Calcutta High Court: In an appeal filed by Calcutta Municipal Corporation (appellants) challenging the judgment and order dated 24-04-2015, whereby the petition of the Cricket Association of Bengal (respondent 1) was allowed, the Division Bench of Arijit Banerjee and Kausik Chanda, JJ., dismissed the appeal and upheld the decision of the Single Judge quashing a demand notice dated 27-03-1996, whereby the Kolkata Municipal Corporation had levied advertisement tax of Rs. 51,18,450/- on the Cricket Association of Bengal under Section 204 of the Kolkata Municipal Corporation Act, 1980.
The dispute stemmed from advertisements displayed during the inaugural ceremony and semi-final match of the Wills World Cup 1996, held at Eden Gardens stadium on 11 February and 13 March 1996 respectively. The Cricket Association of Bengal, a lessee of the Eden Gardens property owned by the Ministry of Defence, Government of India, was served with a demand for advertisement tax by Kolkata Municipal Corporation. Challenging this, the Cricket Association of Bengal filed a petition before the Court on several grounds, ie., that the advertisements were not visible from any public street or place as required under the then unamended Section 204 of the Kolkata Municipal Corporation Act, 1980; that the demand was arbitrary and issued in breach of natural justice without prior hearing; and that in light of Article 285(1) of the Constitution of India, the Union’s property was immune from such taxation.
The Single Judge held that Eden Gardens was not a public place, and therefore the statutory precondition for levying advertisement tax under Section 204 of Kolkata Municipal Corporation Act, 1980 was not met. Furthermore, the Court found that the Cricket Association of Bengal was denied procedural fairness and that the demand notice lacked any computation of details or legal basis.
On appeal, Kolkata Municipal Corporation contended that Eden Gardens, being accessible to the public on purchase of tickets, was a restricted public place and thus attracted the provisions of Section 204. It was further urged that the absence of a regulation was not fatal, and that the Cricket Association of Bengal should have asked for the computation of details. Kolkata Municipal Corporation also attempted to argue that the Cricket Association of Bengal, being a society in occupation of the property, could not claim immunity under Article 285, as it was not the Union itself but a lessee.
The Cricket Association of Bengal asserted that the stadium, despite occasional public access, did not qualify as a “public place” under the Act or in common legal parlance. The admission was conditional, controlled, and restricted by ticketing and capacity, distinguishing it from truly public spaces. The Cricket Association of Bengal also emphasized the absence of regulations or budgetary prescription for tax calculation under Section 204, rendering the demand arbitrary and contrary to Article 265 of the Constitution, which mandates that no tax be levied or collected except by authority of law. Additionally, the notice was issued without a prior show-cause or hearing and was followed by criminal proceedings, facts which demonstrated a blatant violation of the principle of audi alteram partem.
The Court meticulously analyzed the issues and held that Section 204, as it stood prior to its amendment in 2019, applied only where advertisements were visible from public places or streets. Since Kolkata Municipal Corporation did not dispute that the in-stadia advertisements were only visible from within the stadium, and since Eden Gardens did not constitute a public place, Section 204 could not be invoked. The Bench agreed with the Cricket Association of Bengal’s contention that a public place requires unrestricted public access, which the stadium lacked due to controlled, ticketed entry and limited admission.
On the issue of natural justice, the Court castigated Kolkata Municipal Corporation’s procedure and found that the notice of demand was unreasoned, provided no breakup or basis for the figure of Rs. 51,18,450, and gave Cricket Association of Bengal only two days to object and three days to pay. The Court relied on a catena of domestic and foreign judgments to reiterate that administrative actions entailing civil consequences must comply with audi alteram partem and cannot be a mere formality or façade. The failure to respond to the Cricket Association of Bengal’s representation, and the hurried initiation of criminal proceedings, further confirmed procedural impropriety.
The Court also emphasized that the absence of regulations or budgetary prescription regarding tax rates under Section 204 rendered the imposition ultra vires. It relied on precedent holding that when a statute prescribes a method of doing an act, it must be done in that manner alone. Thus, without valid regulations or prescribed rates, no valid computation or demand of tax could arise. The argument of waiver or estoppel by conduct, arising from the Cricket Association of Bengal’s prior payments, was rejected on the ground that there can be no estoppel against a statute.
On the question of Article 285, the Court found substance in the Cricket Assocation of Bengal’s argument. The Eden Gardens, being Union property, was exempt from State or local taxation. Even though the Cricket Assocation of Bengal was a lessee, Article 285(1)’s immunity extended to the property, especially as the Cricket Assocation of Bengal had no ownership rights, and the lease did not extinguish the Union’s title. In the absence of a statutory provision by Parliament to the contrary, Kolkata Municipal Corporation could not impose any tax on property of the Union, including advertisement tax levied with reference to a site owned by the Union.
Thus, the Court concluded that the demand notice dated 27-03-1996 was vitiated on multiple counts, lack of jurisdiction under Section 204 due to the non-public nature of the stadium, failure to follow the mandated procedure, breach of natural justice, absence of a lawful computation mechanism, and violation of constitutional immunity under Article 285. The appeal was dismissed, and the impugned demand was quashed.
[Calcutta Municipal Corporation v. The Cricket Association of Bengal, 2025 SCC OnLine Cal 4970, decided on 19-06-2025]
Judgment authored by: Justice Arijit Banerjee
Advocates who appeared in this case:
For the Appellants (Kolkata Municipal Corporation & Ors.):
Mr. Alak Kumar Ghosh, Mr. Swapan Kumar Debnath, Ms. Sima Chakraborty, Ms. Susmita Saha Dutta, Advocates
For the Union of India (UOI):
Mr. Alak Kumar Ghosh, Mr. Swapan Kumar Debnath, Ms. Sima Chakraborty, Ms. Susmita Saha Dutta, Advocates
For the Respondent No. 1 (Cricket Association of Bengal):
Mr. Jaydip Kar, Sr. Advocate; Mr. Samrat Sen, Sr. Advocate; Mr. Kaushik Mandal, Advocate
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