Delhi High Court: 'Advertisement Tax and Property Tax Are Separate
The Delhi High Court has observed that property tax and advertisement tax operate in completely different fields and are levied on different incidences. There is no overlapping of the two taxes. Whereas the incidence of levy of building tax is the erection of a permanent immovable structure which qualifies as a building, the incidence of levy of advertisement tax is the display of an advertisement.
The Delhi High Court bench comprising of Justice Vipin Sanghi and Justice Sanjeev Narula held that under section 2(3) of the Delhi Municipal Corporation Act, 1957 ('DMC Act'), all immovable structures (except boundary wall) are covered by the definition of 'building' and are liable to be subjected to property tax. The immovable structures erected to hold and support 'hoardings' would also qualify as 'building' and would be liable to be subjected to property tax.
The Court was hearing the present petitions filed by the Delhi International Airport (P) Ltd (Petitioner) impugning the power of the South Delhi Municipal Corporation (SDMC – the Respondent) to impose the tax, by contending inter-alia that Bye-Laws 9(m) and 14 of Delhi Municipal Corporation (Property Taxes) Bye-Laws, 2004 ('2004 Bye-Laws'), whereby the levy was being imposed, were ultra vires the DMC Act.
The Petitioner- Delhi International Airport Pvt. Ltd. ('DIAL'), is a joint venture company with Airports Authority of India (AAI). Under the Operation, Maintenance and Development Agreement ('OMDA') dated 4th April 2006, executed with AAI, the Petitioner has been granted exclusive right and authority for performing the functions of operating, maintaining, developing, designing, constructing, upgrading, modernizing, financing and managing of Indira Gandhi International Airport, Delhi.
On 23rd August 2012, the Respondent issued a demand for property tax, premised on the fact that Petitioner, as the owner or occupier, is liable to file property tax return and pay tax on the 'hoarding' in terms of the definition of the said word.
The Petitioner's quandary arose with the Respondent, exercising its power conferred under Section 481 of the DMC Act, framed the 2004 Bye-Laws whereby it has levied building tax on the structures and 'hoardings' used for display of advertisements.
The Petitioners also sought consequential relief in the nature of writ of mandamus for quashing of notices and the demands raised by the Respondent under the impugned 2004 Bye-Laws. Since the grounds of challenge and nature of reliefs sought in both the petitions were identical, and common questions of law was present, the Court proceeded to hear both the petitions together, and the same were now being decided by way of the common judgment.
Relying upon the principle of noscitur a sociis, it was contended that the words 'any other structure' was found in the definition of 'building' should be interpreted in accordance with the words surrounding it and would include only those structures which have a roof, or at least constructed with a motive to a lay roof over them in future, and, those which are capable of holding a roof.
According to the Petitioners, Section 116E (1) of the Act provides for determination of the annual value of the covered space of a building for levy of building tax. The explanation to the said provision defines 'covered space' in relation to a building, and does not include 'hoardings'.
Petitioner had also laid a challenge to the imposition of property tax on the structure which is a hoarding on the ground that the Respondents are already levying Advertisement Tax.
It was argued that there is already a revenue sharing arrangement with SDMC for the financial year 2017-18, and SDMC has received Rs.18 Crores from the advertisement revenue generated from Petitioner's hoardings as per the revenue sharing arrangement.
It was contended that the DMC Act provides for a detailed, clear and separate scheme for charging advertisement tax on the advertisement being displayed on or upon any land or building under Section 142 and onwards of the DMC Act and, therefore, the legislature never intended to tax the same thing twice which the Respondents are trying to do under the guise of delegated legislation.
The Court held that the afore-noted challenge was misconceived, as advertisement tax and property tax are separate levies. They are two separate incidences of tax i.e. advertisement tax and property tax. The property tax is levied under Section 113 of the DMC Act, which details the different kinds of taxes that can be imposed by the corporation under the DMC Act.
According to the Court, Property tax has been listed as one of the taxes leviable under Section 113 of the Act. The advertisement tax under the V Schedule provides that no tax shall be levied on any other advertisement in terms of the details given therein.
Therefore, the court did not find any merit in the contention of the Petitioner that the Respondent cannot levy property tax, merely because the advertisement is being subjected to advertisement tax.
Thus, the contention that hoardings, per se, are only susceptible to advertisement tax is devoid of any merit. The challenge to the vires of the provision impugned in the present petition on this ground is totally devoid of merit and was rejected.