Allahabad High Court Judgement

Allahabad High Court Judgement

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JUDGEMENT HEADLINE : Kanpur Nagar Nigam Vigyapan Par Kar Nirdharan......Kar Vasooli Upvidhi, 2016 Is Invalid Having Been Framed Without Following Procedure Contemplated U/
JUDGEMENT TITLE : U.P. Advertisers Association Thru' Its President & 13 Others Vs. State Of U.P. & 2 Others On 05/04/2017 By Allahabad High Court
CASE NO : WRIT - C NO. 9389 OF 2017
CORAM : Hon'ble Dilip B. Bhosale,Chief Justice And Hon'ble Yashwant Varma,J.

 

HIGH COURT OF JUDICATURE AT ALLAHABAD

RESERVED
AFR

Case:- WRIT - C No 9389 Of 2017
U P Advertisers Association Through Its President & 13 Ors
Vs
State Of U P & 2 Ors

Appearance:
For Petitioners : Mr W H Khan, Senior Advocate, Assisted By
Mr Gulrez Khan, Advocate

For Respondents: Mr Anil Tiwari, Advocate


Hon'ble Dilip B Bhosale, Chief Justice
Hon'ble Yashwant Varma, J

(Per Dilip B Bhosale, CJ)

This Writ Petition Under Article 226 Of The Constitution Of India, Filed By U P Advertisers Association And The Advertising Agencies, Has Sought The Following Reliefs:
"I. Issue A Writ, Order Or Direction In The Nature Of Certiorari Quashing Nagar Nigam (Vigyapan Par Kar Nirdharan, Pratishodh Viniyman Va Vigyapan Kar Vasooli Upvidhi, 2016 Published In The Official Gazette U.P. On 2.4.2016 (Annexure-1 To The Writ Petition).

(II) Issue A Writ, Order Or Direction In The Nature Of Mandamus Commanding The Respondents Not To Interfere In Petitioner Nos. 1 To 10 Carrying On The Business Of Advertising And Charge Only The Tax And Fees Etc. Which The Respondents Were Charging From The Petitioners Before The Enforcement Of Rules, 2016.

(III) Issue A Writ, Order Or Direction In The Nature Of Mandamus Commanding The Respondents Not To Enforce The Aforesaid Rules Of 2016 And The Amount Realized By The Respondents From The Petitioners Under New Rules, 2016 Be Directed To Be Refunded To The Petitioners."
2. Though, In The Prayer Clause As Also In The Body Of The Writ Petition, "Rules, 2016" Are Referred To As Rules, Which Are Placed On The Record As Annexure-1, From A Perusal Thereof, It Is Clear And Is Also Not In Dispute That These Are Not Rules Framed Under Section 540 Of The Uttar Pradesh Municipal Corporation Act, 1959 (for Short, "Act, 1959") But Are Bye-laws Made Under Section 541 Being The Kanpur Nagar Nigam Vigyapan Par Kar Nirdharan, Pratisedh, Viniyaman Va Vigyapan Kar Vasooli Upvidhi, 2016 (for Short, "Bye-laws, 2016").

3. Section 540 Of The Act, 1959 Empowers The State Government To Make Rules Or Model Rules To Carry Out The Purpose Of The Act, Whereas Section 541 Confers Powers On The Corporation To Make Bye-laws, Not Inconsistent With The Act And The Rules, With Respect To The Matters Mentioned Therein, Including In Relation To Fixing Of Fees For Any Licence, Sanction Or Permission To Be Granted By Or Under The Act, Regulating The Charges For Services Rendered By Any Municipal Authority, And Prohibition And Regulation Of Advertisements. The Procedure For Making Rules By The State Government Under Section 540 And Bye-laws By The Corporation Under Section 541 Is Also Prescribed Under The Provisions Of The Act. We Would Make Reference Thereto A Little Later And At An Appropriate Stage.

4. It Is Clear That The Bye-laws, 2016, Impose An Advertisement Tax As Contemplated By Section 172 Read With Section 192 Of The Act, 1959. Section 172 Deals With The Taxes To Be Imposed Under This Act And Subject To The Provisions Thereof And Of Article 285 Of The Constitution Of India. Under This Provision, The Corporation Is Conferred With The Power To Impose Two Kinds Of Taxes. The First Part [sub-section (1)] Lays Down That The Corporation "shall" Impose A Tax On Trades, Professions, Transfer Of Property, Tax On Vacant Land And So On. The Second Part [sub-section (2)] Lays Down That The Corporation "may" Impose A Tax In Addition To The Taxes Specified In Sub-section (1) For The Purposes Of The Act And Subject To The Provisions Thereof, Including A Tax On Advertisements, As Contemplated By Clause (h) Of Sub-section (2) Of Section 172. Further Reference To Section 172, We Propose To Make A Little Later. In This Backdrop, The Questions That Fall For Our Consideration Are - Whether The Municipal Corporation Is Competent To Impose An Advertisement Tax As Contemplated By Clause (h) Of Sub-section (2) Of Section 172 Of The Act, 1959 By Making Bye-laws In Exercise Of Its Powers Under Section 541 Thereof, And Whether The Procedure For Framing The Bye-laws As Contemplated Under This Act Has Been Followed. In Other Words, Whether The Procedure For Making The Bye-laws In Exercise Of The Powers Under Section 541 Of The Act, 1959 Is Mandatory In Nature And, If So, Whether The Procedure Contemplated Under The Provisions Of The Act And The Relevant Rules Was Followed And, If Not, Whether The Bye-laws Under Challenge Deserve To Be Struck Down As Ultra Vires The Provisions Of This Act.

5. The First Petitioner Is An Association Of Advertisers Of Kanpur. Petitioner Nos 2 To 10 Claim That They Look After The Interest Of The Advertisers Of Kanpur And Represent Them In Various Matters Concerning Imposition And Collection Of Advertisement Tax Before The State Government And Kanpur Nagar Nigam And Its Authorities. They Are Also Advertising Agencies And Carry On Business Of Advertisement Within The Limits Of The Nagar Nigam, Kanpur Nagar By Displaying Hoardings, Kiosks, Glow Signs Etc At The Nagar Nigam Sites And Private Sites In Accordance With The Provisions Of The Act, 1959. Petitioner Nos. 11 To 13 Are Owners Of The Buildings/sites Who Have Let Out Their Land/building To The Petitioner - Advertiser Under Agreements To Install Hoardings And Display Advertisements On Rent. They Are Not Directly Engaged In The Business Of Advertisement.

6. Before The Bye-laws, 2016 Were Framed, The State Government, In Pursuance Of Powers Conferred Under Section 227 Read With Section 192, 219, Sub-section (1) Of Section 540 And Section 550 Of The Act, 1959 And Section 21 Of The Uttar Pradesh General Clauses Act And In Supersession Of All Previous Rules And Orders With Regard To Advertisements, Had Notified The Municipal Corporation (Assessment And Collection Of Tax On Advertisement) Rules, 2009 (for Short, "Rules, 2009") On 27 February 2008. The Rules, 2009 Were Enforced From The Date Of Its Publication In The Official Gazette And Were Extended To Every Municipal Corporation Of Uttar Pradesh. Those Rules Imposed An Advertisement Tax And Also Provided The Mode Of Recovery And Initiation Of Penal Action, In The Event Of Contravention Of Those Rules By The Advertising Agencies As Well As Other Related Persons. A Bunch Of Writ Petitions Were Filed By The Advertising Agencies Challenging The Rules, 2009 Mainly On The Ground That The Rules Were Ultra Vires The Constitutional Mandate Enshrined Under Articles 19(1)(a) And 19(1)(g) Of The Constitution Of India. The Rules Were Also Challenged On The Ground That Those Were Framed In Contravention Of Statutory Provisions Contained In The Act, 1959. While Dealing With Similar Challenge, Two Division Benches Of This Court Expressed Differing Views/opinions And, In View Thereof, A Reference Was Made By A Division Bench Of This Court Vide Order Dated 28 October 2010 Passed In A Bunch Of Writ Petitions The Leading One Of Which Was Purvanchan Advertising Association & Ors Vs State Of U P & Ors, 2011 (2) ADJ 161 (DB) (LB) Expressing Disagreement With The Judgment Of Another Division Bench Whereby A Similar Challenge In A Writ Petition Was Dismissed In Taj Advertising & Ors Vs State Of U P & Ors, [2010 (5) ADJ 272 (DB)]. The Full Bench In Anurag Bansal Vs State Of U P & Ors, [2011 (5) ADJ 879 (LB) (FB)], After Considering The Scheme Of The Act And The Relevant Rules, Upheld The Challenge To The Rules Affirming The View Expressed By The Division Bench In Purvanchan Advertising Association (supra), And Disagreeing With The Opinion Expressed By The Division Bench In Taj Advertising (supra). It Held That The State Government Has Got The Legislative Competence To Frame Rules But Subject To Fulfilment Of Necessary Conditions And Procedures Prescribed Under Chapter IX. It Was Further Held That The Government Could Not Have Framed The Rules, 2009 For All The Municipal Corporations Without Taking Recourse Of Not Only Section 206 Of The Act, 1959 But Also The Other Statutory Provisions Contained In Chapter IX Of The Act, 1959. Thus, The Full Bench Declared The Rules, 2009 As Invalid And Ultra Vires The Act Having Been Framed Without Following The Provisions Of Sections 199 To 203 Of The Act And Other Statutory Provisions Discussed In The Body Of The Judgment. It Was Also Declared That The Provisions Contained In The Rules, 2009, Requiring The Owner Of The Buildings To Face Penal Consequences, As Invalid And Violative Of Section 195 Of The Act.

