Bombay HC: Advertising Companies' Challenge to PMC's Billboard Fee Hike Dismissed

In an important legal decision, the Bombay High Court has agreed with the Pune Municipal Corporation's (PMC) choice to raise the license fee for billboards and advertisements, dismissing several complaints against the increase.

Background of the Case

In 2013, the PMC decided to raise the license fees for lit and unlit billboards to Rs. 222 per square foot per year. This decision was based on a bidding process started in 2011, which received the highest bid at this rate. The new rates were suggested by the Municipal Commissioner and later approved by the General Body in 2018.

Petitioners' Arguments

The petitioners, mostly advertising companies, including M/s. Mangalmurti Advertising through its partner Yougesh U. Murkute, argued that:

• The fee increase was too high and was more like a tax than a fee meant to regulate.
• The increase was applied starting from 2013, which they said was not allowed.
• With the start of the Goods and Services Tax (GST) in 2017, the PMC no longer had the power to charge these fees, especially after the removal of Entry 55 from the State List.

Court's Analysis

Authority to Charge Fees

The court confirmed that the PMC has the power to charge fees under certain sections of the Maharashtra Municipal Corporation Act (MMC Act). These sections allow the PMC to manage billboards and advertisements through a licensing system, charging fees approved by the municipal body.

Fee vs. Tax

The court explained the difference between a fee and a tax, deciding that the license fee was meant to regulate and not to make money like a tax. It highlighted that the fee was for managing advertisements, not for earning revenue.

Applying Fees from the Past

The court decided that applying the fee starting from 2013 was okay, as the General Body's approval in 2018 made the Municipal Commissioner's earlier decision valid.

Impact of GST

The introduction of GST did not change the PMC's ability to charge these fees. The court noted that the GST system did not replace the specific fees collected by municipal bodies for services like advertisement licenses.

Verdict

The court dismissed the petitions, supporting the PMC's decision to charge the increased fees. It highlighted the need for city bodies to have control over their finances to effectively carry out their responsibilities.

The judgment highlights the importance of municipal independence in financial matters and explains the difference between fees for regulation and taxes within the local government system.