Full Judgment Text
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2023INSC893
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.5362 OF 2023
M/S Harsh Automobiles
Private Limited …APPELLANT(S)
VERSUS
Indore Municipal Corporation …RESPONDENT(S)
WITH
CIVIL APPEAL NO.5363 OF 2023
M/S Sanghi Brothers
(Indore) Private Limited …APPELLANT(S)
VERSUS
Indore Municipal Corporation
And another …RESPONDENT(S)
J U D G M E N T
Aravind Kumar, J.
Signature Not Verified
Digitally signed by
NEETA SAPRA
Date: 2023.10.11
15:32:01 IST
Reason:
1. The Order dated 24.10.2017 passed in WP No.1842 of 2016 and
WP No.2106 of 2012 by the High Court of Madhya Pradesh whereunder
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the demand notices raised against the appellants for payment towards
advertisement tax came to be affirmed by relying upon the judgment of
Bharti Airtel Vs. State of Madhya Pradesh rendered in WP No. 2296 of
2012 decided on 12.01.2015 has been called in question.
RE: Facts in C.A.5362 of 2023 arising out of final order and
judgment dated 24.10.2017 passed in WP No.1842 of 2016
2. Appellant is the occupier of the premises at 14 Rukmini Plaza,
AB Road, Indore and is a dealer of Hyundai Passenger Cars and is
carrying on said business at the said premises apart from other places.
Appellant has displayed a name board with its trade name and business
in the premises where business is being run. Second respondent issued
a notice on 04.07.2015 demanding an amount of Rs.2,03,850/- for
recovery of advertisement tax namely for the displaying sign board at
its premises under Section 189-A of the Municipal Act, 1965. An
objection was raised to the same by the appellant contending inter alia
that putting up of sign board and displaying the name of the appellant’s
business would not fall within the definition of “advertisement”, rather
it was displaying its own name and business through the sign board as
it would be necessary for the general public to know the name and
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nature of business and the product it was dealing with. Being aggrieved
by this notice writ petition under Article 226 of the Constitution of India
came to be filed and the Hon’ble High Court by impugned order relying
upon the judgment of Bharti Airtel (supra) dismissed the petition.
Hence this appeal.
RE: Facts in CA 5363 of 2023 arising out of the final order
and judgment dated 24.10.2017 passed in WP No.2106 of
2012 .
Appellant is a company incorporated under the Companies Act, 1956
and in order to let the general public know the name and business of the
company and the nature of its business and its products, appellant
company has put up a name board displaying its trade name within the
business premises displaying the products and services in which the
appellant is dealing and as such the notice dated 04.01.2012 came to be
issued by the second respondent demanding advertisement tax of
Rs.1,31,137/- and yet another notice dated 04.01.2012 of Rs.51,000/- in
respect of another premises where similar board had been put up by the
appellant. These notices were duly replied to by the appellant by
objecting to the same and contending inter alia that it was not
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displaying any advertisement rather it was displaying its own trade
name and business sign board and sought for withdrawal of the notice.
It was also contended that notice issued was without jurisdiction as one
of its premises situated at Lasudia Mori, AB Road, Tehsil and District
Indore was situated outside the municipal limits and therefore no tax
was leviable. Hence, sought for notices being withdrawn.
3. Subsequently, second respondent issued another notice on
08.02.2012 revising its earlier demand of sum of Rs.1,82,137.50 to
Rs.46,050. This notice came to be challenged by filing a Writ Petition
under article 226 of the Constitution of India before the High Court of
Madhya Pradesh in Writ Petition No.2106 of 2012. The High Court by
impugned order dated 24.10.2017 relying upon the judgment of Bharti
Airtel (supra) dismissed the petition. Hence this appeal.
4. We have heard the arguments of learned advocates appearing
for the parties namely Shri Kapil Arora and Mr. Niraj Sharma, learned
counsel appearing for the appellants and Shri Mishra Saurabh, learned
counsel appearing for the respondent.
