Taking note of the recent notices issued by MCC on city multiplexes and cinema halls, Vinod Vashisht, leading author of the region on GST, Excise and Taxation says that such move of asking payment of fees for display of advertisements is not right in earnest and would fall flat if challenged.
Chandigarh Municipal Corporation is asking all multiplexes and cinema halls to pay fee every week for advertisements shown during movie shows under the Chandigarh Advertisement Control Order, 1954 (as amended from time to time), which prescribes fees for display of advertisements. The cinema owners have been asked to pay flat weekly fees of Rs 4,800 for advertisements shown through slides and Rs 24,000 for advertisements shown through reels.
Chandigarh Advertisement Control Order, 1954 was formulated under Section 12 of the Capital of Punjab (Development and Regulation) Act, 1952 which was then extended to Chandigarh by the Punjab Reorganisation (Chandigarh) (Adaptation of Laws on State and Concurrent Subjects) Order, 1968.
“Section 12 regarding ‘Control of Advertisements’ stipulates that the Administrator can by notification in the official gazette, make the Advertisements Control Order for restricting or regulating the display of advertisements affixed to land or building and fees to be charged. The scope of this section does not cover display of advertisement in cinema houses. Therefore, any order levying fee of advertisements during movie shows are not under the ambit of this Act and MCC is not empowered to make such demand,” said Vashisht.
Vashisht pointed out that MCC came into existence as per the Punjab Municipal Corporation Law (Extension to Chandigarh) Act, 1994 and it should now start making best use of this Act instead of banking upon the old Capital Act. Under Sections 399 and 401 of Municipal Act, Punjab has already formulated its Advertisement Policy, 2018 and Chandigarh should take cue from it, added Vashisht.
Putting flat fees for display of advertisements for all types of cinemas (traditional single screen and multiplexes) is not prudent. Even under the GST Act, there are concessional treatments for cinema houses with less than rupee 100 ticket or theatres with less than rupee 250 admission ticket.
Now, State or UTs are no more empowered to levy tax on advertisements. Taxation on advertisements has been removed from the ‘State List’ in the Constitution of India at the time when GST was rolled out last year. MCC can levy advertisement fees mostly on display of advertisements at sites under its jurisdiction, where the sites are under not its direct control there it should be a revenue sharing model depending upon the category of advertisements, suggested Vashisht.