Tax on sale or purchase of goods

Last updated: 13 February 2008

Court :
SUPREME COURT OF INDIA

Brief :
Appellant was an advertising agency, engaged in creating original concepts and designing advertising material filed its returns both under Finance Act, 1994 and Karnataka Value Added Tax Act, 2003. Assessing Authority completed assessment by excluding certain items of exempted turnover which included service charges, design and art work charges collected by appellant in which no transfer of property in goods was involved. Subsequently, criminal proceedings were initiated against appellant and Tribunal held that sale of printed material with a background of providing concept was an indivisible activity liable to tax as a whole. On appeal, High Court upheld order passed by Tribunal – the exclusive payment of service tax and VAT should be held to be applicable having regard to respective parameters of service tax and sales tax as envisaged in a composite contract as contradistinguished from an indivisible contract - therefore, sales tax would not be payable on value of entire contract irrespective of element of service provided . Assessing authority was correct in law approach and, therefore, impugned judgment was to be set aside and appeal was to be allowed.

Citation :
Imagic Creative (P.) Ltd. v Commissioner of Commercial Taxes