1. The learned advocate for the petitioners has tendered a draft amendment. The amendment is allowed in terms of the draft. The same shall be carried out forthwith.

2. By these petitions, the petitioners have challenged resolution No.928 dated 28.11.2018 passed by the Standing Committee of the respondent Corporation approving the revised rates of licence fees. The petitioners also seek a declaration that after the introduction of GST with effect from 1.7.2017 in the light of the 101st amendment of the Constitution, the respondents cannot collect any tax on hoardings of the petitioners in the private properties in Ahmedabad city and consequently any fees for the licence for the advertisements on hoardings in the private properties in Ahmedabad city. The petitioners also seeks a declaration that section 386(2) of the Gujarat Provincial Municipal Corporations Act, 1949 (hereinafter referred to as “the GPMC Act”) is ultra vires the Constitution and more particularly, Articles 14 and 243X thereof.

3. Mr. Mihir Joshi and Mr. Mihir Thakore, Senior Advocates, learned counsel for the petitioners invited the attention of the court to the judgment and order dated 2.2.2006 passed by a learned Single Judge in Special Civil Application No.12603 of 2005 and allied matters wherein the court had taken the view that the licence fee is regulatory in character and, therefore, stricto senso the element of quid pro quo does not apply in the case. The court observed that the Municipal Corporation regulates the said activity by providing for certain standards. All these activities would require certain regulatory control to be exercised on the part of the Corporation and for this purpose the Corporation would require maintenance of staff for processing of applications, for granting licence also, to periodically carry out inspection to ensure that the hoardings do not breach any of the legal provisions or other requirements laid down by the Corporation. The court held that for this purpose if the Corporation levies licence fee, the true character of fee has to be determined as a regulatory licence fee and licence fee cannot be characterized as compensatory in nature.

4. The attention of the court was invited to the letter dated 17.11.2018 of the Municipal Commissioner addressed to the Municipal Secretary wherein it has inter alia been stated that upon perusal of the details of the tender invited for the advertisement on the roads/streets of the Municipal Corporation properties, much higher rates were obtained earlier. Upon looking at the same, as the licence fees for private properties are much less compared to the rates obtained for tender sites, agencies are encouraged not to participate in the tender process and to advertise on the private properties situated near the tender sites. It was submitted that this letter clearly shows that the purpose for increase in licence fees is an extraneous purpose. The reason for increasing the licence fee is not for any regulatory purpose but because the present rates impact the tender process and make it commercially unviable. It was contended that therefore, the justification given cannot be a basis for arbitrary increase in the licence fees.

5. Next it was submitted that sub-section (2) of section 386 of the GPMC Act suffers from two infirmities; firstly, it does not specify any procedure or limits subject to which such levy or collection can be made; and secondly, it does not provide any guidelines as to which factors should be taken into account for the purpose of determining the rates of licence fees.

6. The attention of the court was further invited to the provisions of Article 243X of the Constitution and more particularly, to clause (a) thereof which provides that the Legislature of a State may, by law authorise a Municipality to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits as may be specified in the law. It was submitted that in the present case, sub-section (2) of section 386 of the GPMC Act does not specify any limits and, therefore, the same is ultra vires the provisions of Article 243X of the Constitution.

7. Reference was made to Article 243ZF of the Constitution of India which provides that notwithstanding anything in that Part, any provision of any law relating to Municipalities in force in a State immediately before the commencement of the Constitution (Seventy-fourth Amendment) Act, 1992, which is inconsistent with the provisions of that Part, shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until the expiration of one year from such commencement, whichever is earlier, to submit that in this case the period of one year has elapsed since a long time and hence, the protection under Article 243ZF of the Constitution is no longer available insofar as section 386(2) of the GPMC Act is concerned.

It was submitted that if the licence fee partakes the character of tax, the fact that all the taxes are subsumed in the Goods and Services tax will have an implication.

8. Reliance was placed upon the decision of the Supreme Court in the case of Krishna Mohan (P) Ltd. v. Municipal Corporation of Delhi, (2003) 7 SCC 151, wherein the question before the Supreme Court was, whether section 116(3) of the Delhi Municipal Corporation Act, 1957 vests arbitrary and uncanalised discretion in the Commissioner and is, therefore, invalid for excessive delegation of legislative powers? The court declared section 116(3) invalid as it delegated unguided and uncanalised legislative powers to the Commissioner to declare any plant or machinery as part of land or building for the purpose of determination of the rateable value thereof. It was submitted that sub-section (2) of section 386 of the GPMC Act which vests uncanalised power in the Commissioner in respect of the licence fees that can be charged is, therefore, invalid.

9. Having regard to the submissions advanced by the learned counsel for the petitioners, Issue Notice returnable on 20th March, 2019. Ad-interim relief is granted in terms of paragraph 7.0 (B)(ii) and (iii) of the petitions subject to the petitioners continue paying the licence fees applicable prior the Resolutions at Annexures-A and AA to the petitions without prejudice to their rights and contentions. Direct service is permitted. The petitioners are permitted to serve the respondent No.5 Union of India directly through Registered Speed Post.

Registry to place a copy of this order in each petition.