7. In Anurag Bansal (supra), The Full Bench Considered, In Depth, The Relevant Provisions Of The Act, Rules And The Constitution And, In Paragraphs 67 And 68, Observed Thus:
"67. Accordingly, The Power Conferred On The State Government Under Section 540 Of The Act Is Subject To Sections 172, 192, 193, 194, 195 And 196 And 199 Of The Act. However, The Government Has Right To Frame Model Rules Or Issue Direction Under Section 206 Of The Act To Impose Certain Taxes By Publication In Official Gazette. Thus, The Impugned Rules Seem To Have Been Framed In Contravention Of Statutory Provision Contained In The Act. Hence, The Judgment In Taj Advertising (supra) Seems To Not Lay Down A Correct Law.
68. The Other Aspect Of The Matter Is That The Provisions Contained In The Act With Regard To Imposition Of Tax Seem To Be An Instance Of Conditional Legislation. Consistent With Their Sovereign Character, Legislatures In India Have Been Held To Possess Wide Power Of Delegation. This Power Is, However, Subject To One Important Limitation. The Legislation Cannot Delegate Essential Legislative Functions Which Consist In The Determination Or Choosing Of The Legislative Policy And Of Formally Enacting That Policy Into A Binding Rule Of Conduct Vide In Re: Article 143, Constitution Of India In Vasanlal Maganbhai Sanjawala V. State Of Bombay, AIR 1961 SC 4, P. 7 (para 4). However, The Delegation May Be Valid Only When The Legislative Policy And Guidelines To Implement It Are Adequately Laid Down And The Delegatee Is Only Empowered To Carry Out The Policy Within The Guidelines Laid Down By The Legislature Vide AIR 1972 SC 1917, P. 1922, Tata Iron & Steel Co. V. Workmen, (1972) 1 SCC 383; Gwalior Rayon Mills V. Asstt. Commr., Sales Tax, AIR 1974 SC 1660, P. 1669 (para 22) : (1974) 4 SCC 98; P.N. Kaushal V. Union Of India, AIR 1978 SC 1457, P. 1472 : (1978) 3 SCC 558; Ajoy Kumar Banerjee V. Union Of India, (1984) 3 SCC 127, Pp. 147, 148 : AIR 1984 SC 1130; A.S. Barasuraman V. State Of Tamil Nadu, AIR 1990 SC 40, P. 43 : (1989) Supp (1) SCC 430; Agriculture Market Committee V. Shalimar Chemical Works, AIR 1997 SC 2502, P. 2507 : (1997) 5 SCC 516.

In View Of Above, Delegation Of Unfettered Powers To The Municipal Commissioner To Impose Tax In The Form Of Penalty Seems To Be An Instance Of Excessive Delegation, Contrary To The Statutory Provisions (supra).

7.1 The Observations Made In Paragraphs 82 To 85 Are Also Relevant, Which Read Thus:
"82. Keeping In View The Statutory Provisions Contained In The Act Under Section 172 Read With Section 199 Of The Act And Other Provisions, Ultimate Power To Impose Tax Vests In The Corporation I.e. In Its General Body Or Board Constituted By The Elected Representatives. The Corporation Can Modify The Proposal Of Executive Body Under Section 202 Of The Act Even After Sanction Of Tax Proposal By The State Government. It Shall Be Necessary To Place The Matter For Approval Before The Corporation And The Corporation Shall Take Final Decision By Special Resolution With Regard To Imposition Of Tax. The State Government Has Got Power Under Section 205 Of The Act To Abolish Or Modify The Tax Imposed By The The Corporation. It Does Not Mean That The State Government Lacks Power With Regard To Tax Matter. Power Conferred On The State Government Is General Power Which May Be Exercised Without Affecting The Statutory Power Provided To Corporation To Impose And Regulate Tax Within Its Jurisdiction. The Government May, By Notification, Under Section 206 Of The Act By General Or Special Order Published In Official Gazette, Required Corporations To Impose Any Tax Mentioned In Sub-section (2) Of Section 172 Of The Act, Not Already Imposed At A Specified Rate. The Government May Also Increase, Modify Or Vary The Rate Of Tax In Case The Corporation Fails To Carry Out The Order.

83. The Government May Pass Suitable Order Imposing, Increasing, Modifying, Or Varying The Tax Thereupon And In Such Event The Order Of The State Government Shall Operate As If It Had Been A Resolution Duly Passed By The Corporation.

84. In View Of Above, The Tax Imposed By The State Government Straightaway Without Exercising The Power Conferred By The Act I.e. Issuance Of Direction By Notification In Gazette To Impose Tax Seems To Be An Act Of Exceeding Of Jurisdiction. Impugned Rules Have Been Framed By The Government In Contravention Of Statutory Provisions (supra) Contained In The Act. By Framing The Impugned Rules, The State Government Seems To Have Acted Treating The Corporations Of The State As Its Department Which Seems To Not The Aim And Object Of Article 243 (Q) Of The Constitution.

85. It Is A Recognized Canon Of Construction That An Expression Used In A Rule, Bye-law Or Form Made In Exercise Of A Power Conferred By A Statute Must Unless There Is Anything Repugnant In The Subject Or Context Have The Same Meaning As Is Assigned To It Under The Statute Vide Onkarlal Nandlal V. State Of Rajasthan, (1985) 4 SCC 404. However It Is Subject To Rider That The Rules Should Be Consistent With The Provisions Of The Act, And If A Rule Goes Beyond What The Act Contemplates, The Rule Must Yield To The Act Vide Central Bank Of India V. Their Workmen, AIR 1960 SC 12, P. 23; Babaji Kondaj V. Nasik Merchants Co-operative Bank Ltd., (1960) 1 SCR 200; And Luckwood's Case (1984) 2 SCC 50, P.63 : AIR 1984 SC 192 : (1894) AC 347, P. 360 (HL)."

