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2023 (1) TMI 2 - HC - Indian LawsLevy of tax on advertisement - Constitutional Validity of Section 103(b)(vi), 134 containing the words "after levy of tax under Section 134 has been determined by the Corporation" and in Sections 135(1), 135(2)(ii), 135(3), 139 and Schedule (viii) to the Municipal Corporations Act, 1976 along with bye laws framed by Municipal Corporation pursuant to the aforesaid provisions - Whether impugned provisions namely Section 94(1)(b)(xiii) including the explanation thereto, Section 94(1-B) containing the words "after the levy of tax under Section 94 has been determined by Municipal council" in Sections 133(1), 133(2)(ii), 133(3), proviso (iv) to Section 142, Section 324(1)(ff) and Schedule 7 to the Karnataka Municipalities Act, 1964 along with rules/bye laws framed by Municipalities in the State pursuant to the said provisions are unconstitutional and ultra vires the constitution and require to be quashed? HELD THAT:- As could be seen from the provisions under KMC Act, 1976 and KM Act, 1964 power has been entrusted to the Corporation to levy tax on advertisement and the power to determine the rate of tax has been vested with the Corporation and the Municipal Council respectively. Thus, hitherto power to levy and demand the tax on advertisement was traceable to the aforesaid provisions of the Acts. In turn the legislative competence of the State was traceable to entry No.55 of List II of Schedule VIII to the Constitution of India which conferred power on the State to make laws with respect to advertisement tax - the Parliament brought 101st amendment to the Constitution by way of constitution (one hundred and one first amendment) Act, 2016 by which entry No.55 of List II of Schedule VIII to the Constitution has been omitted. Consequently the State has no power to make any laws with respect to advertisement tax. The amendment to the Constitution omitting entry No.55 and consequent promulgation of the Goods and Services Tax (compensation to States) Act, 2017 the power of the State Legislature to levy tax on advertisement is withdrawn. It is appropriate to refer to the Judgment of the Constitutional Bench of the Apex Court in the case of KOLUTHARA EXPORTS LTD. VERSUS STATE OF KERALA & ORS. [2002 (2) TMI 1314 - SUPREME COURT] wherein the Apex Court dealing with Judgment of the Division Bench of High Court of Kerala (Ernakulam) upholding the Constitutional Validity of Section 4(2) read with Section 2(d) of Kerala Fishermen Welfare Fund Act, 1985(Act 30 of 1985) (As amended by Act 15 of 1987) held that When any statute of a State or any provision therein is questioned on the ground of lack of legislative competence, the State cannot claim legitimacy for enacting the impugned provisions with reference to the provisions in part IV of the Constitution; the Legislative competency must be demonstrated with reference to one or more of the entries in List II and III of the Seventh Schedule of the Constitution. Thus, it is clear that on and after implementation of Goods and Service Tax Act, 2017 consequent upon the 101st amendment to the Constitution certain taxes including the taxes and advertisement which were levied by the respective States and the Union are subsumed into goods and service tax. The authority to levy tax which was available under entry No.55 List II (State List) of the Seventh Schedule to the Constitution has been omitted. Consequently, the Municipal Corporations and the Municipalities which are the inferior corporate bodies of the State do not have power to levy and collect the tax on advertisement. As rightly contended by learned Senior counsel for the petitioner that amendment to the Karnataka Gram Panchayath and Panchayath Swaraj Act has already been made vide Karnataka Gram Swaraj at Panchayath Raj (Amendment) Act 2017 as seen in the notification dated 12.07.2017 as per Annexure-R whereby provisions similar to Section 94 of KM Act and 103 of KMC Act that existed in Section 199(3) of the Karnataka Gram Swaraj and Panchayath Raj act, providing for levy of tax and advertisement the Panchayath has been omitted in view of omission of entry No.55 in List II of Schedule VII of the Constitution - The amendment made by the State Government to the Panchayath Raj Act has, as contended by the petitioner has lead to anomaly wherein the tax on advertisement is being levied and collected within the limits of Municipal corporation and Municipalities while no such levy is being made within the limits of Panchayaths. This Court is of the considered view that the petitioner has made out a case for grant of relief as sought for - Petition allowed.
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