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2016 (9) TMI 715 - ALLAHABAD HIGH COURT

2016 (9) TMI 715 - ALLAHABAD HIGH COURT - TMI - Demand of advertisement tax - whether Rules, 2005 after having been superseded and repealed by Rules, 2009 would not revive after Rules, 2009 are declared ultra vires and, therefore, any demand of advertisement tax for the period of 2010-11 and subsequent thereto would be illegal and without jurisdiction? - Held that:- The power of State Government to abolish or modify a tax imposed by Government has validly been recognized but advertisement tax im .....

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and orders in respect of advertisement tax were superseded. New set of Rules, which have been struck down, would not render revival of supersession already done by Rule framing authority and that be so in our view Rules, 2005 shall not revive. - Sri Rahul Sahai, learned counsel appearing for respondent-Nagar Nigam, when confronted with aforesaid authorities, could not place any authority before us so as to pursue to take a different view in the matter.The authorities, therefore, committed a .....

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gned in this writ petition, which are quashed by this judgment. If any, amount has been deposited by petitioners pursuant to impugned orders or realized by respondents by coercive method or otherwise, same shall be refunded to petitioners without any further delay. However, we make it clear that this judgment shall not preclude Competent Rule making authority from promulgating new set of rules in accordance with law. - WRIT TAX No. - 622 of 2015 - Dated:- 24-8-2016 - Hon'ble Sudhir Agarwal A .....

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TAX No. - 172 of 2016, WRIT TAX No. - 173 of 2016 ORDER 1. Heard Sri S.D. Singh, learned Senior Advocate for petitioners and learned Standing Counsel as well as Sri Rahul Sahai, Advocate for respondents. 2. All these writ petitions involve common questions of law and fact and, therefore, as agreed by learned counsel for the parties, have been heard together and are being decided by this common judgment. 3. Demand of advertisement tax in accordance with Agra Nagar Nigam (Samachar Patro Me Prakash .....

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on service. They are Licensed Service Providers in State of U.P. by virtue of licence granted by Government of India, Ministry of Communications and IT, Department of Telecommunication under the provisions of Indian Telegraph Act, 1885 (hereinafter referred to as the "Act, 1885"). They have been authorized to set up and operate "Unified Access Services" (hereinafter referred to as the "UAS") in the licensed service area. 5. Nagar Nigam, Agra (hereinafter referred to .....

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a new set of Rules, namely, U.P. Municipal Corporation (Assessment and Collection of Tax On Advertisement) Rules, 2009 (hereinafter referred to as the "Rules, 2009") have been framed applicable to every Municipal Corporation in State of U.P. and aforesaid Rules clearly provide that same are being promulgated in supersession of all the previous rules and orders issued in this behalf. These Rules were published in notification dated 24.12.2009 and came into effect from the date of their .....

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aken by petitioners is that Rules, 2009 were challenged being ultra vires of Act, 1959 as also Article 19(1)(a) and 19(1)(g) of the Constitution in various writ petitions led by Misc. Bench No. 3336 of 2010 (Anurag Bansal and others Vs. State of U.P. and others). A Full Bench of this Court in its judgment reported in 2011(5) ADJ 879 has upheld the contention and declares Rules, 2009 as ultra vires of Act, 1959 and has struck down the same. 8. Petitioners thus contended that since Rules, 2009 hav .....

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re liable to pay advertisement tax accordingly. 10. The only question which has been argued before us is that, Rules, 2005 after having been superseded and repealed by Rules, 2009 would not revive after Rules, 2009 are declared ultra vires and, therefore, any demand of advertisement tax for the period of 2010-11 and subsequent thereto would be illegal and without jurisdiction. 11. The stand of respondents in counter affidavit is very clear that after Rules, 2009 have been declared ultra vires, s .....

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here is no infirmity in the impugned proceedings." (emphasis added) 12. Basic facts are not disputed. Earlier, rules framed were applicable only to NNA for levy of advertisement tax. Subsequently State Government framed a general set of Rules applicable to all Municipal Corporations governed by Act, 1959. Rules, 2009 were published in supersession of all previous rules and orders issued in this behalf. Operative part of Rules, 2009, reads as under: "In exercise of powers under section .....

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27, 2008 required by sub-section (2) of section 540 of the said Act of 1959, is pleased to make the following rules:" (emphasis added) 13. Rules, 2009 have been promulgated in a way that firstly rule framing authority has declared that notification dated 24.10.2009 is being issued in exercise of powers under Section 227 read with 192, 219, 540(1) and 550 of Act, 1959 and Section 21 of U.P. General Clauses Act, 1904 (hereinafter referred to as the "Act, 1904") and in supersession .....

