matter.” 7. On the basis of the above noted provisions, it is submitted that the Director of Municipal Administration exercises control over the proceedings of the Municipal Board along with other authorities including the State Government. Therefore, exercise of the powers by the Director in according approval to the budget which included the budget estimate with hoarding tax would amount to approval by the State Government. In our view, such an inference cannot be drawn by section 296 A of the Act. It mentions different authorities including the State Government which can exercise control over proceedings of the Municipal Boards. Such authorities are Commissioner of the Division and Deputy Commissioner. We fail to understand as to how it may be possible to infer that exercise of such controlling power by different authorities would mean that the Director of Municipal Administration has also the power to accord sanction for imposition of tax as required under section 68 of the Municipal Act. Needless to emphasise that the taxing statutes and the provisions have to be strictly construed and a liberal interpretation is impermissible. The power to accord approval for imposition of tax can be exercised only by the authorities as mentioned in section 68 which by any stretch of imagination cannot be intermingled with the functions of the State Government and other authorities as mentioned under section 296A of the Assam Municipal Act. 8. An effort has also been made to impress that the Director of Municipal Administration could also exercise power of according sanction since the word State has not been defined under the Act. We feel that such a definition is a hardly necessary for the purposes of considering the point involved. This argument too seems to have no merit. 8. An effort has also been made to impress that the Director of Municipal Administration could also exercise power of according sanction since the word State has not been defined under the Act. We feel that such a definition is a hardly necessary for the purposes of considering the point involved. This argument too seems to have no merit. Clause (46) of section 3 to which our attention has been drawn by learned counsel for the Municipal Board itself indicates the difference namely, the Government of Assam has power to appoint the Director of Municipal Administrator. An authority having the power of appointment and the appointee would obviously not mean authorities of equal status. Such authorities are created by the State Government for carrying out different functions as may be statutory provided for them to carry out the administration or in any other manner lawfully permissible, but such authorities cannot be described as the State Government. Section 68 (1) of the Act provides for sanction by the State Government not by the Director. 9. Learned counsel for the Municipal Board has furnished a copy of notification by which the Governor of Assam was pleased to sanction the post of Director, Municipal Administration and setting up a Directorate under the administrative control of Municipal Administration Department vide notification No.MA.87/64/Pt.I/66 dated 12.7.67. This notification is itself sufficient to nullify the submission made on behalf of the Municipal Board that sanction of budget estimate by the Director may amount to sanction by the State Government. The two authorities on the face of it are different. 10. The Director, Municipal Administration has accorded approval to the budget estimate under Rule 16 of the Municipal Accounts Rules and budget estimate framed by the State Government under section 301 of the Assam Municipal Act, 1956. The Director, Municipal Administration is a functionary under the Assam Municipal Act. The functions which he may be entitled to discharge may be found under the statute itself, or the rules framed thereunder. It appears that under the statutory rules approval of budget estimate may be one of the functions assigned to him which the Director has discharged accordingly under Rule 16 of the Municipal Accounts Rules and Budget Estimates. Such function provided under the rule was not partake the character and function of an authority namely, State Government as provided under section 68 (1) of the Assam Municipal Act. Such function provided under the rule was not partake the character and function of an authority namely, State Government as provided under section 68 (1) of the Assam Municipal Act. The nature and character of the two functions is entirely different. Levy of taxes under the law as provided under section 68 (1) of the Assam Municipal Act relates to imposition of tax with power of the State Government to sanction the same. No estimated income in the budget would validly be included in the budget estimate unless such a tax is validly imposed in accordance with law. In absence of a meeting convened for the purpose namely, for considering the question of imposition of tax under clause (n) of sub-section (1) of section 68 of the Assam Municipal Act and without there being any such decision of the Board and over and above without any sanction by the State Govt. it cannot be said that any hoarding tax was ever imposed by the Municipal Board. So far the position of imposition of a tax under clause (n), sub-section (1) of section 68 is concerned, it stands on a different footing. Clause (n) does not lay down any particular tax, but a general power for levy of tax 'on items other than covered under other clauses with the sanction of the State Government. Mere existence of such power would not justify realisation of any tax by any name for any purpose in respect of which there exists no decision much less, in the manner prescribed. To be a valid tax imposed under clause (n) it must have the sanction of the State Government before it can be realised. But there is none in the present case. Approval of budgetary estimate by the Director for the year 1975-76 would in no way amount to a tax under clause (n) of sub-section (1) to section 68. 11. The existence of power to impose a tax, the authority empowered must exercise that power. In the present case, the Board never seem to have considered the question of imposition of hoarding tax in any of its meeting convened for the purpose namely for imposition of hoarding tax. The other question arises later is about following of the procedure etc. In the present case we find that there is no foundation of hoarding tax itself. In the present case, the Board never seem to have considered the question of imposition of hoarding tax in any of its meeting convened for the purpose namely for imposition of hoarding tax. The other question arises later is about following of the procedure etc. In the present case we find that there is no foundation of hoarding tax itself. The Director, in discharge of his functions under Rule 16 of the Municipal Accounts Rules and Budget Estimate had only been discharging his statutory duty, but his powers would be confined only as may be conferred under the provisions of the Act or the rules and not beyond the provisions. Budgetary approval in the estimates showing any income from any kind of tax not imposed by the authority, much less, in accordance with law would in no way subject the people to' exigibility to such taxes. Therefore, in our view, the demand of hoarding tax from the petitioner-appellant is illegal and liable to be struck down. 12. In the result, the appeal is allowed and the judgment and order passed by the learned Single Judge as well as the notice of demand (Annexure 6 to the writ petition) for hoarding tax are set aside. Cost easy.