8. We Have Heard Learned Counsel For The Parties And, With Their Assistance, Gone Through The Entire Material Placed Before Us And Also The Relevant Provisions Of The Act And The Rules. Mr W H Khan, Learned Senior Counsel, At The Outset, Submitted That The Corporation Has No Authority In Law To Impose An Advertisement Tax Specified In Clause (h) Of Sub-section (2) Of Section 172 By Framing Bye-laws. He Submitted That The Procedure Contemplated Under Sections 199 To 206 For Framing Rules To Impose Taxes Under Section 172(2) Being Mandatory In Nature And Since The Corporation Has Not Made Rules By Following The Said Procedure, The Bye-laws Under Which Tax Has Been Imposed Cannot Be Sustained In Law. In Support Of This Proposition, He Placed Reliance Upon The Judgments Of The Supreme Court, To Which We Propose To Make A Reference At An Appropriate Stage In The Latter Part Of This Judgment. He Further Submitted That The Bye-laws As A Whole Under Which The Impugned Advertisement Tax Has Been Imposed Deserve To Be Set Aside Being Ultra Vires The Provisions Of The Act. He Submitted That The Procedure Contemplated Under Sections 542 To 544 For Making Bye-laws Was Admittedly Not Followed By The Corporation. He Submitted That The Draft Bye-laws Were Not Placed Before The Corporation By The Municipal Commissioner As Contemplated By Section 542. He Then Invited Our Attention To Section 543 To Submit That The Objections Were Not Heard By The Corporation But Were Heard And Decided By A Sub-Committee Consisting Of Officers Of The Corporation Which Is Not Permissible In Law. He, Therefore, Submitted That Even The Bye-laws Deserve To Be Set Aside Being Ultra Vires The Mandatory Provisions Of The Act. Learned Senior Counsel For The Petitioner Did Not Make Any Other Submissions Though, In The Writ Petition, He Has Made Reference To Several Rules To Demonstrate On Merits That The Bye-laws Deserve To Be Set Aside. He Did Not Make Any Submissions And Confined His Challenge Only On The Ground As Aforestated.

8.1 On The Other Hand, Mr Anil Tiwari, Learned Counsel Appearing For The Nagar Nigam Fairly Submitted That The Procedure Contemplated Under The Provisions Of Sections 199 To 206 Of The Act, 1959 Was Not Followed For Making Rules To Impose A Tax Specified In Sub-section (2) Of Section 172. He Submitted That For Framing The Bye-laws, The Procedure Contemplated Under This Provision Was Followed And, Therefore, The Corporation Was Justified In Imposing Tax By Framing Bye-laws Under Section 541 Of The Act, 1959. With His Assistance, We Have Gone Through The Counter Affidavit And The Other Material, To Which He Invited Our Attention In Support.

9. We Now Proceed To Look Into The Relevant Provisions Of The Act, 1959. Chapter IX Of The Act, 1959 Dealing With Corporation Taxation Consists Of Sections 172 To 227. Before We Look Into All Relevant Provisions, It Would Be Relevant To Have A Glance At Sections 172 And 192 At This Stage. Sections 172 And 192 Read Thus:
"172. Taxes To Be Imposed Under This Act. - (1) For The Purposes Of This Act And Subject To The Provisions Thereof And Of Article 285 Of The Constitution Of India The Corporation Shall Impose The Following Taxes, Namely,-

(a) Property Taxes;
(b) A Tax On Vehicles Other Than Mechanically Propelled Vehicles, And Other Conveyances Plying For Hire Or Kept Within The City Or On Boats Moored Therein;

(c) A Tax On Helicopters Or Any Other Type Of Planes, When They Land On Or Take Off From The Helipads, Airports, Airstrips Or Places Made For This Purpose Situated Within The Corporation. The Tax So Imposed Shall Be Paid By The Airport Authority Or Person Or Persons, Or Managers, Or Director Or Institution Or Department Or Agency Involved In The Maintenance, Management And Supervision Of The Airport, Airstrip, Helipad Or The Place As The Case May Be;

(d) A Tax On Trades And Professions;
(e) A Tax On Deeds Of Transfer Of Immovable Property Situated Within The City;

(f) A Tax On Vacant Land Situated Within The City;

(2) In Addition To The Taxes Specified In Sub-section (1) The Corporation May For The Purposes Of This Act And Subject To The Provisions Thereof Impose Any Of The Following Taxes, Namely, -

(a) A Tax On Callings And On Holding A Public Or Private Appointment;

(b) [* * *]
(c) [* * *]
(d) [* * *]

(e) A Tax On Dogs Kept Within The City;
(f) A Betterment Tax;
(g) [* * *]
(h) A Tax On Advertisements Not Being Advertisements Published In Newspapers;

(i) A Theatre Tax; And
(j) [* * *]
[* * *]
(3) The Corporation Taxes Shall Be Assessed And Levied In Accordance With The Provisions Of This Act And The Rules And Bye-laws Framed Thereunder.

(4) Nothing In This Section Shall Authorize The Imposition Of Any Tax Which The State Legislature Has No Power To Impose In The State Under The Constitution Of India:

Provided That Where Any Tax Was Being Lawfully Levied In The Area Included In The City Immediately Before The Commencement Of The Constitution Of India Such Tax May Continue To Be Levied And Applied For The Purposes Of This Act Until Provision To The Contrary Is Made By Parliament.

192. Tax On Advertisements. - Where A Corporation Imposes A Tax Mentioned In Clause (h) Of Sub-section (2) Of Section 172, Every Person Who Erects, Exhibits, Fixes Or Retains Upon Or Over Any Land, Building, Wall, Hoarding Or Structure Any Advertisement Or Who Displays Any Advertisement To Public View In Any Manner Whatsoever, In Any Place Whether Public Or Private, Shall Pay On Every Advertisement Which Is So Erected, Exhibited, Fixed, Retained Or Displayed To Public View, A Tax Calculated At Such Rates And In Such Manner And Subject To Such Exemptions As May Be Provided By The Act Or Rules Made Thereunder:

Provided That No Tax Shall Be Levied Under This Section On Any Advertisement Or A Notice-
(a) Of Public Meetings, Or
(b) Of An Election To Any Legislative Body Or The Corporation,

(c) Of A Candidature In Respect Of Such An Election:

Provided Also That No Such Tax Shall Be Levied On Any Advertisement Which Is Not A Sky-sign And Which-
(a) Is Exhibited Within The Window Of Any Building, Or

(b) Relates To The Trade Or Business Carried On Within The Land Or Building Upon Or Over Which Advertisement Is Exhibited, Or To Any Sale Or Letting Of Such Land Or Building Or Any Effects Therein Or To Any Sale, Entertainment Or Meeting To Be Held Upon Or In The Same, Or
(c) Relates To The Name Of The Land Or Building Upon Or Over Which The Advertisement Is Exhibited, Or The Name Of The Owner Or Occupier Of Such Land Or Building, Or

(d) Relates To The Business Of Any Railway Administration, Or

(e) Is Exhibited Within Any Railway Station Or Upon Any Wall Or Other Property Of A Railway Administration Except Any Portion Of The Surface Of Such Wall Or Property Fronting Any Street.

Explanation 1.- The Word "structure" In This Section Shall Include Any Movable Board On Wheels Used As An Advertisement Or An Advertisement Medium.

Explanation 2. - "Public Place" Shall, For The Purpose Of This Section, Mean Any Place Which Is Open To The Use And Enjoyment Of The Public, Whether It Is Actually Used Or Enjoyed By The Public Or Not."


10. As Seen Earlier, Section 172 Which Empowers The Corporation To Impose A Tax, Speaks Of Two Types Of Taxes, Namely Obligatory Taxes, Which The Corporation Must Impose Under Section 172 (1), And Optional Taxes, Which A Corporation May Impose Under Section 172 (2). We Are Concerned With The Optional Taxes Under Section 172 (2) Of The Act, 1959. Sub-section (3) Of Section 172 States That The Corporation Taxes Shall Be Assessed And Levied In Accordance With The Provisions Of The Act, 1959, The Rules And Bye-laws Framed Thereunder. The Provisions Of Sub-section (3), However, Do Not Specify Which Of The Taxes Are To Be Assessed And Levied, In Accordance With Rules And Which Of The Taxes By Bye-laws. It Would, Therefore, Become Necessary To Examine Whether An Advertisement Tax Could Be Assessed And Levied In Accordance With The Bye-laws, 2016. In Other Words, Whether Advertisement Tax Could Be Imposed By Framing Bye-laws.