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550 of Act, 1959 read with Rule 21 of Act, 1904 and by subsequent part, Rules, 2009 have been promulgated. 14. It is not the case of respondents that power exercised by Rule framing authority with regard to supersession of earlier rules was bad or even this part has been nullified by any subsequent judgment of this Court. 15. Earlier validity of Rules, 2009 was upheld in Taj Advertising and others Vs. State of U.P. and others, 2010(4) ALJ 293. In another set of petitions filed at Lucknow Bench l .....

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of the Act? (3)Whether delegation of power could be made under the Rules framed by the State Government to the Central Government? (4)Whether the licence for putting hoardings/advertisements on public properties, owned by private owners, can be given by public auction ? (5)Whether the impugned rules are ultra vires to the provisions of Articles 14, 19(1) (a) and 19(1)(g) of the Constitution of India? (6)Whether the Rules, 2009 are invalid, they having been framed without following the provisions .....

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o putting of hoardings and as given under the Rules, 2009) on private properties, in special areas etc. and in 'no hoarding zones' into the sole authority of the Municipal Commissioner, that too with no guidelines and without providing any superior forum of appeal/revision against his decision, suffers from the vice of excessive delegation and in any case absolutely arbitrary and unreasonable?" 16. Full Bench, however, decided to deliberate only questions no. 1, 2, 6 and 7 and answe .....

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out following the provisions of Sections 199 to 203 of the Act and other statutory provisions discussed in the body of judgment (supra). (7) Provision contained in the Rule 2009 requiring the owner of building to face penal consequences is invalid and violative of Section 195 of the Act." 17. Now the question is, "whether in view of aforesaid decision can it be said that Rules, 2005, stood superseded by Rules, 2009 would revive after striking down of Rules, 2009 by Full Bench in Anurag .....

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gislative competence or violation of constitutional provisions. Scope of challenge to delegated legislation namely, rules, regulations- bye-laws etc is much wider. Validity thereof can also be challenged on the ground that same are inconsistent with the provisions of Statute under which they have been framed or that mandatory procedure prescribed in statute for making delegated legislation has not been followed. 19. Effect of declaring any legislation as ultra vires or bad for any other reason i .....

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titution Bench recently has expressed this view in Supreme Court Advocates-on-Record Association and another Vs. Union of India, 2016(5) SCC 1. In the majority judgment rendered by Hon'ble Jagdish Singh Khehar, J. (for Himself and on behalf of Justice Madan B. Lokur, Justice Kurian Joseph and Justice Adarsh Kumar Goel), Court considered this aspect in paras 408 to 415 holding, when amended provision postulating a different provision is set aside, the original process of selection and appoint .....

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law is on a field not within the domain of the legislature, it is absolutely null and void, and a subsequent cession of that field to the legislature will not have the effect to breathing life into what was a still-born piece of legislation and a fresh legislation on the subject would be requisite. But if the law is in respect of a matter assigned to the legislature but its provisions disregard constitutional prohibitions, though the law would be unenforceable by reason of those prohibitions, w .....

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ice on certain routes to the exclusion of others. Article 19(1)(g) conferred power upon a citizen to carry on business and there was no power under Constitution available to State to deny such fundamental right to a citizen by engaging itself to carry on any trade or business. An amendment was made vide Constitution (First) Amendment Act, 1951. Thereunder State became entitled to carry on any trade or business either by itself or through corporation owned or controlled by it to the exclusion of .....

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amendment of Constitution removing constitutional objection and must be re-enacted. Hon'ble Mukherjea, J. speaking for Court, referred to Prof. Cooley in his work on "Constitutional Limitations" (Vol. I page 384) and said: "a statute void for unconstitutionality is dead and cannot be vitalised by a subsequent amendment of the Constitution removing the constitutional objection but must be re-enacted". 22. Court not only quoted aforesaid passage from Prof. Cooley but also .....

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dra Lal Jaini Vs. State of U.P. AIR 1963 SC 1019 reiterated the above view in para 22 of report. It says: "...it must be held that unlike a law covered by Art. 13(1) which was valid when made, the law made in contravention of the prohibition contained in Art. 13(2) is a still-born law either wholly or partially depending upon the extent of the contravention. Such a law is dead from the beginning and there can be no question of its revival under the doctrine of eclipse." (emphasis added .....

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. Rules, 2009 have not been struck down for want of legislative competence but they have been held invalid for the reason that mandatory procedure prescribed in statute has not been followed and, therefore, here doctrine of "still-born" and consequences if such a law is made, would not apply but here is a case where a subordinate legislation has been found invalid for want of observance of certain mandatory procedure prescribed in statute. In these circumstances, it has to be examined .....

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natory and also contravenes Article 304-A of the Constitution. An argument was raised that if amended rules is invalid old Rule 16 would revive. The Court in para 24 of the judgment said: "24. It has been urged for the respondent that if the impugned rule be held to be invalid, old r. 16 gets revived and that the tax assessed on the petitioner will be good. We do not agree. Once the old rule has been substituted by the new rule, it ceases to exist and it does not automatically get revived w .....

