Kolkata Municipal Corporation & Anr. vs Vodafone East Limited & Ors.

The Court : By consent of the parties the appeal is treated as on the day’s list and taken up for consideration along with the application for stay.

The instant appeal arises out of a judgment and order dated 10th February, 2016 passed by a learned Single Judge in WP 183 of 2003 (Vodafone East

Ltd. Vs. K. M. C.). By the said order the learned Single Judge proceeded to dispose of the writ petition as follows :

“Imposition of Advertisement Act under Section 204 of the Kolkata Municipal Corporation Act, 1980 by the Kolkata Municipal Authorities on the

petitioner is under challenge. Referring to AIR 2007 Kolkata 136 (Calcutta Soft Drinks Pvt. Ltd. v. Calcutta Municipal Corporation & Ors.), it is

submitted that no advertisement tax is payable by the petitioner as the advertisement on the building and land bearing such advertisement has a

relationship with the business of the petitioner. The Corporation has realised advertisement tax from the petitioner.

The petitioner is entitled to the refund of the same. The Corporation Authorities are represented. On behalf of the Corporation Authorities learned

Additional Advocate General submits that, the non-obstante clause in sub-Section 2 of Section 204 of the Kolkata Municipal Corporation Act, 1980

ought not to be interpreted in a manner so as to render the sub section (1) thereof nugatory. In support of such contention he relies upon 2006 volume

10 SCC 452 (ICICI Bank Limited versus SIDCO Leathers Ltd. & Ors.) and 2009 volume 4 SCC 94 (Central Bank of India versus State of Kerala

and Others).

I have considered the rival contentions of the parties and the materials made available on record. The fact situation of the petition is similar to that of

Calcutta Soft Drinks (Supra). Calcutta Soft Drinks (Supra) arose out of differences of opinion between two Hon’ble Judges of a Division Bench.

There it has been held as follows :-

“34. In view of what have been stated above I am of the view that if the advertisement on a building or land has a relationship with the business

which is carried on within such land or building, no advertisement-tax is payable and it is of no consequence that the manufacturer of the item who

actually has advertised for the goods has no trade-licence for carrying on business over the said premises.â€​

Calcutta Soft Drinks (Supra) is a binding precedent on me. In ICICI Bank (Supra) the interpretation of Section 529 and 529A Companies Act, 1956

was involved. In Central Bank Of India (Supra) the provisions of Section 38-C of the Bombay Sales Tax Act, 1959 and Section 26-B of Kerala

General Sales Tax Act, 1963 and other similar provisions of other State Legislations with regard to the first charge over a property of a defaulting

assessee vis-a-vis the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and Securitisation and Reconstruction of

Financial Assets and Enforcement of Security Interest Act, 2002 was in issue.

In view of the binding precedent of Calcutta Soft Drinks (Supra) I allow the present writ petition. The petitioner did not press the first relief in the writ

petition with regard to the declaration of the various provisions of the Kolkata Municipal Corporation Act, 1980 as altra vires the Constitution of India.

Since the Corporation Authorities are not entitled to charge advertisement tax, any payment made by the petitioner ought to be refunded by the

Corporation Authorities. The Corporation Authorities will take appropriate steps with regard thereto in accordance with law. WP No. 183 of 2003 is

allowed to the extent indicated above. No order as to costs.â€​

The appellants before us are the Kolkata Municipal Corporation and its Municipal Commissioner. The only issue sought to be raised before us on

behalf of the appellants is that the judgment referred to and relied upon by the learned Single Judge in the case of Calcutta Soft Drinks is a subject

matter pending consideration before the Hon’ble Supreme Court. As such, the issue has not reached its finality. On being asked, the learned

advocate representing the appellants, however, could not produce any order of stay passed by the Supreme Court in that matter.

We are of the view that so long as the order of the High Court rendered in the case of Calcutta Soft Drinks remains valid and subsisting, its ratio

applies fairly and squarely as a binding precedent in respect of similar matters. As such, we do not notice any palpable infirmity or perversity of

reasoning in respect of the impugned order, which would warrant any interference in an Intra-Court Mandamus Appeal.

However, we make it clear that in the event the judgment of the High Court in Calcutta Soft Drinks Case is ultimately set aside by the Hon’ble

Supreme Court, its consequential effect, needless to mention, will finally determine the rights of the writ petitioner/respondent accordingly. The appeal

and the application for stay stand disposed of accordingly.