11. Section 192 States That Where A Corporation Imposes A Tax, Mentioned In Clause (h) Of Sub-section (2) Of Section 172, Every Person Who Erects, Exhibits, Fixes Or Retains Upon Or Over Any Land, Building, Wall, Hoarding Or Structure, Any Advertisement Or Who Displays Any Advertisement To Public View In Any Manner Whatsoever, In Any Place, Whether Public Or Private, Shall Pay, On Every Such Advertisement, A Tax Calculated At Such Rates And In Such Manner And Subject To Such Exemptions As May Be Provided By The Act Or Rules Made Thereunder. The Expression Used In Section 192 "as May Be Provided By The Act Or Rules", If Read With The Expression "in Accordance With The Provisions Of This Act And The Rules And Bye-laws Framed Thereunder" In Sub-section (3) Of Section 172, Makes It Clear That A Tax Should Be Calculated At Such Rates And In Such Manner As May Be Provided By The Act Or Rules Made Thereunder. Insofar As Advertisement Tax Under Section 172 (2) (h) Is Concerned, The Legislature Has Consciously Deleted The Word "bye-laws" From Section 192 Of Act, 1959 Thereby Making Its Intent Clear, That Such A Tax Cannot Be Imposed By Framing Bye-laws. Section 193 Empowers The Municipal Commissioner Not To Grant Any Permission In Case An Advertisement Contravenes Any Bye-law Made By The Corporation. Section 194 Provides That A Permission Granted Under Section 193 Shall Be Void In Case It Contravenes Any Bye-law Made By The Corporation. Section 196 Provides That For Contravention Of Any Provision Contained In The Act, As Provided Under Sections 192 And 193, The Beneficiaries Shall Be Held Responsible For Whom Or For Whose Purpose The Advertisement Has Been Erected.

12. The Legislature Has Delegated Powers To The Corporation In Respect Of Taxes Mentioned In Section 172 Of The Act, 1959. The Delegation Made To The Corporation Under This Provision Is Within The Permissible Limits Of Delegation. The Corporation Is Expected To Impose Taxes As May Be Provided By The Act And Rules Made Thereunder Which Should Be Consistent With The Law Under Which It Is Made And Cannot Go Beyond The Limits Of The Policy And The Standards Laid Down Therein (See: Delhi Municipal Corporation Of Delhi Vs Birla Cotton, Spinning And Weaving Mills, AIR 1968 SC 1232). The Constitution Confers A Power And Imposes A Duty On The Legislature To Make Laws. In Turn, It Is Open To The Legislature To Delegate Its Power To Impose Taxes In Accordance With The Provisions Of The Act And The Rules Framed Thereunder. When Powers Are Delegated By The Legislature To Local Authorities Such As A Corporation, It Is Expected To Work Within The Four Corners Of The Law, Under Which The Power Is Delegated, More Particularly When The Delegate Deals With The Subject-imposition Of Taxes. In Other Words So Long As The Law Provides A Method/procedure By Which The Local Body Should Act, It Cannot Deviate From The Procedure Contemplated Under The Said Legislation And It Is The Bounden Duty Of The Local Body To Observe The Procedure While Exercising The Delegated Powers In Case Of Taxation. It Is Therefore Necessary In The Present Case To Find Out What Is The Procedure Provided For In The Act Either For Framing Rules Or For Framing Bye-laws And Then To Consider The Questions Formulated By Us In The Earlier Part Of The Judgment.

13. The Provisions Of Section 199 To Section 206 Under The Heading Imposition Of Taxes In Chapter IX Of The Act, 1959 Provide The Procedure To Be Adopted For Imposition Of Taxes, For Framing Of Proposal, Subsequent Procedure Which Is To Be Adopted After Framing Of A Proposal, And Also Confers Power On The State Government To Reject, Sanction Or Modify The Proposal. The Power Has Been Conferred On The State Government To Modify, Abolish Or Decline The Proposal Of The Corporation With Regard To Imposition Of Taxes. The State Government Has Also Been Conferred The Power Under Section 206 To Require A Corporation To Impose Taxes. In Short, The Provisions Of Sections 199 To 206 Prescribe The Procedure For Making Rules Contemplated Under Section 540 In Chapter XXIII Of The Act, 1959. At This Stage, It Would Be Relevant To Reproduce Section 540, Which Reads Thus:
"540. Making Of Rules By State Government. - (1) In Addition To The Power Conferred Upon The State Government Under The Preceding Chapters Of This Act To Make Rules The State Government May Make Rules To Carry Out The Purposes Of The Act And May Also Make Model Rules For The Guidance Of A Corporation In Any Matter Connected With The Carrying Out Of The Provisions Of This Or Any Other Enactment.

Explanation.- The Power Conferred By This Sub-section Includes The Power To Make Rules Regulating The Holding Of Meetings Of The Corporation And Its Committees And The Conduct Of Business At Such Meetings Till Bye-laws Are Framed Under The Act For The Purpose.

(2) The Power Of The State Government To Make Rules Under This Act Shall Be Subject To The Condition Of The Rules Being Made After Previous Publication And Of Not Taking Effect Until They Have Been Published In The Official Gazette.

(3) Any Rule Made By The State Government May Be General For All Corporations Or May Be Special For Any One Or More Corporations To Be Specified.

(4) [* * *]"

13.1 This Provision Of The Act, 1959 Provides That The State Government May Frame Rules For The Purposes Of This Act Or May Make Model Rules To Be Adopted By Corporations Of The State. Section 219 In Chapter IX Provides For Regulating By Rules Matters Such As Assessment, Collection And Other Matters As Provided For Under The Said Provision, Whereas Section 227 Confers A Power On The State Government To Make Rules For The Purpose Of Carrying Into Effect The Provisions Of Chapter IX And May Provide For Matters Referred To In Section 219. Section 219 Does Not Speak About Imposition Of Taxes Under Section 172, Including An Advertisement Tax. The Expression 'rules' Used In Section 192 Means The Rules Made By The State Government After Following The Procedure As Contemplated Under Section 199 To 206. The Relevant Sections Under The Heading 'Imposition Of Tax' In Chapter IX Read Thus:
"199. Framing Of Preliminary Proposals.- (1) When A Corporation Desires To Impose A Tax Specified In Sub- Section (2) Of Section 172 It Shall By Resolution Direct The Executive Committee To Frame Proposals Specifying-

(a) The Tax, Being One Of The Taxes Described In Sub-section (2) Of Section 172 Which It Desires To Impose;

(b) The Persons Or Class Of Persons To Be Made Liable, And The Description Of Property Or Other Taxable Thing Or Circumstances In Respect Of Which They Are To Be Made Liable, Except Where And In So Far As Any Class Or Description Is Already Sufficiently Defined Under Clause (a) Or By This Act;

(c) The Amount Or Rate Leviable From Each Such Person Or Class Of Persons;

(d) Any Other Matter Referred To In Section 219 Which The State Government Requires By Rule To Be Specified.

(2) Upon A Resolution Being Passed Under Sub-section (1) The Executive Committee Shall Frame The Proposals And Also Prepare A Draft Of The Rules Which It Desires The State Government To Make In Respect Of The Matters Referred To In Section 219.

(3) The Executive Committee Shall, Thereafter, Publish In The Manner Prescribed By Rule The Proposals Framed Under Sub-section (1) And The Draft Rules Framed Under Sub-section (2) Along With A Notice In The Form To Be Prescribed By Rule.

200. Procedure Subsequent To Framing Proposals.-(1) Any Inhabitant Of The City May, Within Two Weeks From The Publication Of The Said Notice, Submit To The Corporation An Objection In Writing To All Or Any Of The Proposals Framed Under The Preceding Section, And The Corporation Shall Take Any Objection So Submitted Into Consideration And Pass Orders Thereon By Special Resolution.

(2) If The Corporation Decides To Modify The Proposals Of The Executive Committee, Or Any Of Them The Municipal Commissioner Shall Publish The Modified Proposals And, If Necessary, Revise Draft Rules Along With A Notice Indicating That The Proposals And Rules (if Any) Are In Modification Of Proposals And Rules Previously Published For Objection.

(3) Any Objections Which May Be Received To The Modified Proposals Shall Be Dealt With In The Manner Prescribed In Sub-section (1).
(4) When The Corporation Has Finally Settled Its Proposals, The Municipal Commissioner Shall Submit Them Along With The Objections (if Any) Made In Connection Therewith To The State Government.

201. Power Of State Government To Reject, Sanction Or Modify Proposal.- Upon Receipt Of The Proposals And Objection Under The Preceding Section The State Government May Either Refuse To Sanction The Proposals Or Return Them To The Corporation For Further Consideration Or Sanction Them Without Modification Or With Such Modification Not Involving An Increase Of The Amount To Be Imposed, As It Seems Fit.

