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Hoardings Are Movable Property Under Section 2(3) of DMC Act Subject To the Twin Test: Delhi High Court

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Delhi High Court in the case of Delhi International Airport v South Delhi Metropolitan Corporation discussed in detail the provision under Section 2(3) of the DMC Act. The Court stated that Property and Advertisement Tax could be levied to each other on a property.

Brief Facts of the Case

The Court heard two Petitions against the DMC (Property Taxes) Bye-Laws, 2004.

In the first petition, the Petitioner was the Delhi International Airport. The Respondent issued a demand for property tax on ‘hoarding’, as per the definition of the said word as provided under the DMC (Property Taxes) Bye-Laws, 2004.

The Petitioner questioned the impugned demand on the ground that it was vague and ambiguous, and requested that the same be withdrawn. Additionally, the Petitioner called upon the Respondents to furnish the copies of the notifications which vested jurisdiction with the Respondents to claim property tax on hoardings. The Respondent clarified that the Bye-Laws contained the relevant provision, i.e, Bye-Law 14. Further, the definition of the word ‘building’ as defined in Section 2(3), was stated to cover ‘any other structure’ which would include a hoarding. 

The Petitioner objected to the interpretation of the words ‘any other structure’. The Respondent continued to impress upon the Petitioner to file the property tax return and clear dues from 2004 onwards. This was along with interest rate of one per cent per month as per Section 152(2) of the DMC Act. This was to be done in consonance with Section 116E of the Act, read with Bye-Law 14 of the 2004 Bye-Laws, failing which, an assessment would be made under Section 113D of the Act. Further action would be taken as provided under Section 152A of Act for willful default in payment of property tax. Aggrieved with the Respondent’s stand, the Petitioner filed the present petition impugning the demands on several grounds.

In the second petition, the Petitioner was the Delhi Outdoor Advertisers Association. They challenged the constitutional validity of the 2004 Bye-Laws to the extent that it imposed property taxes on hoardings. 


Relying on certain principles of Interpretation of Statutes, it was contended that hoardings are not buildings as under Section 2(3), DMC Act. Hence it could not be amenable to tax. It was movable property and as per purposive interpretation, it did not come under the term ‘wall’. Hoardings, thus, could not be part of covered space as under Section 331(f) and 116D(1).

It was further argued that a tax could be imposed only by a statute made by the competent legislature, and not by a delegated legislation.

Court’s Observation

After a detailed analysis of all the contentions raised by the Petitioner and relevant principles of Interpretation of Statues, the Court stated that under Section 2(3) of the DMC Act, all immovable structures (except boundary wall) were covered by the definition of ‘building’ and were liable to be subjected to property tax. Thus, immovable structures erected to hold and support ‘hoardings’ would also qualify as ‘building’. These would be liable to be subjected to property tax. But, only such of the hoardings as per Bye-Law 9(m) would be liable to be subjected to property tax, which qualified as immovable structures. 

Hoardings, if fastened on the immovable structures which get embedded in the earth or something that has been embedded in the earth, and met the test of permanence were liable to be considered as immovable structures. However, if the twin tests of degree and mode of annexation or object of annexation failed, hoardings would be excluded from the definition of a building. Then, in such cases, the Hoardings would not be liable to be subject to property tax. 

The Petitioner’s submission against the validity of Bye-Laws 9(m) and 14 as being violative of Article 14 and Article 265 of the Constitution were said to have no merit. 

The Court held that the South Delhi Municipal Corporation was competent to include such of the hoardings, which constituted immovable property in a ‘covered space’. This was under the powers conferred by the statute. 

The South Delhi Metropolitan Corporation was further empowered to provide how property tax on a building is to be levied by way of Bye-Laws. Thus, the argument that tax could be imposed by statute and not by delegated legislation was ruled to be irrelevant. This was because much of the hoardings which constituted immovable structure were covered by a building, and the Act itself provides for property tax on buildings. 

Property tax could be levied additionally. to Advertisement tax as both the levies were said to be separate. 

Court’s Order

Applying the observations to the present case, the Court set aside the demands and notices of the Respondent.

The reason was that the South Delhi Metropolitan Corporation did not examine whether the hoardings here qualify as permanent immovable structures, and, whether they were to be included in the definition of ‘building’ under Section 2(3) of the Act. 

The Court held that the Respondent had the liberty to issue a fresh show-cause notice to the Petitioners with regards to the views expressed in this judgment. The Court concluded that they were to pass orders of assessment/demand after affording an opportunity of hearing per law.

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