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5. It is the contention of the learned advocates appearing for the
appellant that impugned orders have been passed by relying upon the
judgment rendered by the coordinate bench of the High Court in Bharti
Airtel (supra) which was inapplicable to the facts on hand as the issue
involved in the said case related to whether the municipal corporation
can appoint a tax collecting agent for the purpose of collection of
advertisement tax? and the question relating to display of trade name
and nature of business by a trader or a business establishment on its own
premises where business is being carried on would tantamount to an
advertisement, was neither in issue examined or decided in the said
case. It is contended display of trade name and nature of business by a
trader at its premises does not amount to “advertisement” and this fact
has not been considered by the High Court under the impugned
judgment. The learned advocates would further elaborate their
submissions by contending that if putting up of a sign board at its own
premises for identification purposes or for the customers to know the
identity of the premises would amount to advertisement then sign name
boards of all business establishments, Government officers, public
sector undertakings, sign boards put up by professionals like Doctors,
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Advocates, Engineers, Architects, Consultants, schools, colleges,
hotels, restaurants etc. would also fall within the ambit of advertisement
and would be liable to pay advertisement tax. Non-putting up of sign
board displaying the name of the firm would result in the public or the
customer making an extensive research and survey for buying a
particular product or availing the services which the appellants were to
provide. They would also contend that where the sign boards are put up
to attract the customers and to promote the purchase of a particular
product and providing information of the said product or service at a
particular place would be an ‘advertisement’ whereas depicting the
name of the business establishment and the products being dealt by it
would only be an information to the general public and such display of
information would not amount to advertisement and as such it would
not be liable to be taxed.
6. They would also contend that imposition of “advertisement tax” on
sign boards displaying the name and products of the business
establishment is violative of Article 19(1)(a) and 19(1)(g) of the
Constitution of India.
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7. The learned counsel appearing for the appellant in Civil Appeal
No.5363 of 2023 (Special Leave Petition No. 5761 of 2018) would also
contend the Indore Municipal Corporation (advertisement, bye-laws)
framed by virtue of the powers conferred under Indore Municipal
Corporation Act, 1956 would mandate the imposition of advertisement
tax to the premises situated within the territorial limits of Indore
Municipal Corporation and the business premises of the appellant was
situated outside the municipal limits namely the premises at Lasudia
Mori, Tehsil and District Indore was not falling within the territorial
limits of Municipal Corporation and as seen it would not be exigible for
levy of advertisement tax and such levy would be without jurisdiction.
Hence, they have sought for allowing the appeal.
8. Per contra, Shri Mishra Saurabh, learned counsel appearing for
the respondent No.1 (Indore Municipal Corporation) would contend
that appellants were displaying the name of their business
establishment, name of their principal, names of the products and
services of the companies in which they were dealing, with an intent to
bring it to the notice and information of the general public for
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commercial exploitation. Hence, he would contend if the sign board
which has the purpose to make publicly known and information which
is covered under the definition of “advertisement” it would amount to
display for commercial exploitation. By referring to the judgment of
this Court in Municipal Corporation of Greater Bombay (2002) 4 SCC
219 and ICICI Bank Vs. Municipal Corporation of Greater Bombay
(2005) 6 SCC 404 he would contend that appellants have admittedly
displayed the trade name and also the products and services in which
they are dealing so as to bring it to the notice and information of general
public about their business, the product and services provided by them
which fulfills the definition of “advertisement” as held in Municipal
Corporation of Greater Bombay Vs. Bharat Petroleum (2002) 4 SCC
219 . He would further contend that display of names of the commodity
would fall under the definition of “advertisement” and therefore the
name boards containing the names of product would be liable to
advertisement tax. Contending on the touchstone of the Judgments of
this Court when the facts on hand are examined it would clearly indicate
that display boards of the appellants would reflect that they had a
common object to seek the attention of the customers and give
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information about the products and services which they would be
rendering and thereby advertising to the general public about the
product, its utility etc. and seeking the attention of the customers would
tantamount to advertisement. Reiterating the contentions raised in the
counter-affidavit and by relying upon the following judgments he has
sought for dismissal of the appeals.
1. New Delhi Municipal Committee v/s. Allied Motors Pvt.
Ltd ( 1995) SUPP (4) SCC 150.