202. Resolution Of Corporation Directing Imposition Of Taxes.- (1) When The Proposals Have Been Sanctioned By The State Government, The State Government, After Taking Into Consideration The Draft Rules Submitted By The Corporation, Shall Proceed Forthwith To Make Such Rules In Respect Of The Tax As For The Time Being It Considers Necessary.
(2) When The Rules Have Been Made The Order Of Sanction And A Copy Of The Rules Shall Be Sent To The Corporation, And Thereupon The Corporation Shall By Special Resolution Direct The Imposition Of The Tax With Effect From A Date To Be Specified In The Resolution.

203. Imposition.- (1) A Copy Of The Resolution Passed Under Section 202 Shall Be Submitted To The State Government.

(2) Upon Receipt Of The Copy Of The Resolution The State Government Shall Notify In The Official Gazette, The Imposition Of The Tax From The Appointed Date, And The Imposition Of Tax Shall In All Cases Be Subject To The Condition That It Has Been So Notified.

(3) A Notification Of The Imposition Of A Tax Under Sub-section (2) Shall Be Conclusive Proof That The Tax Has Been Imposed In Accordance With The Provisions Of This Act.

204. Procedure For Altering Taxes.- The Procedure For Abolishing A Tax, Or For Altering A Tax In Respect Of The Matters Specified In Clauses (b) And (c) Of Sub-section (1) Of Section 199 Shall, So Far As May Be, Be The Procedure Prescribed By Sections 199 To 202 For The Imposition Of A Tax.

205. Power Of State Government To Remedy Or Abolish Tax.- (1) Whenever It Appears, On Complaint Made Or Otherwise To The State Government, That The Levy Of Any Tax Is Contrary To The Public Interests Or That Any Tax Is Unfair In Its Incidence, The State Government May, After Considering The Explanation Of The Corporation Concerned, By Order Require Such Corporation To Take Measures Within A Time To Be Specified In The Order, For The Removal Of Any Defect Which It Considers To Exist In The Tax Or In The Method Of Assessing Or Collecting The Tax.

(2) Upon The Failure Or Inability Of The Corporation To Comply, To The Satisfaction Of The State Government, With An Order Made Under Sub-section (1), The State Government, May By Notification, Suspend The Levy Of The Tax, Or Of Any Portion Thereof, Until The Defect Is Removed, Or May Abolish Or Reduce The Tax.

206. Power Of State Government To Require Corporation To Impose Taxes.- (1) The State Government May, By General Or Special Order, Published In The Official Gazette, Require A Corporation To Impose Any Tax Mentioned In Sub-section (2) Of Section 172 Not Already Imposed, At Such Rate And Within Such Period As May Be Specified In The Notification, And The Corporation Shall Thereupon Act Accordingly.
(2) The State Government May Require A Corporation To Increase, Modify Or Vary The Rate Of Any Tax Already Imposed And Thereupon The Corporation Shall Increase, Modify Or Vary The Tax As Required.

(3) If The Corporation Fails To Carry Out The Order Passed Under Sub-section (1) Or (2), The State Government May Pass Suitable Order Imposing, Increasing, Modifying Or Varying The Tax And Thereupon The Order Of The State Government Shall Operate As If It Had Been A Resolution Duly Passed By The Corporation."

13.2 Section 199 Provides That When A Corporation Desires To Impose A Tax Specified In Sub-section (2) Of Section 172, Which Also Includes An Advertisement Tax, It Shall, By Resolution, Direct The Executive Committee To Frame Proposals And Also Draft Rules In Respect Thereof. Sub-section (2) Of Section 199 Provides That Upon A Resolution Being Passed Under Sub-section (1), The Executive Committee Is Empowered To Frame The Proposals And Also Prepare A Draft Of The "rules" Which It Desires The State Government To Make In Respect Of The Matters Referred To In Section 219. From A Bare Perusal Of Sub-section (1) And Sub-section (2), It Is Clear That Proposals Specifying The Tax Being One Of The Taxes Prescribed In Sub-section (2) Of Section 172, Which It Desires To Impose, The Rules Are Required To Be Made By The State Government. Sub-section (3) Provides That The Executive Committee Shall Thereafter Publish, In The Manner Prescribed By The Rule, The Proposals Framed Under Sub-section (1) And The Draft Rules Framed Under Sub-section (2) Along With A Notice In The Form To Be Prescribed By The Rules. Sub-section (1) Of Section 200 Provides For The Procedure To Invite Objections And That The Corporation Shall Take The Objections So Submitted Into Consideration And Pass Orders Thereon By Special Resolution. It Is Open To The Corporation To Modify The Proposals Of The Executive Committee And Then Publish The Modified Proposals And, If Necessary, Revise The Draft Rules Along With A Notice Indicating That The Proposals And Rules, If Any, Are In Modification Of The Proposals And Rules Previously Published. If Any Objections Are Received To The Modified Proposals, They Are Required To Be Dealt With In The Manner Prescribed In Sub-section (1) Of Section 200. When The Corporation Finally Settles Its Proposal, The Municipal Commissioner Is Authorised To Submit Them With The Objections, If Any, Made In Connection Therewith To The Sate Government. The State Government Under Section 201 Is Empowered To Either Reject, Sanction Or Modify The Proposals Submitted By The Corporation Or Return Them For Further Consideration Or Sanction Without Modification Or With Such Modification, Not Involving An Increase In The Quantum Of Tax To Be Imposed, As It Deems Fit. Thereafter, When The Proposals Have Been Sanctioned, The State Government, After Taking Into Consideration The Draft Rules Submitted By The Corporation, Shall Proceed Forthwith To Make Such Rules In Respect Of The Tax As, For The Time Being, It Considers Necessary. When The Rules Have Been Made, The Order Of Sanction And A Copy Of The Rules Is Required To Be Sent To The Corporation, And Thereupon The Corporation Under Sub-section (2) Of Section 202 Shall, By Special Resolution, Direct Imposition Of The Tax With Effect From A Date To Be Specified In The Resolution. A Copy Of The Resolution Passed Under Section 202, As Provided For Under Section 203, Shall Be Submitted To The State Government Which, In Turn, Shall Notify The Same In The Official Gazette And The Imposition Of The Tax From The Appointed Date, Shall, In All Cases, Be Subject To The Condition That It Has Been So Notified. A Notification Of The Imposition Of A Tax Under Sub-section (2) Shall Be Conclusive Proof That The Tax Has Been Imposed In Accordance With The Provisions Of This Act. In The Present Matter, We Are Not Concerned With Sections 204, 205 And 206 Though We Have Reproduced Them To Only Indicate The Scheme Of The Provisions Regarding Imposition Of Taxes.

