Patna Municipal Corporation & Ors Vs Tribro Ad Bureau & Ors. (Supreme Court of India)
Conclusion: Imposition of royalty could not be equated with imposition of tax/levy. Even otherwise, the law was no longer res integra that conduct of the parties and acquiescence would preclude a party from turning around and assailing a decision acquiesced to, except where there was an inherent lack of jurisdiction, or the exercise of authority was perverse or malafide, in law or in fact.
Held: Municipal Commissioner convened a meeting with advertising agencies. It was resolved that agencies must submit details of their advertisements to the authorised officer, and the corporation would charge a royalty of ₹1 per square foot per year for hoardings displayed on land under its jurisdiction. The corporation introduced new royalty rates for advertisements, setting different rates for various types of hoardings. For the respondent, the rate was increased to ₹10 per square foot per year, effective from November 2, 2007. The corporation passed a resolution to cancel the registrations of advertising agencies that defaulted on enhanced royalty payments, after discovering illegal hoardings and unpaid dues. Demands for royalty, fee, or tax were issued to the advertising companies based on these resolutions. The demand and the office order of November 2, 2007, were challenged in a writ petition before the Patna High Court. The Single Judge quashed the penalty demands and directed the corporation to accept payments according to the 2007 rates it had set. The corporation issued a demand notice to the respondent for ₹21,98,000 as royalty, fee, or tax, in line with the Single Bench judgement. The respondent contested the calculation and requested a corrected notice. Without a response, the respondent continued to pay self-assessed royalty at ₹1 per square foot. The core question before the Division Bench was whether the demand was by way of a tax/levy or simply in the nature of royalty for permission for advertising through hoardings within the limits of the Corporation. The Court would clarify that there could be no issue with the proposition of law as stands settled by the various earlier decisions of this Court with regard to the power and modality of charging of tax/levy, which obviously had to be done in terms of the power conferred under/by authority by law. In the present case, however, it could not be lost sight of, as also elucidated in Indsil Hydro Power and Manganese Limited, especially after considering a host of precedents, that the imposition of royalty could not be equated with imposition of tax/levy. Even otherwise, the law was no longer res integra that conduct of the parties and acquiescence would preclude a party from turning around and assailing a decision acquiesced to, except where there was an inherent lack of jurisdiction, or the exercise of authority was perverse or malafide, in law or in fact. In the instant factual setting, the advertising companies/respective Respondents No.1 had agreed in the year 2005 to pay a royalty of Re.1 per square foot to the Corporation for putting up hoardings/advertisements. Only 2 advertising companies, in praesenti, moved the High Court by way of letters patent appeals, whereas, it was informed, a majority of the advertising companies complied with making payment(s) @ Rs.10 per square foot subsequent to the decision of the Corporation dated 02.11.2007. It was also worthwhile to note that the initial rate viz. Re.1 per square foot of royalty in the year 2005 was fixed after a Meeting with all the stakeholders on 29.08.2005. The advertising companies concerned had agreed to pay Re.1 per square foot royalty per year on such hoarding. The same was merely revised on 02.11.2007 i.e., after a period of over 2 years. In order to balance equities, the Court would indicate that the enhanced rate of Rs.10 per square foot would be payable by the respective Respondents No.1/advertising companies and other similarly-situated persons in terms of the Resolution of the Corporation from the date the same was made public/communicated to the concerned parties, whichever was later, with simple interest at the rate of 6% per annum. The Corporation was directed to furnish computation of amounts due to the parties concerned within 4 weeks. Payments be made within 16 weeks thereafter by the parties concerned, failing which they should carry interest @ 10% per annum and be recoverable as arrears under the Bihar and Orissa Public Demands Recovery Act, 1914.
