HC quashes Rs 51 lakh tax demand by KMC, holds Eden Garden not a ‘public place’

Kolkata: The Calcutta High Court has quashed a tax demand of Rs 51,18,450 issued by the Kolkata Municipal Corporation (KMC) against the Cricket Association of Bengal (CAB) in connection with advertisements displayed during the 1996 Wills World Cup matches at Eden Gardens.

A Division Bench comprising Justice Arijit Banerjee and Justice Kausik Chanda upheld an earlier order passed by a Single Judge on April 24, 2015, which had set aside the KMC’s demand notice dated March 27, 1996. The controversy arose after KMC imposed advertisement tax under Section 204 of the Kolkata Municipal Corporation Act, 1980, for banners displayed at Eden Gardens during the World Cup opening ceremony on February 11 and the semifinal match on March 13, 1996. CAB challenged the tax demand on grounds including lack of jurisdiction, violation of natural justice, and constitutional protection under Article 285(1) of the Constitution of India.

The court observed that the demand notice lacked any computation details or breakup of the claimed amount. It noted that the notice gave CAB only two days to raise objections and three days to pay the tax, which the court found to be inadequate and unreasonable.

The Bench ruled that the advertisements in question were located inside the stadium and not visible from a public street or public place, a necessary condition under the unamended Section 204 of the Act. It further held that Eden Gardens, being accessible only to ticket holders, did not constitute a “public place.”

Additionally, the court found that the land and structures of Eden Gardens belong to the Union of India and are leased to CAB. Referring to Article 285(1) of the Constitution, it held that the property of the Union is exempt from state taxation unless Parliament provides otherwise.

The court also noted that KMC failed to produce any statutory regulations or budget estimates justifying the rate or amount of the tax. Accordingly, it quashed the demand notice for being arbitrary, lacking statutory authority, and issued in breach of the principles of natural justice.