13.3 From The Language Employed In These Provisions, In Particular Sections 199, 200 And Section 202, Which Also Uses The Word "shall", The Intent Of The Legislature Is Clear. By Its Very Nature, It Is Mandatory And It Is Necessary To Be Complied With Strictly Before Any Tax Under Sub-section (2) Of Section 172 Can Be Imposed. In Other Words, The Procedure Specified In These Provisions Is Mandatory Considering Its Language, The Purpose For Which It Has Been Enacted, The Setting In Which It Appears And The Intention Of The Legislature Which, In Our Opinion, Obviously Is That No Tax Should Be Imposed Without Hearing The Taxpayers. In Any Case, There Is No Serious General Inconvenience Or Injustice To Any One If The Procedure Under These Provisions Is Held To Be Mandatory. On The Other Hand, It Will Be Unjust To Taxpayers If They Are Held To Be Directory.
14. At This Stage, Let Us Have A Look Into The Counter Affidavit Filed On Behalf Of The Nagar Nigam To Ascertain The Procedure Followed For Making Bye-laws, 2016. The Respondent - Kanpur Nagar Nigam Through Its Tax Officer Filed A Counter Affidavit Dated 28 March 2017 And Placed The Supporting Material On Record. In The Counter Affidavit, The Detailed Procedure That Was Followed For Framing The Rules, 2016 Has Been Narrated By The Deponent. He Has Stated That Draft Rules Were Prepared Under The Authority Of A Resolution Dated 19 July 2014 Adopted By The Corporation As Provided For Under Section 199 Of The Act, 1959 And Were Placed Before The Executive Committee On 30 August 2014. The Executive Committee Thereafter Invited Objections To The Bye-laws By Issuing An Advertisement In Daily Newspapers Hindustan And Amar Ujala And Also Uploaded The Same On The Website Of The Nagar Nigam. It Is Further Stated That 29 Objections Were Received And To Deal With Those Objections, The Deponent (Tax Officer) Had Constituted A Committee Vide Office Memorandum/order Dated 14 January 2015 Consisting Of The Upper Mukhya Ayukt 'Pratham' As Its President; Mukhya Nagar Lekha Pareekshak, Executive Engineer (Traffic), Chief Tax Assessing Officer As Its Members And The Officer Incharge (Advertisement) As Member Secretary. The Committee In Its Meeting Dated 16 January 2015 Decided To Provide An Opportunity Of Hearing To The Objectors. The Notices Were Accordingly Served To All The Persons Who Raised Objections And After Hearing Them, The Modified Rules Were Placed Before The Executive Committee On 26 February 2015. The Executive Committee Considered The Modified Rules And Resolved To Constitute A Three Member Sub-Committee For Revising The Rates. The Sub- Committee Submitted Its Report To The Executive Committee Which, In Turn, Placed The Modified Rules With The Revised Rates Before The Corporation On 25 March 2015. The Draft Rules Were Accordingly Placed Before The Special Meeting Of The Corporation Which Vide Its Resolution Dated 1 May 2015 Again Decided To Place The Draft Rules Before The Executive Committee. The Executive Committee Thereafter Once Again On 21 May 2015 Considered All The Proposals And Suggestions And Ultimately Decided To Place The Same Before The Corporation. The Corporation Ultimately Accepted The Proposal/draft Rules In Its Meeting Held On 21 November 2015 And Forwarded The Same To The State Government For Seeking Its Approval With Its Letter Dated 18 January 2016. The Affidavit States That The State Government Has Approved The Rules Vide Its Order Dated 28 January 2016.

14.1 We Have Perused Both The Letters Dated 18 January 2016 And 28 January 2016. Both The Letters, As Seen Earlier, Do Not Make Any Reference To 'Rules' As Such And What Was Forwarded By The Corporation To The Government And What Was Considered By The State Government Was The Bye-laws. From A Perusal Of The Letter Dated 28 January 2016, It Appears That The Government Did Not Grant Approval As Such But It Simply Conveyed Its No Objection To The Implementation Of The Impugned Bye-laws In Place Of The 2014 Bye-laws.

14.2 It Is, Thus, Clear From The Sequence Of Events That The Corporation Purportedly Made Bye-laws And Not Rules And Claimed That For Making The Bye-laws, They Followed The Procedure Contemplated Under The Provisions Of Sections 199 To 206. Mr Anil Tiwari, Learned Counsel Appearing For The Nagar Nigam Fairly Admitted That What Was Passed By The Corporation Were Bye Laws As Contemplated Under Section 541 Of The Act, 1959 And Not Rules. This Being So, It Cannot Be Stated That The Procedure Which We Have Held To Be Mandatory For Making Rules To Impose Taxes Specified In Sub-section (2) Of Section 172 Was Followed And No Rules Were Framed For Imposing Advertisement Tax. Even If It Is Assumed That The Procedure Contemplated Under Sections 199 To 206 Could Be Followed Even For Making Bye-laws, Still, It Cannot Be Stated That The Procedure Prescribed Under Sections 199 To 206 Was Followed. It Is A Well Settled Principle Of Law That Where A Power Is Given To Do A Certain Thing In A Certain Manner, The Thing Must Be Done In That Way Or Not At All. (See Dhanajaya Reddy Vs State Of Karnataka, (2001) 4 SCC 9; Commissioner Of Income Tax, Mumbai Vs Anjum M H Ghaswala & Ors, (2002) 1 SCC 633; Captain Sube Singh & Ors Vs Lt Governor Of Delhi & Ors, (2004) 6 SCC 440; Competent Authority Vs Barangore Jute Factory & Ors, (2005) 13 SCC 477, And State Of Jharkhand & Ors Vs Ambay Cements & Anr, (2005) 1 SCC 368. The Provisions Of Sections 199 To 206 Specify/prescribe The Procedure For Framing Rules By The State Government And On The Face Of It, Is Mandatory In Nature And, Therefore, For Imposing Taxes Under Sub-section (2) Of Section 172 Of The Act Are Required To Be Followed Scrupulously. It Is, Thus, Clear That A Failure To Comply With Any Mandatory Provision Prescribing The Procedure For Imposing A Tax Would Vitiate The Tax, Though A Minor And Trivial Deviation From The Procedure To Be Complied With Might Not Be Considered As Fatal. This Principle Is Reiterated By The Supreme Court In Dhrangadhra Chemical Works Ltd Vs State Of Gujarat & Anr, (1973) 2 SCC 345.
15. The Observations Made By The Supreme Court In Municipal Council, Khurai & Anr Vs Kamal Kumar & Anr, AIR 1965 SC 1321 Which Are Also Relevant, Read Thus:
"In View Of The Fact That The Resolution Of March 3, 1963 On The Basis Of Which The List Was Published Had Been Revoked, The Particulars Mentioned In The Second And The Third Of The Above Items Would Necessarily Be Different From Those Which Would Be Arrived At After Taking Into Account The Resolution Of April 28, 1963. Under Art. 265 Of The Constitution No Tax Shall Be Levied Or Collected Except By Authority Of Law. This Clearly Implies That The Procedure For Imposing The Liability To Pay A Tax Has To Be Strictly Complied With. Where It Is Not So Complied With The Liability To Pay The Tax Cannot Be Said To Be According To Law. The Objections Which The Assessees Had Filed In Pursuance Of The Notification Actually Published By The Chief Municipal Officer Were Based Upon The List Published Under S. 136 And Not In Pursuance Of What The Liability Would Be Under The Resolution Of The Municipal Council, Dated April 28, 1963. Therefore, It Cannot He Said That The Opportunity As Contemplated By The Act Was At All Given To The Assessees For Lodging Their Objections As Required By S. 137 Of The Act. Moreover, Mr. Setalvad Was Not Able To Point Out To Us Any Provision Of The Act Or Of The Rules, Except S. 78, Whereunder The Council Could Delegate Its Function Of Hearing And Deciding Objections To A Sub-Committee. Section 78 Reads Thus:

"Any Powers Or Duties Or Executive Functions Which May Be Exercised Or Performed By Or On Behalf Of The Council May, In Accordance With The Rules Made Under This Act, Be Delegated By The Council To The President Or Vice-President Or To The Chairman Of The Standing Or Other Committees, Or To One Or More Stipendiary Or Honorary Officers, But Without Prejudice To Any Powers That May Have Been Conferred On The Chief Municipal Officer By Or Under Section 92."

Even Assuming That Under This Provision The Power Of The Council Of Hearing Objections Could Be Delegated, The Delegation Can Presumably Be Only In Favour Of The Persons Mentioned In S. 78 Quoted Above. It Cannot Be In Favour Of A Sub-Committee Or A Committee. It Is True That The Convener Of The Sub-Committee Appointed By The Council Was The Vice-President But The Delegation Was Not To Him Alone But To The Sub-Committee. The Two Are Not The Same Thing Because While In One Case The Right To Decide An Objection Would Be Solely Exercisable By The Vice-President In The Other It Will Be Exercisable By The Sub-Committee As A Whole. If There Is Unanimity Amongst The Members Of The Sub-Committee No Prejudice May Be Caused. But If The Vice- President Is Of One Opinion And The Other Two Members Are Of A Different Opinion The Decision Of The Sub-Committee Cannot Be Said To Be That Of The Vice-President At All. But To The Contrary."

16. Admittedly, In The Present Case, The Objections Were Not Heard Either By The Executive Committee Or By The Corporation Consisting Of The Elected Members Of The Corporation. As Observed By The Supreme Court In Municipal Council, Khurai (supra), The Corporation Cannot Delegate Its Power To Hear Objections To A Sub-Committee. In Any Case, The Corporation Cannot Impose Taxes Specified In Sub-section (2) Of Section 172 By Framing Bye-laws. The Procedure For Making Rules For Imposing An Advertisement Tax As Contemplated Under This Provision Are Mandatory And, Therefore, The Provisions Imposing A Tax Under The Bye-laws Deserve To Be Declared Ultra Vires The Provisions Of The Act, 1959, In Particular The Provisions Contained In Chapter IX Thereof.

