State Govt Has Power To Impose Permit Fee On Erection Of Mobile Towers : Supreme Court

The bench of Justices BV Nagarathna and Ujjal Bhuyan refused to accept the case of Bharat Sanchar Nigam Limited, the appellant, that the subject of permit fee on mobile towers would fall within the scope of Entry 31 of List I of the Seventh schedule of the Indian Constitution which lies exclusively within the domain of the Central Legislature. Entry 31 deals with posts and telegraphs; telephones, wireless, broadcasting, and other like forms of communication.

The appellant contended that the State authority does not have any power vested with them to issue any Circulars/Directions/Rules regarding these subjects.

The issue under adjudication was whether the State Government/local authority has power and authority to realise tax/fee or a charge on erection of mobile towers by Bharat Sanchar Nigam Limited.

Background

A Circular was issued by the State of Chhattisgarh, addressed to the local authorities to cause realisation of one time permit fee while granting sanction for erection of a mobile tower in the area under jurisdiction of the Municipal Corporations/Municipalities/Gram Panchayats and also for realisation of the yearly renewal fees.

The origin of this challenge arose when subsequently, through a Circular (November 11, 2009), there was an enhancement of the permit fee by five times and renewal fee by 10 times and settlement fee by 15 to 50 times. Pursuant to this, the State Government also issued the Chhattisgarh Municipal Corporation (Erection of Temporary Tower or Structure for Cellular Mobile Phone) Rules, 2010 (2010 Rules) for collection of fees.

Both, the 2010 Rules and 2009 circular, were challenged before the High Court in the context of the legislative competence being absent in the State to deal with the subject.

On the other hand, State Government's stance was that the State Legislature had the competence to frame the impugned Rules because a mobile tower, being a structure on land or building, comes within within the domain of State List under Entry 49 of List II of the Seventh Schedule, dealing with taxes on land and building.

However, the High Court had upheld the circulars as well as the Rules and therefore, dismissed the petitioners' plea. Thus, the present appeal.

Supreme Court's Observations

At first, the Court highlighted judgments wherein it had already delved into the scope and ambit of the Entries in various Lists of Seventh Schedule. These included Ahmedabad Municipal Corporation v. GIL Infrastructure Ltd. (2017) 3 SCC 545.

In this matter, the Court had observed that in the context of a mobile tower located on land and building, incidence of a tax or charge or fee is not on the structure of the mobile tower as such, rather it is on the use of the land and building on which the mobile tower is erected. Therefore, the person who is using the land and building for the purpose of installation of the mobile tower so as to make use of the said structure for the purpose of telecommunication or telegraph services is liable to pay the tax or fee or charge.

Based on this, the Court, in the present case, opined that Entry 49 List II is the only Entry which enables the State Government to collect tax or fee or charge, as the case may be, with regard to the use of land and building for the purpose of erection of the mobile towers located within a municipal corporation, municipality or a nagar panchayat or any other land and building within the state of Chhattisgarh

Relying on Ahmedabad Municipal Corporation' case, the Court further noted that mobile tower is covered within the subject enumerated in Entry 49 of List II which deals with land and building and therefore, was a subject covered under the State List.

Based on these facts and circumstances, the Apex Court refused to interfere with the High Court's order and held:

“….in the backdrop of the pertinent Entries in List I and List II of the Seventh Schedule of the Constitution and particularly in the context of the judgment of this Court in Ahmedabad Municipal Corporation, we find that the High Court of Chhattisgarh was right in upholding the Circulars and Rules and repelling the challenge made to the same as being devoid of any merit.”

Case Title: BHARAT SANCHAR NIGAM LIMITED & ANR. V. THE STATE OF CHHATTISGARH & ANR, SLP(C) NO(S).16014-16015 OF 2020.

Citation : 2023 LiveLaw (SC) 849

Click here to read the order