The Karnataka High Court has declared that there is no conflict between the power to levy GST under GST Act and power of Municipal Corporation to levy advertisement fee or advertisement tax under Section 134 of the Karnataka Municipal Corporations Act.
Advocate Zameer Pasha for the petitioners contended that on the enactment of the Goods and Service Tax Act (GST), the authority of the respondents to either levy or collect advertisement tax is ousted. Therefore, there could be no demand for advertisement tax post the enactment of the GST.
Further, the respondents have collected the advertisement tax in terms of Section 134 of the Karnataka Municipal Corporations Act, 1976. The power under Section 134 of the KMC Act flows from Entry 54, List II of Schedule VII of the Constitution of India. The said Entry 54 having been deleted the said power is divested. Hence, even on that ground no advertisement tax could be levied.
The GST Act has been introduced pursuant to 101st amendment to the Constitution which among other things has introduced Article 246(A) to the Constitution. The GST Act has been introduced with the intention to simplify the process of collecting indirect taxes. The indirect taxes like excise duty, sales tax, service tax, etc., have been subsumed in the GST Act wherein GST is levied on the supply of services and or goods.
With regard to the above contentions of the petitioners, Justice Suraj Govindaraj observed that “If so done there is double taxation which is impermissible and that on coming into force of the GST Act, it is only GST which is applicable to the petitioners and no advertisement tax is liable to be paid.”
Noting the fact that the GST as stated above is levied on any supply of goods or services, the Court observed that the petitioners supplying services and or goods, on the invoice that the petitioners were to raise on their respective clients the invoice amount would be required to be accompanied by a GST amount on the basis of the categorization of services and or goods under the GST Act. The said GST collected from the client of the petitioners, the amount is required to be remitted by the petitioners to the GST authorities.
“In this transaction the petitioners are only a collecting agency who collects the GST payable on the service rendered and deposits the same with the authorities, the incidence of tax, i.e., GST being on the services rendered or goods supplied, the obligation of payment being on the person availing the service and or receiving the goods,” the Court said.
“The incidence of GST is on the service rendered by the petitioner to its clients and has nothing to do with respondent No.2-HDMC. The transaction with HDMC is the permission and or license granted by the HDMC to put up hoarding and or use a hoarding either on the land belonging to the HDMC and or on land belonging to a private party. The incidence of advertisement tax or advertisement fee is on the license granted by HDMC 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,” the Court said.
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