17. The Constitution Bench Of The Supreme Court In R B Sugar Co Vs Rampur Municipality, AIR 1965 SC 895, Considering The Question Whether A Particular Provision Of A Statute Which On The Face Of It Appears Mandatory Inasmuch As It Uses The Word "shall" Or Is Merely Directory, Observed That The Issue Cannot Be Resolved By Laying Down Any General Rule And Depends Upon The Facts Of Each Case And For That Purpose The Object Of The Statute In Making The Provision Is The Determining Factor. The Purpose For Which The Provision Has Been Made And Its Nature, The Intention Of The Legislature In Making The Provision, The Serious General Inconvenience Or Injustice To The Persons Resulting From Whether The Provision Is Read One Way Or The Other, The Relation Of The Particular Provision To Other Provisions Dealing With The Same Subject And Other Considerations Which May Arise On The Facts Of A Particular Case Including The Language Of The Provision, Have All To Be Taken Into Account In Arriving At A Conclusion Whether A Particular Provision Is Mandatory Or Directory. Applying This Principle Laid Down By The Constitution Bench Of The Supreme Court, We Are Satisfied That The Procedure Contemplated Under The Provisions Of Sections 199 To 203 Of The Act, 1959 Is Mandatory In Nature.

18. The Observations Made By The Supreme Court In Visakhapatnam Municipality Vs Kandregula Nukaraju & Ors, (1975) 2 SCC 773 While Considering The Provisions Of The Andhra Pradesh Municipalities Act, 1965, Read Thus:
"11. Imposition Of Certain Kinds Of Taxes Is An Obligatory Function Of Municipal Councils, Under The Act. Section 81(1)(a) Provides That Every Council Shall, By Resolution, Levy A Property Tax, A Profession Tax, A Tax On Carriages And Carts And A Tax On Animals. Under Section 81 (2) A Resolution Of A Council Determining To Levy A Tax Shall Specify The Rate At Which And The Date From Which The Tax Shall Be Levied. The First Proviso To This Sub-section Requires That "before Passing A Resolution Imposing A Tax For The First Time" Or Increasing The Rate Of An Existing Tax, The Council Shall Publish A Notice In The Prescribed Manner Declaring The Requisite Intention. The Council Has Further To Invite Objections And It Is Under An Obligation To Consider The Objections Received Within The Stipulated Time. By Section 83, When A Council Determines, Subject To The Provisions Of Section 81, To Levy Any Tax For The First Time Or At A New Rate, The Secretary Shall Forthwith Publish A Notification In The Prescribed Manner Specifying The Rate At Which, The Date From Which And The Period Of Levy, If Any, For Which, Such Tax Shall Be Levied. Section 83 Is Thus Expressly Subject To Section 81 And Under The Latter Provision No Tax Can Be Imposed "for The First Time" Unless The Procedure Prescribed Therein Is Followed. Since The Procedure Prescribed By The First Proviso To Section 81 (2) Was Not Followed In Regard To The Period Prior To October 1, 1970 The Levy Of Property Tax On The Properties Of Respondents Nos. 1 To 36 For That Period Is Without The Authority Of Law And Consequently Illegal.
12. It Was Urged On Behalf Of The Appellant That The First Proviso To Section 81 (2) Would Apply Only When A Tax Was Imposed "for The First Time" And Since The Appellant Was Levying Properly Tax Long Before Its Imposition On The Properties Of Respondents 1 To 36, It Was Unnecessary To Follow The Procedure Prescribed By The Proviso. It Is Not Possible To Accept This Submission. The Municipality Might Have Been Levying Property Tax Since Long On Properties Situated Within Its Limits But Until April 1, 1966 The Villages Of Ramakrishnapuram And Shriharipuram Were Outside Those Limits. Qua The Areas Newly Included Within The Municipal Limits, The Tax Was Being Imposed For The First Time And Therefore It Was Incumbent On The Municipality To Follow The Procedure Prescribed By The First Proviso To Section 81 (2). Residents And Taxpayers Of Those Areas, Like Respondent Nos. 1 To 36, Never Had An Opportunity To Object To The Imposition Of The Tax And That Valuable Opportunity Cannot Be Denied To Them. It Is Obligatory Upon The Municipality Not Only To Invite Objections To The Proposed Tax But Also To Consider The Objections Received By It Within The Specified Period. Such Period Has To Be Reasonable, Not Being Less Than One Month. The Policy Of The Law Is To Afford To Those Likely To Be Affected By The Imposition Of The Tax A Reasonable Opportunity To Object To The Proposed Levy."

19. We Also Would Like To Look At The Provisions Prescribing The Procedure For Framing Rules Under Section 540 From Another Angle. If The Provisions Of Sections 199, 200, 201 And 203 Are Seen Carefully, It Is Left Completely To The Elected Body Of The Corporation To Make Rules. In Other Words, The Delegation Of Imposition Of Tax And Even To Make A Proposal To The State Government For Framing Rules Has Been Made To An Elected Body Responsible To The People Including Those Who Pay Taxes, May Be Because Councillors Have To Go For Election Every Five Years. This Means That If They Behave Unreasonably And The Inhabitants Of The Area So Consider It, They Can Be Thrown Out At The Ensuing Elections. As A Matter Of Fact, Making The Procedure Mandatory, In Our Opinion, Is A Great Check On The Elected Councillors Acting Unreasonably And Fixing Unreasonable Rates Of Taxation. This Is A Democratic Method Of Bringing To Book The Elected Representatives Who Have Acted Unreasonably In Such Matters [See Municipal Corporation Of Delhi Vs Birla Cotton, Spinning And Weaving Mills, Delhi & Anr, AIR 1968 SC 1232. Also See R B Sugar Co (supra)].

20. In The Present Case, Apart From The Fact That No Rules As Contemplated Under Section 540 Have Been Framed, It Is Also Pertinent To Note That The Objections For Making Even Bye-laws 2016, Were Received And Heard By A Committee Of The Officers Of The Corporation And Not By The Elected Members Of The Corporation Or The Executive Committee Or Any Other Committee Of Councillors. The Supreme Court In Municipal Council, Khurai (supra) Considered This Aspect Of The Matter And Clearly Held That Powers To Hear Objections Cannot Be Delegated To A Sub-Committee.

21. Article 265 Of The Constitution Provides That No Tax Shall Be Levied Or Collected Except By Authority Of Law. This Itself Clearly Implies That The Procedure For Imposing The Liability To Pay A Tax Has To Be Strictly Complied With. Where It Is Not So Complied, The Liability To Pay Tax Cannot Be Said To Be According To Law. That Apart, In The Present Case, No Rules Are Framed For Imposing An Advertisement Tax As Contemplated Under Clause (h) Of Sub-section (2) Of Section 172 And, In The Absence Thereof, The Corporation Has No Powers To Impose A Tax In View Of The Opinion Expressed By Us Earlier In The Foregoing Paragraphs, Under The Bye-laws. We Have, Therefore, No Hesitation In Holding That The Procedure Is Mandatory, Considering Its Language, The Purpose For Which The Provisions Have Been Enacted, The Setting In Which It Appears And The Intention Of The Legislature Which Obviously Is That No Tax Should Be Imposed Without Hearing Taxpayers.

22. Thus, It Is Clear That To Impose A Tax Specified Under Sub-section (2) Of Section 172, The Procedure Contemplated Under Sections 199 To 203 Requires To Be Followed Scrupulously And A Deviation Therefrom Is Not Permissible And If There Is Any, The Rules Framed Would Be Rendered Illegal Or Ultra Vires The Procedure Contemplated Under These Provisions. We Are Not Entering Into Such Controversy Since, In The Present Case, There Are No Rules At All Before Us That Have Been Framed And Approved, Published Or Notified In The Official Gazette By The State Government.