2. ICICI Bank & Another v/s. Municipal Corporation of
Greater Bombay & Ors . (2005) 6 SCC 404 .
3. Municipal Corporation of Greater Bombay v/s. Bharat
Petroleum Corporation Ltd. (2002) 4 SCC 219 .
4. Municipal Corporation of Greater Bombay & Ors. v/s.
Ratiloku Shetty AIR 2002 Bom 94 .
5. Shri Krishna Pictures v/s. Administrator, Indore Municipal
Corporation, Indore 1980 JLJ 530 .
9. A plain reading of the impugned order would clearly indicate
that the Writ Petitions filed by the appellants herein before the High
Court was dismissed by relying upon the judgment of Bharti Airtel vs.
State of Madhya Pradesh rendering in W.P. No.2296 of 2012 on
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12.01.2015 by arriving at a conclusion that all the grounds raised in the
writ petitions have been answered in Bharti Airtel.
10. A perusal of the judgment rendered in Bharati Airtel (supra)
could indicate that the issue involved or the lis revolved around in the
said matter was whether the advertisement tax levied under the
impugned notices therein through the medium of an agency is
permissible? Namely, “whether contractor can be empowered to
recover the terminal tax ?” It is in this background the impugned notices
therein came to be quashed. Hence, we are of the considered view that
principles enunciated in Bharti Airtel (supra) would be inapplicable to
the facts on hand the impugned order would not be sustainable on this
short ground. However, it would not stop at it, inasmuch as the issue
regarding levy of advertisement tax would still be at large. It is in this
background, we propose to examine as to what further course of action
is proposed to be taken?
11. In the instant appeals, a demand was raised by the second
respondent on the appellants for payment of advertisement tax which
was objected to by the appellants contending inter alia that imposition
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of tax on sign boards is impermissible and they were not advertising
any product or goods and had only displayed the name of the business
establishment describing or displaying the goods/ products in which
they are dealing and exhibiting or displaying its trade name along with
the commodity with which it is dealing, on its premises would not
tantamount to advertisement particularly when no details/
characteristics, etc. are displayed to attract potential buyers by calling
upon such purchasers to purchase a particular product and said notice
was unsuccessfully challenged by the respective appellants before the
High Court.
12. The Indore Municipal Corporation is a municipality as defined
under Article 243-Q of the Constitution of India and by virtue of Entry
No.5 of State List-II under Schedule VII of the Constitution the State
Government has promulgated Madhya Pradesh Municipal Corporation
Act, 1956 for Constitution, regulation of Municipal Corporation
whereunder as the Corporation has been empowered to carry out all
civil body works including levy and collection of various taxes which
includes the tax on “advertisements” (otherwise advertisements
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published in newspapers and advertisement broadcasted by radio or
television) as provided under Entry No.55 of State List.
13. The respondent authorities have sought to sustain the demand
by virtue of Section 132(6)(1) of the Municipal Corporation Act and
said provisions reads:
"132. Taxes to be imposed under this Act.-
(1) For the purpose of this Act, the Corporation shall,
subject to any general or special order which the State
Government may make in this behalf, impose in the whole
or in any part of the Municipal Area, the following taxes
namely: -
(a) a tax payable by the owners of buildings or lands situated
within the city with reference to the gross annual letting
value of the buildings or lands, called the property tax,
subject to the provisions of Sections 135,136 and 138.
(b) a water tax, in respect of lands and building to which a
water supply is furnished from or which are connected by
means of pipe with municipal water works.
(c) a general sanitary cess, for the construction and
maintenance of public latrines and for removal and disposal
of refuse and general cleanliness of the city.
(d) a general lighting tax, where the lighting of public streets
and places is undertaken by the corporation.
(e) a general fire tax, for the conduct and management of the
fire service and for the protection of life and property in the
case of fire.
(f) a local body tax on the entry of such goods as may be
declared by the State Government by notification in the
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Official Gazette into the municipal area for consumption,
use or sale therein at a rate not exceeding four percent of the
value of goods.
(2) Notwithstanding anything contained in clause (f) of sub-
section (1) if in the opinion of the State Government it is
expedient to do so, it may delegate the power to the
Corporation to declare the goods on which local body tax
shall be levied and the rates thereof.
