Clarifying the Boundary: Informational Display vs. Commercial Advertisement – A Case Study”
Case: Harsh Automobiles Pvt. Ltd. v. Indore Municipal Corporation
Sanghi Brothers (Indore) Pvt. Ltd. v. Indore Municipal Corporation
Court: Supreme Court of India
Judges: S. Ravindra Bhat and Aravind Kumar, JJ.
Date of Judgment: October 9, 2023
Parties:
Appellant(s): Harsh Automobiles Pvt. Ltd. and Sanghi Brothers (Indore) Pvt. Ltd.
Respondent(s): Indore Municipal Corporation and Another
Case Summary:
Background: The case involved two appeals challenging the demand notices raised by the Indore Municipal Corporation for advertisement tax on the display of name boards by two companies – Harsh Automobiles Pvt. Ltd. and Sanghi Brothers (Indore) Pvt. Ltd.
Facts: Both appellants displayed name boards at their business premises, indicating their trade names and the products they dealt with. The Municipal Corporation issued demand notices for advertisement tax, which the appellants objected to, arguing that the display of their trade names and products did not constitute advertisement but rather provided information to the public.
Contention of Parties: The appellants argued that their name boards were not advertisements but merely provided information about their businesses and products, thus not liable for advertisement tax. They contended that imposing such tax would violate their constitutional rights under Article 19(1)(a) and 19(1)(g).
The respondent Municipal Corporation argued that the name boards displayed by the appellants were advertisements as they aimed to promote their businesses and products to the public, attracting customers for commercial exploitation.
Court’s Analysis and Decision: The Court examined the definition of “advertisement” and concluded that for an activity to be considered an advertisement, it must have a commercial purpose and solicit customers. Mere display of trade names and products without soliciting customers did not constitute advertisement.
The Court held that the demand notices for advertisement tax were not sustainable as the name boards displayed by the appellants were informational in nature and did not promote commercial exploitation. Imposing tax on such displays would be without authority of law and violate constitutional rights.
The Court directed the Municipal Corporation to reconsider the objections raised by the appellants to the demand notices and dispose of them expeditiously. The interim order restraining enforcement of the demand notices was continued.
Conclusion: The appeals were disposed of in favor of the appellants, with directions to the Municipal Corporation to reexamine the objections to the demand notices. The Court emphasized that the display of name boards providing information about businesses and products did not amount to advertisement and thus were not liable for advertisement tax.
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