The High Court of Karnataka has declared that there is no conflict between the power to levy GST under Goods and Services Act and the power of municipal corporations in the State to levy advertisement fee or advertisement tax under Section 134 of the Karnataka Municipal Corporations Act.
Justice Suraj Govindaraj passed the order while dismissing the petition filed by Hubballi-Dharwad Advertisers’ Association, and several advertising agencies.
The petitioners had claimed that collection of advertisement of tax by Hubballi-Dharwad Municipal Corporation after commence of Goods and Services Tax (GST) Act amounts to double taxation and hence the corporation cannot impose advertise tax or fee on the advertising agencies for permitting advertisement hoardings.
However, the court said that the incidence of advertisement tax or advertisement fee is on the license granted by the corporation permitting the petitioner to put up hoarding or make use of the hoardings, this incidence of advertisement tax or fee has nothing to do with supply or service or goods by the petitioner to its clients to put up their advertisement on such hoardings.
Pointing out that the transaction with the corporation is for the permission or license granted to put up hoarding and or use a hoarding either on the land belonging to the corporation or on the land belonging to a private party, the court said that it is “an independent and distinct transaction” and does not amount to double taxation.
“The GST as stated above is levied on any supply of goods or services. The petitioners carrying on advertisement business it is during the course of the said business that the petitioner is required to collect GST from any of its/their clients and remit it to the authorities. It is not that the petitioners are making payments of GST out of their own pockets,” the court observed.