(3) The mode of assessment and collection of the local body
tax shall be such as may be prescribed.
(4) The water tax under the clause (b) of sub-section (1) shall
be charged-
(a) on buildings and lands which are exempted from
property tax, at a rate as shall be determined by the
Corporation. (omitted)
(b) on buildings and lands which are not exempted
from property tax, at a rate as determined in clause (a)
plus such percentage of the property tax, as shall be
determined by the Corporation.
Provided that the water tax under clause (b) of sub-
section (1) shall not be levied on building and land
owned by freedom fighters during their life time, if
they are exempted from Income Tax and the water
connection is for domestic purpose and which does not
exceed half inch connection.
(5) The taxes under clause (c), (d), and (e) of sub-section (1)
shall be levied at a consolidated rate as under:- (a) on
buildings and lands which are exempted from property tax
at a rate as determined by the corporation (omitted) (b) on
buildings and lands which are not exempted from property
tax at a rate prescribed under clause (a) plus such percentage
of the property tax, as may be determined by the
Corporation, subject to the conditions that such percentage
shall not exceed ten percent of the amount of property tax.
(6) In addition to the taxes specified in sub-section (1), the
Corporation may, for the purpose of this Act, subject to any
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general or special order which the State Government may make
in this behalf, impose any of the following taxes, namely:
(a) a latrine or conservancy tax payable by the occupier or
owner upon private latrines, privies or cesspools or open
premised or compounds cleansed by Corporation agency;
(b) a drainage tax, where a system of drainage has been
introduced;
(c) a tax on persons exercising any profession or art or carrying
on any trade or calling within the city;
(d) omitted
(e) omitted.
(f) fees on the registration of cattle sold within the city;
(g) market dues on persons exposing goods for sale in any
market or in any place belonging to or under the control of the
Government or of the Corporation;
(h) a betterment tax on properties whose value may have
improved as a result of town planning scheme under taken by
the Corporation;
(i) a tax on pilgrims resorting periodically to a shrine within
the limits of the Corporation;
(j) a tax on persons occupying houses, buildings or lands within
the limits of the Corporation according to their circumstances
and property
xxxx
(1) a tax on advertisement other than advertisements published
in newspapers."
14. A perusal of the above provision would indicate that a tax on
“advertisement” other than the advertisement published in newspapers,
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can be imposed. Sub-section (1) of Section 133 of the Act provides that
Corporation may, by a special meeting bring forward a resolution to
propose imposition of any tax under Section 132 defining classes of
persons or description of property proposed to be taxed, amount or rate
of tax to be imposed and system of assessment to be adopted. By virtue
of power vested under Section 427 of the Act, respondent Corporation
has made the Municipal Corporation (advertisement) bye-laws, 1976
which came to be approved by the State Government under Section 430
of the Act and it was duly published in the official gazette on
18.08.1978 as required under Section 429 and 431 of the Act of 1956.
The respondent-Corporation is tracing its source of power to levy and
collect advertisement tax under clause 4, 5 and 6 of the bye-laws of
1976.
15. In the teeth of aforesaid statutory provisions, it requires to be
examined as to whether the display boards or sign boards or name
boards as displayed by the appellants would partake the character of
“advertisement” so as to attract Section 132 of the Act and thereby the
demand is to be sustained? If the answer is in the affirmative,
necessarily the demand deserves to be sustained. On the contrary, if the
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answer is in the negative it would not detain us for long to quash the
same. The incidental question which may also arise would be whether
all modes of display would tantamount to advertisement? or such
display would only be information to the potential customer so as to
make aware about the type of product, goods or services dealt with by
the business establishment that is available in the premises of such
business establishment? To answer this, it would be apt and appropriate
to note the meaning of the expression “advertisement” assigned under
various dictionaries. They read as under:
(a) “BLACK'S LAW DICTIONARY, 8TH EDITION
Advertising: 1. The action of drawing the public's attention
to something to promote its sale. 2. The business of
producing and circulating advertisements
(b) LAW AND COMMERCIAL DICTIONARY
Advertisement : Notice given in a manner designed to
attract public attention. Edwards v. Lubbock Country, Tex
Civ. App., 33 S.W.2d 482. Information communicated to the
public, or to an individual concerned, as by handbills,
newspaper, television, bill-boards, radio. First Nat.
