Putting up Non-Commercial Signages on their Property: Karnataka HC Sets aside Ad Tax Demand on Educational Institutions [Read Order]
It was held that in the absence of any commercial or promotional content, the said signage cannot be subjected to advertisement tax under Section 134 of the Act
Educational Institution
Educational Institution
While setting aside a demand for advertisement tax against an educational institution, the Karnataka High Court has held that in the absence of any commercial or promotional content, advertisement tax under Section 134 of the Karnataka Municipal Corporation Act, 1976 is not applicable for displaying non-commercial signage and boards on its own property.
The petitioner, BS Gupta, Secretary of Gupta Education Trust, who had challenged the legality/validity of the order issued by BBMP, under Section 134 of the Karnataka Municipal Corporation Act, 1976.Gupta Education Trust is a charitable trust and is offering PU courses in commerce and science, degree courses in B.Com and B.BA disciplines and a PG course in M.Com. The building where this institution runs the courses is used for educational purposes, and no commercial activities are undertaken in the said building.
Challenging the demand notice on the ground that it is a charitable and non-commercial institution, not engaged in any form of commercial advertising as contemplated under the relevant taxing provisions. It was contended that the levy of advertisement tax on such an institution is ultra vires, amounts to an unreasonable fiscal burden, and is not envisaged under the statutory scheme of the Act.
The petitioner argued that the tax demand is without jurisdiction, misconceived, and violative of Article 14 and 19(1)(g) of the Constitution of India. It is urged that the petitioner is a non-profit institution engaged in charitable activity and this signage displayed is purely informative and devoid of any commercial content. Therefore, petitioner's counsel would submit that the same does not fall within the definition of "advertisement" under the BBMP Advertisement Bye-laws 2006.
Per contra, the counsel appearing for the respondent corporation has opposed the petition and submitted that the impugned orders are legally sustainable, having been passed in accordance with law. Placing reliance on Section 134 of the Act, he contends that the corporation is duly empowered to levy tax on advertisements, including signage and hoardings.
He further argued that the petitioner-institution had erected hoardings and display boards without obtaining prior permission from the Corporation, and therefore, the levy of advertisement tax is justified and in consonance with the statutory provisions.
The signage and boards displayed by the petitioner/institution are fixed on the property owned and possessed by the petitioner/institution, and these hoardings are meant purely for institutional identification and providing directions to students, parents, and staff, devoid of any promotional or commercial messaging encouraging profit-oriented activity.
The signage affixed to the college building serves the sole purpose of identifying the educational institution. The signage is modest in size and contains only the name of the institution and its emblem. On top of this building, a few hoardings are also noticed. The placement of signage and hoardings on the college building does not display any promotional content, advertisement of third-party goods or services, or inducement to the public to avail any trade offering.
A single bench of Justice Sachin Shankar Magadum viewed the placement of signage on the college building as being part and parcel of the institution's physical infrastructure and not intended to solicit business. Such signage lacks the essential character of an advertisement as defined under Rule 2A(1) of the BBMP Advertisement Bye-laws 2006.
It was held that in the absence of any commercial or promotional content, the said signage cannot be subjected to advertisement tax under Section 134 of the Act.
The court allowed the petition and quashed the orders passed by the corporation and directed it to consider the petitioners' representation seeking exemption from payment of advertisement tax.
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