23. We Would Now Look Into The Provisions Which Provide For The Procedure To Be Followed For Making Bye-laws Under Section 541. This Provision Empowers A Corporation To Make Bye-laws With Respect To The Matters Mentioned Therein Including "prohibition And Regulation Of Advertisements". Sections 542, 543 And 544 Provide The Procedure For Making Bye-laws. It Would Be Relevant To Reproduce Those Provisions, Which Read Thus:
"542. Municipal Commissioner To Lay Draft Bye-laws Before The Corporation For Its Consideration.- It Shall Be The Duty Of The Municipal Commissioner From Time To Time To Lay Before The Corporation For Its Consideration A Draft Of Any Bye-law Which He Shall Think Necessary Or Desirable For The Furtherance Of Any Purpose Of This Act.
543. Hearing By Corporation Of Objections To Proposed Bye-laws.- No Bye-law Shall Be Made By The Corporation Unless -

(a) A Notice Of The Intention Of The Corporation To Take Such Bye-law Into Consideration On Or After A Date To Be Specified In The Notice Shall Have Been Given In The Official Gazette And In The Bulletin Of The Corporation, If Any, Before Such Date;

(b) A Printed Copy Of Such Bye-law Shall Have Been Kept At The Chief Corporation Office And Made Available For Public Inspection Free Of Charge By Any Person Desiring To Peruse The Same At Any Reasonable Time From The Date Of The Notice Given Under Clause (a);

(c) Printed Copies Of Such Bye-law Shall Have Been Delivered To Any Person Requiring The Same On Payment Of Such Fee For Each Copy As Shall Be Fixed By The Municipal Commissioner;

(d) All Objections And Suggestions Which May Be Made In Writing By Any Person With Respect Thereto Before The Date Of The Notice Given Under Clause (a) Shall Have Been Considered By The Corporation.

544. Bye-laws To Be Published. - The Bye-laws Made Under Section 541 Shall Be Published In The Official Gazette."


24. Section 542 Provides That The Municipal Commissioner Shall Lay Before The Corporation For Its Consideration A Draft Of Any Bye-law Which He Shall Think Necessary Or Desirable To Be Made For The Furtherance Of Any Purpose Of The Act, 1959. Section 543 Provides The Further Procedure To Make A Bye-law. There Are Four Stages, Namely Clauses (a) To (d) Of Section 543 And Section 544 Which Provides For The Publication Of The Bye-laws In The Official Gazette. A Bare Perusal Of The Two Sets Of Provisions, Namely Sections 199 To 206 And Sections 542 To 544, Clearly Demonstrates The Difference In The Procedure Contemplated Therein. The Framing Of Bye Laws Conceives Of The Following Steps Being Taken Before The Bye Laws Can Take Effect:
A. A Notice Of The Intention Of The Corporation To Take Such Bye Law Into Consideration On Or After A Date To Be Specified In The Notice To Be Published In The Gazette And The Bulletin Of The Corporation;
B. A Printed Copy Of The Bye Laws Being Kept Open To Public Inspection At The Corporation Office;
C. Copies Thereof Being Furnished To Any Person Desirous Thereof And
D. All Objections And Suggestions Having Been Duly Considered By The Corporation.

It Is Only Thereafter That They Come To Be Published In The Gazette. As Would Be Evident From The Above, The Proposal To Adopt And Frame Bye Laws Is Mooted By The Municipal Commissioner Initially. The Corporation Is Then Obliged To Effect Notice Of Its Intention To Take Such Bye Laws Into Consideration On Or After A Date To Be Specified In The Said Notice. Objections And Suggestions Are Invited To The Same And Are To Be Considered By The Corporation. It Is Upon A Culmination Of The Aforesaid Processes That A Valid Bye Law Comes Into Existence And Is Entitled To Be Enforced Under The Provisions Of The Act. From The Narration Of Facts Noticed Above And The Averments Taken In The Counter Affidavit It Is Evident That Even This Procedure Was Not Followed. The Bye Laws Dealing With Subjects Other Than The Levy Of Tax Must Also Fall On This Account.
25. At The Cost Of Repetition, It Needs To Be Noted That Section 541 Of The 1959 Act Does Not Empower The Corporation To Frame Bye Law Levying A Tax. While It Enumerates The Various Subjects In Respect Of Which Bye Laws May Be Framed, None Of Them Relate To The Levy Or Imposition Of A Tax. The Subject "prohibition And Regulation Of Advertisements" As Contained In Sub Clause (48) Cannot Be Read As Conferring An Authority Upon The Corporation To Levy A Tax. It Is Settled Law That The Power To Levy A Tax Must Be Specifically Conferred And Cannot Form Part Of A Power To Regulate Especially When The Issue Is Not One Relating To The Levy Of A Regulatory Fee But A Tax. This Issue Was Eloquently Dealt With By The Constitution Bench In State Of West Bengal Vs. Kesoram Industries Ltd. [(2004) 10 SCC 201] Wherein It Was Observed:-
"General Power Of "regulation And Control" Does Not Include Power Of Taxation

77. One Thing, Which Too Is Well Settled By A Series Of Decisions Is That The Power Of "regulation And Control" Is Separate And Distinct From The Power Of Taxation. How This Principle Has Been Applied In Myriad Situations May Be Illustratively Noticed.

98. We Are Clear In Our Minds That A Power To Levy Tax Or Fee Cannot Be Spelled Out From Sections 13, 18 And 25 Of The Act 67 Of 1957. It Is Well Settled That Power To Tax Cannot Be Inferred By Implication; There Must Be A Charging Section Specifically Empowering The State To Levy Tax. Section 18(2)(q) Speaks Of Fee To Be Paid On Applications For Revision And Not On Minerals, Mineral Rights Or Mining Land. Section 25 Speaks Of "recovery Of Tax And Fee" Amongst Others. Two Observations Are Spontaneous. Firstly, A Provision For Recovery, Being A Machinery Provision, Cannot Be Read As Empowering The Levy Of Tax Or Fee. Secondly, It Speaks Of Tax Or Fee Being Due To The Government Without Defining The Same And Without Qualifying The Word "Government" With Central Or State, A Perusal Of Several Provisions Of The Act And In Particular Sections 9A, 15, 15(1-A)(a) And (g), 15(3), 17(3), 21(5) And 25 Goes To Show That The Power Of Recovery Is Invariably Given To The State Government And Obviously The Word "Government" In Section 25 Refers To The State Government, Which Only Is Empowered To Recover The Sums Due As Arrears Of Land Revenue.

Power To Tax Must Be Express, Else No Power To Tax
104. There Is Nothing Like An Implied Power To Tax. The Source Of Power Which Does Not Specifically Speak Of Taxation Cannot Be So Interpreted By Expanding Its Width As To Include Therein The Power To Tax By Implication Or By Necessary Inference. States Cooley In Taxation (Vol. 1, 4th Edn.):

"There Is No Such Thing As Taxation By Implication, The Burden Is Always Upon The Taxing Authority To Point To The Act Of Assembly Which Authorises The Imposition Of The Tax Claimed."

107. Power To Tax Is Not An Incidental Power. According To Seervai, Although Legislative Power Includes All Incidental And Subsidiary Power, The Power To Impose A Tax Is Not Such A Power Under Our Constitution. It Is For This Reason That It Was Held That The Power To Legislate In Respect Of Inter-State Trade And Commerce (Entry 42, List I, Schedule 7) Did Not Carry With It The Power To Tax The Sale Of Goods In Inter-State Trade And Commerce Before The Insertion Of Entry 92-A In List I And Such Power Belonged To The States Under Entry 54 In List II. Entry 97 In List I Also Militated Against The Contention That The Power To Tax Is An Incidental Power Under Our Constitution (See Seervai, H.M.: Constitutional Law Of India, 4th/Sliver Jubilee Edn., Vol. 3, Para 22.20)."

(emphasis Supplied)

26. In The Result, We Find Ourselves Unable To Sustain The Impugned Bye-laws, 2016. We Accordingly Hold And Declare That The Impugned Bye-laws, 2016, Insofar As They Impose An Advertisement Tax, Are Ultra Vires The Provisions Of The Act, 1959 Having Not Been Framed In Accordance With The Provisions Contained In Chapter IX Thereof. The Impugned Bye-laws, 2016 Are Even Otherwise Invalid And Ultra Vires The Act, 1959 Having Been Framed Without Following The Procedure Contemplated Under Sections 542 To 545. The Writ Petition Consequently Stands Allowed In Terms Of This Judgment.

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