Corporation v. Perrine, 99 Mont 454: 43 P.2d 1073
(c) THE NEW ENCYCLOPAEDIA BRITTANICA
VOLUME-I
Advertising , the techniques used to bring products, services,
opinions, or causes to public notice for the purpose of
persuading the public to respond in a certain way toward
what is advertised. Most advertising involves promoting a
good that is for sale, but similar methods are used to
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encourage people to drive safely, to support various
charities, or to vote for political candidates, among many
other examples.
(d) COLLINS DICTIONARY OF THE ENGLISH
LANGUAGE
Advertisement any public notice, as a printed display in a
newspaper, short film on television, announcement on radio,
etc., designed to sell goods, publicize an event, etc.
Advertising 1) the action or practice of drawing public
attention to goods, services, events etc., as by the distribution
of printed notices, broadcasting, etc. 2) the business that
specializes in creating such publicity, 3) advertisements
collectively; publicity.
(e) THE CHAMBERS DICTIONARY
Advertisement - the act of advertising; a public notice with
the purpose of informing and/or changing public attitudes
and behavior; a short performance recorded for radio, T.V.
etc. to advertise goods or services; news.
16. This Court in the case of ICICI Bank and Another Vs.
Municipal Corporation of Greater Bombay (2005) 6 SCC 404 has
held that advertisement should have some commercial exposition or the
soliciting customers to the product or service prominently shown in the
advertisement. Primarily, it should have a commercial purpose and
should be indicative of business activity of the displayer with a view to
attract the attention of people to its business it has been further held:
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“15. An advertisement is a matter that draws attention of the
public or segment of public to a product, service, person,
organisation or line of conduct in a manner calculated to
promote or oppose directly or indirectly that product,
service, person, organisation or line of conduct intended to
promote sale or use of product or range of products. An
advertisement is an information that the producer provides
about its products or services. An advertisement tries to get
consumers to buy a product or a service. An advertisement
is generally of goods and services and is an information
intended for the potential customers and not a mere display
of the name of the company unless the same happens to be a
trade mark or trade name.”
17. The aforesaid finding was recorded in the background of Section
328A of Bombay Municipal Corporation Act. It has been further held
therein to the following effect:
“18. The context in which the word advertisement has been
used in Section 328-A of the Corporation Act and in the
commercial and ordinary parlance it must have direct or
indirect connection with the business, trade or commerce
carried out by the advertiser. It must have some commercial
exposition. The advertisement would be for the purpose of
directing or soliciting customers to the product or service
prominently shown in the advertisement. If ordinary
parlance meaning is not given to the word advertisement in
Section 328-A it will create anomalous position, inasmuch
as a simple name board put on the house to indicate who is
residing in the premises, would also be an advertisement; a
name board or signboard of a trader visible to the public or
identifying the place of business would also be an
advertisement. In our considered opinion advertisement
within the meaning of Section 328-A of the Corporation Act
must primarily have a commercial purpose and should be
indicative of business activity of the displayer with a view to
attract the attention of people to its business.
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19. In the present case the appellant has put up an illuminated
ATM board at various sites and as per the appellant it has
been put only to tell the existing customers and others about
the location of the ATM centres, which in itself is in the
interest of public at large and not to attract new customers
for opening the bank account. Normally, the ATM centres
enable the customers to carry out the banking activities or
transactions at any time, day or night and even on gazetted
holidays. They are in the nature of public service as they
enable the customers to do away with the need to keep large
sums of cash in their house; they are able to have access to
the money in their account even on holidays and emergency.