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if suitable reserved category candidates are not available in one recruitment the unfilled vacancies shall be carried forward in next recruitment but still some vacancies remained unfilled they would be treated unreserved. This carry forward rule was amended by Government in 1955 to further carry forward unfilled vacancies without any provision for lapse, i.e., for treating vacancies unreserved. Result of substitution of provision by 1955 Rule was that paras 5(3) and 5(4) of 1952 Rule cease to e .....

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that if 1952 Carry Forward Rule still continue, that is also arbitrary. Court considered three questions as under: (1) Whether Carry Forward Rule of 1952 can still be said to exist? (2) Whether Carry Forward Rule of 1952 if it is still exist is bad for the same reason as the Carry Forward Rule of 1955 in the light of judgment in T. Devadasan (supra). (3) Whether petitioner-B.N. Tiwari would be entitled to appointment even if Carry Forward Rule, 1952 does not exist? 30. Answering first question, .....

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y ,Ceased 'to exist because its place was taken by the carry forward rule of 1955. Thus by promulgating the new carry forward rule in 1915, the government of India itself cancelled the carry forward rule,of 1952. When therefore this Court struck down the carry forward rule as modified in 1955 that did not mean that the carry forward rule of 1952 which had already ceased to exist, because the Government of India itself cancelled it and had substituted a modified rule in 1955 in its place, cou .....

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to answer. We are not concerned with third question and the issue raised in these writ petitions, in our view, is covered by the answer given by Supreme Court to first question in B.N. Tiwari (supra). 32. Again a similar question arose in Indian Express Newspaper (Bom) Pvt. Ltd. and others vs. Union of India and others, 1986(159) ITC 856. Government of India had issued a notification dated 15.07.1977 under which total exemption was granted. It was substituted by notification dated 01.03.1981. Su .....

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ers, 2002(2) SCC 645. Therein Rule 49 of U.P. Sugarcane (Regulation of Supply and Purchase) Rules, 1954 was substituted by U.P. Sugarcane (Regulation of Supply and Purchase) (Amendment) Rules, 1992. Rule 1(2) of notification dated 24.04.1992 which caused said amendment clearly provides that amendment Rules, 1992 shall remain in force w.e.f. 01.10.1991 to 30.09.1992. Therefore, effect of amendment of rules was only one year. However, Rule 2 whereby amendment was caused, said that for the rules se .....

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rule cease to be operative and it was answered in negative. However, in para 15 of judgment, Court said, that it would have been a different case where a subsequent law which modified earlier low held to be void. In such case, earlier law shall be deemed to have never been modified or repealed and, therefore, continued to be in force. Where it is found that legislature lacked competence to enact a law, still amends existing law and subsequently it is found that legislature or the authority was d .....

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session by legislature the annulment or concealment by legislature itself and if that be so earlier provision would not revive. In para 412.4 after referring judgments in Koteswar Vittal Kamath Vs. K. Rangappa Baliga and Co., 1969(1) SCC 255, Court observed, that, it is true that if amendment to an erstwhile legislative enactment, envisages substitution of an existing provision, the process of substitution must be deemed to comprise of two steps. The first step would envisage that old rule would .....

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al provisions of Constitution. 35. In para 412.7 of judgment, Court referred to its decision in Indian Express Newspaper (Bom) Pvt. Ltd. (supra) and said that legal effect of an earlier law, later law enacted in its place was declared invalid would not depend merely upon the use of words like "substitution" or "supersession". It would depend on totality of circumstances and context upon which provision was couched. Court also referred to the judgment in Bhagat Ram Sharma vs. .....

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acco Co. Ltd. vs. CTO, 1975(3) SCC 512 the effect and meaning of repeal was considered. Court said that repeal connotes abrogation or obliteration of one statute by another from statute book completely as if it had never been passed. When an Act is repealed, it must be considered (except as to transactions past and closed) as if it had never existed. It said: "Repeal is not a matter of mere from but one of substance, depending upon the intention of the Legislature. If the intention, indicat .....

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rincipal object of a repealing and amending Act is to excise dead matter, prune off superfluities and reject clearly inconsistent enactments. 38. If we examine the matter in present cases in the light of aforesaid discussion, we find that Rules, 2009 made two declarations. One is an independent declaration that existing rules and orders are superseded and second is an enactment of a set of rules by Rule framing authority. 39. Rules, 2009 dealing with liability and procedure of imposition of adve .....

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e 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. 86. ...government seems to have exceeded its jurisdiction while framing the rules straightway without following the procedure provided by the Act." 40. Simultaneously in para 82 of judgment, Court further said: "82. ..... State Government has got power under Section 205 of the Act to abolish or modify t .....

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(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." 41. In para 83, Court said: "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." 42. Thus the power of State .....

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