Bombay High Court Backs Municipal Power to Charge Hoarding Fees; GST Has No Impact
Bombay High Court Backs Municipal Power to Charge Hoarding Fees; GST Has No Impact
A batch of writ petitions led by Manoj Madhav Limaye & Ors. questioned the authority of Municipal Corporations, primarily the Pune Municipal Corporation, to levy and enhance licence fees for permissions relating to sky-signs and hoardings under Sections 244 and 386(2) of the Maharashtra Municipal Corporation Act, 1949.
The petitioners argued that the levy was, in substance, an illegal “tax” imposed without legislative competence and not a genuine fee linked to regulation. The challenge was founded on constitutional changes following the 101st Constitutional Amendment and the introduction of GST, with petitioners asserting that all forms of advertisement tax stood abolished.
Issue Raised: Whether the licence fee levied by Municipal Corporations on sky-signs and hoardings constitutes an impermissible “tax” extinguished post-GST, or a valid regulatory fee within municipal powers.
GST Demand Sent Back to Statutory Appeal as Supreme Court Weighs Validity of Limitation Extensions
HC Held: The High Court dismissed the petitions in their entirety, holding that the impugned levy is a regulatory fee and not a tax. The Court underscored that Municipal Corporations bear substantial responsibility in regulating hoardings to ensure public safety, traffic discipline, skyline management, and structural integrity, and the fee is charged to defray the cost of such regulation. The distinction between a tax and a regulatory fee was reaffirmed, with the Court observing that public interest in urban regulation cannot be compromised.
The Court further held that the source of power to levy such fees flows from Entries 5 and 66 of List II of the Seventh Schedule and Article 243X of the Constitution, and not from the deleted Entry 55 relating to advertisement tax. As a result, the levy is not subsumed under GST. The Court characterised the challenge as commercially motivated “luxury litigation” and upheld the Corporations’ authority to fix and revise licence fees.
To Read Full Judgment, Download PDF Given Below