Mumbai: The Bombay high court Wednesday did not give any relief to the advertising industry, which has filed a petition against new law which levies stamp duty on advertising-related contracts.
The division bench of Chief Justice Swatanter Kumar and Justice Dhananjay Chandrachud made it clear that advertising firms will have to furnish the information regarding such contracts, as required by collector, stamps.
Earlier, there was no stamp duty on contracts entered into by advertising agencies with their clients and with the media companies.
But in 2005, state government amended Bombay Stamp Act, and provided for duty on “all instruments related to advertisements in mass media for promotion of a product”.
Advertising Agencies Association Of India, Indian Society of Advertisers and Indian Newspaper Society alongwith a few others then filed the present petition, saying that the amendment was unconstitutional.
The main arguement against the amendment is that the constitution does not allow state governments to levy tax on advertisements in newspapers, radio, or TV. It falls in the union government’s domain.
However, additional government pleader Niranjan Pandit said mass media covered other media like hoardings, mobile vans, neon signs, etc. too.
The state has no plan to levy stamp duty on advertisments in newspapers, radio and TV, Pandit told the court.
According to Pandit, the contracts between clients and agencies would attract stamp duty.
Moreover, he said, the advertisements in magazines too would attract duty, as magazines do not fall in the ‘newspaper’ category.
The petitioners, on the other hand, are contending the amendment violates the spirit of Article 19, which guarantees freedom of speech and freedom of press.
“Right to advertise is a facet of right to free speech,” the petition says, adding even Supreme Court has accepted in previous cases that there is a link between “unhindered” advertising and freedom of press.
Pandit said that as of now, the government can collect stamp duty with regard to advertising in other forms of media -- save newspapers, radio and TV -- as the court has passed no restraining order.
the petition will come up for hearing in due course.