Stamp duty: Ad industry fails to get relief

The Bombay High Court on Wednesday did not give any relief to the advertising industry which has filed a petition against a new law that 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 along with a few others then filed the petition saying that the amendment was unconstitutional.

The main argument against the amendment is that Constitution does not allow state governments to levy tax on advertisements in newspapers, radio or TV.

The matter to make amendments in this regard falls in the Union government's domain.

However, government pleader Niranjan Pandit said that the word mass media covered other media like hoardings, mobile vans, neon signs etc too.

State has no plan to levy stamp duty on advertisements in newspapers, radio and TV, Pandit told the court.

According to Pandit the contracts between clients and agencies would attract stamp duty.