M/S Harsh Automobiles Private Limited v. Indore Municipal Corporation, Civil Appeal No. 5362 of 2023

The Signboard affixed for displaying general information about the company would not come within the purview of Advertisement, hence, Advertisement Tax cannot be levied.

Summary:

The appellant, a dealer of Hyundai cars, challenged the demand of advertisement tax by the respondent, Indore Municipal Corporation, for displaying a signboard with its trade name and business details at its premises. The appellant contended that the signboard was not an advertisement, but a means of disseminating knowledge to the public. The Petitioner in the present case, appealed before the High Court of Madhya Pradesh, however, the High Court dismissed the appellant’s writ petition, relying on a previous judgment that held that such signboards are liable to advertisement tax. The High Court also rejected the appellant’s argument that the signboard was protected by the right to freedom of speech and expression under Article 19(1)(a) of the Constitution of India. Thus, the Appellant approached the Hon’ble Supreme Court challenging the decision of the High Court. The Supreme Court upheld the contention of the Appellant and reversed the decision of the High Court.

Facts of the Case:

The Appellant, a dealer of Hyundai cars, challenged the demand of Advertisement Tax by the Respondent, Municipal Corporation, Indore, for displaying a signboard with its trade name and business details at its premises. The Appellant contended that the signboard was not an advertisement, but a means of disseminating knowledge to the public. The High Court dismissed the Appellant’s writ petition, relying on a previous judgement that held that such signboards are liable to Advertisement Tax. The Appellant appealed to the Supreme Court against the High Court’s order.

Issues Raised:

Whether the expenses on account of warranty and statutory bonus were to be excludable while working out the ex-work cost.

Judgment:

The Supreme Court reversed the High Court’s order, holding that the signboard displayed by the appellant was not an advertisement within the meaning of Section 2(1) of the Madhya Pradesh Municipal Corporation Act, 1956. The Supreme Court observed that the signboard was intended to convey general information about the appellant’s business and products, and not to promote or solicit any trade or business. The Supreme Court also held that the signboard was covered by the right to freedom of speech and expression, and that the imposition of advertisement tax was an unreasonable restriction on that right.

Analysis:

The Supreme Court’s judgment is a landmark decision that recognizes the right of a business entity to display its trade name and business details on a signboard as a form of expression protected by the Constitution of India. The judgment also clarifies the distinction between an advertisement and a signboard and sets a precedent for other cases involving similar issues. The Supreme Court considered the purpose, nature, content, and impact of the signboard displayed by the appellant, and applied the tests of reasonableness and proportionality to determine whether the imposition of advertisement tax was justified.

[1] https://ksandk.com/wp-content/uploads/2023/10/Judgement-6.pdf