Municipal Corporation has the Authority to Levy License Fees on Outdoor Advertisements retrospectively

Court Declares License Fees as Regulatory and Valid Despite Petitioners' Challenge Based on GST and Constitutional Amendments

In a significant judgment dated December 10, 2025, the Bombay High Court (Division Bench) dismissed a batch of writ petitions challenging the Pune Municipal Corporation's (PMC) authority to levy license fees on sky-signs, hoardings, and outdoor advertisements under Sections 244, 245 read with Section 386(2) of the Maharashtra Municipal Corporation Act, 1949 (MMC Act). The petitioners, primarily comprising outdoor advertising agencies, contested the legality and quantum of the license fees, asserting that the fees amounted to an illegal tax, especially after the introduction of the Goods and Services Tax (GST) and the deletion of Entry 55 (taxes on advertisements) from the State List under the Seventh Schedule of the Constitution of India.

The petitioners claimed that the license fees fixed at Rs.222 per sq. ft. per annum, retrospectively applied from April 1, 2013, were exorbitant, arbitrary, and unauthorized, as they were imposed without prior sanction of the Municipal Corporation's General Body. They also argued that the MMC Act’s provisions permitting such fees were implicitly repealed following the GST regime, which subsumed advertisement-related taxes.

Rejecting these contentions, the High Court held that the license fees are regulatory fees and not taxes. The Court emphasized that the MMC Act clearly distinguishes between taxes and fees, with the latter intended to cover administrative and regulatory expenses associated with granting and renewing licenses for sky-signs and hoardings. The Court observed that the municipal corporation’s power to levy such fees is well-established under the MMC Act and the Bombay Provincial Municipal Corporation (Control of Advertisement and Hoarding) Rules, 2003.

Addressing the issue of retrospective sanction, the Court clarified that Section 386(2) of the MMC Act requires the Commissioner to fix fees “with the sanction of the Corporation” but does not mandate prior sanction. The General Body’s ex post facto approval dated September 28, 2018, sanctioning the Rs.222 rate from April 1, 2013, was therefore valid and lawful. The Court distinguished prior sanction from sanction simpliciter, relying on statutory interpretation principles and precedents such as LIC v. Escorts Ltd. (AIR 2022 SC 336).

Regarding the impact of GST and constitutional amendments, the Court held that deletion of Entry 55 of the State List and the advent of GST laws do not extinguish the municipal corporation’s power to levy regulatory license fees under other legislative entries such as Entry 5 and Entry 66 of List II and Article 243X of the Constitution. The Court rejected the argument that the MMC Act’s licensing provisions were impliedly repealed by GST enactments. It further observed that the GST applies to the supply of advertising services by the agencies to third parties, a transaction distinct from the municipal license fees for sky-signs.

The Court also dismissed challenges to the scrutiny fee of Rs.5,000 per application, holding it to be a legitimate administrative charge distinct from license fees, justified by the costs of processing applications.

On the question of the reasonableness of the license fees, the Court noted that the rates fixed by PMC were based on market-driven tender processes and were reasonable compared to other municipal corporations, such as Mumbai. The Court underscored the evolving complexity in regulating modern electronic and illuminated sky-signs and hoardings, emphasizing the municipality’s responsibility to balance technological advances, public safety, environmental concerns, and urban aesthetics.

In conclusion, the Bombay High Court upheld the PMC’s authority to levy and collect license fees on advertisements and hoardings, dismissed the writ petitions, and observed that the petitions represented “luxury litigation” aimed at unjust enrichment. The Court reiterated the importance of municipal autonomy in revenue generation to fulfill statutory obligations and serve public interest effectively.

Bottom Line:

Municipal Corporation has authority to levy license fees for granting/renewing permissions for sky-signs, advertisements, and hoardings under Sections 244, 245 read with Section 386(2) of the Maharashtra Municipal Corporation Act, 1949 License fees for granting permissions for sky-signs are regulatory fees, not taxes, and thus the levy is valid and distinct from advertisement tax.

License Fee - Introduction of Goods and Services Tax laws and deletion of Entry 55 from the State List of the Seventh Schedule of the Constitution of India do not obliterate the provisions permitting the Municipal Corporation to recover license fees under the Act.

License Fee by Municipal Corporation - Retrospective sanction and enhancement of license fees is valid and legal.

Statutory provision(s): Maharashtra Municipal Corporation Act, 1949 (Sections 82, 127, 244, 245, 386), Bombay Provincial Municipal Corporation (Control of Advertisement and Hoarding) Rules, 2003 (Rule 4, Rule 7, Rule 8, Appendix 2), Constitution of India (Articles 14, 19(1)(g), 243X, 246, 246A, 269A, 366), Maharashtra Goods and Services Tax Act, 2017

Manoj Madhav Limaye v. State of Maharashtra, (Bombay)(DB) : Law Finder Doc Id # 2820327