The ATM centres have a signboard over them that are
illuminated and tell about the fact that there lies the ATM
centre of the Bank in that premises. The fact that there is an
ATM centre in the premises tells that the appellant Bank is
providing automatic teller machine service there and hence
the service provider is clearly identified. The
communication in this is directed to the account-holders and
also to prospective account-holders. The kind of information
supplied of the location of the service provided may also be
construed of commercial exploitation indirectly, as the
signboards may not aim at the existing customers only but
they may also affect the decisions of the prospective
customers. They tell the prospective customers that the
service of the ATM round the clock is being made available
by the appellant Bank which would influence the
prospective customers to make a decision about which
service provider he or she has to choose. The signboard also
helps the people to find out which bank is offering better
services as compared to the other bank. The fact that a bank
has more ATM centers than the other banks, in the
competitive trade and business, provides the incentive to the
people to choose that bank. The fact that one bank has an
ATM center in the given location helps them to get more
account-holders in that area. This also serves the commercial
interest of the bank. Whether particular action is an
advertisement or not would depend on whether the person
wants to promote directly or indirectly his product or service.
If by any communication, the communicator tries to
influence the people to buy his product or service or attract
towards his product or service then it would be a guiding
factor to identify whether a particular communication of the
communicator tantamount to be an advertisement.”
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18. Keeping the aforesaid principles enunciated in mind when we
turn our attention to the facts on hand in general and particularly the
photographs appended (Annexure P-7 in Civil Appeal No.5363 of
2023 @ SLP(C) 5761 of 2018 and Annexure P-6 in Civil Appeal
No.5362 of 2023 @ SLP(C) 5703 of 2018), prima facie, it would
indicate that as dealers of Tata Motors and Hyundai Vehicles appellants
have displayed their name board of respective business establishment
which is also depicting the nature of the respective vehicles which are
being sold and it would be inseparable part of the appellants’ business
establishment. By mere mentioning the name of the product in which
the business establishment is being run would not partake the character
of the advertisement until and unless by such display customers are
solicited. In the absence of the display of the name board or sign board
either by a business establishment or any other establishment including
public offices and professionals or schools or colleges etc. it would
drive the potential customer to such a situation where it would be neigh
impossible to identify the business establishment from which the
potential customer proposes to buy. However, if the sign boards so
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displayed would in any manner promote a particular product or goods
or services or in other words it would attract customers to purchase a
particular brand of product or goods or services and such display
provides information about the product/ services and solicit the
customers, it may amount to advertisement while the latter would only
be an information to the public. The statutory provisions noted
hereinabove does not empower the Municipal Corporation or its agency
to demand tax for display of information through name boards or
display boards. It would emerge from the statutory provisions noted
hereinabove that the legislative intent was never to impose tax liability
on sign boards but only on advertisement. Prima facie , the sign boards
are display boards displayed by the appellants’ companies in the instant
appeals would indicate that they have displayed on their respective
premises the general information to the public about the products being
dealt with by them and it would not reflect any soliciting of customers
or induce the general public to buy the products dealt by the appellants
and displayed on the board. Even in such circumstances, if it is held that
it amounts to advertisement, such levy would be without authority of
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law and would find foul of Article 19(1)(a), 19(1)(g) and Article 265 of
the Constitution of India.
19. In the instant case as noticed hereinabove, on the demand being
raised both the appellants objected to the same and even before the ink
on the objections so raised could dry or in other words even before it
came to be considered they approached the High Court invoking the
extra ordinary jurisdiction of the High court which was in due haste as
such the dismissal of the petition though for a different reason which
we have not subscribed our approval, yet the end result requires to be
sustained and at the same breadth we hold that impugned notices are
required to be adjudicated by the first respondent afresh in the light of
objections filed to the said notices. Hence, we direct the first
respondent to examine the objections filed by the appellants to the
impugned demand notices expeditiously and at any rate with an outer
limit of (8) eight weeks from the date of receipt of this order and in the
event of issue being answered against the appellants the demand raised
thereunder shall not be enforced for a further period of (8) eight weeks
from the date of such order or determination. It is needless to state that
appellants would be at liberty to challenge any adverse orders passed
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by the Commissioner in accordance with law. It is also made clear that
interim order passed shall continue till the period indicated
hereinabove. In the peculiar circumstances of the case costs made easy.
20. Accordingly, the appeals stand disposed of.
.……………………….J.
(S. Ravindra Bhat)
…………………..……J.
(Aravind Kumar)
New Delhi,
October 09, 2023