IMAGIC CREATIVE PVT LTD Vs. COMMISSIONER OF COMMERCIAL TAXES
LAWS(SC)-2008-1-92
SUPREME COURT OF INDIA (FROM: KARNATAKA)
Decided on
January 09,2008
IMAGIC CREATIVE PVT LTD
Appellant
VERSUS
COMMISSIONER OF COMMERCIAL TAXES
Respondents
Referred Judgements :-
TATA CONSULTANCY AND BHARAT SANCHAR NIGAM LTD. V. UNION OF INDIA [REFERRED TO]TATA CONSULTANCY SERVICES V. MUNICIPAL CORPORATION OF GREATER BOMBAY AND ANR. [REFERRED TO]
STATE OF MADRAS VS. CANNON DUNKERLEY AND CO MADRAS LIMITED [REFERRED TO]
BUILDERS ASSOCIATION OF INDIA VS. UNION OF INDIA [REFERRED TO]
FEDERATION OF HOTEL AND RESTAURANT ASSOCIATION OF INDIA VS. UNION OF INDIA [REFERRED TO]
UNION TERRITORY OF CHANDIGARH VS. DILBAGHSINGH [REFERRED TO]
ASSOCIATED CEMENT COMPANY LIMITED VS. COMMISSIONER OD CUSTOMS [REFERRED TO]
STATE OF UTTAR PRADESH VS. UNION OF INDIA [REFERRED TO]
REGISTAR HIGH COURT OF GUJARAT VS. C G SHARMA [REFERRED TO]
Cited Judgements :-
THE COMMISSIONER OF SALES TAX MAHARASHTRA STATE VS. PAGE POINT SERVICE (P) LTD. [LAWS(BOM)-2014-9-207] [REFERRED TO]TATA CONSULTANCY SERVICES LTD. VS. STATE OF MEGHALAYA [LAWS(MEGH)-2014-2-3] [REFERRED TO]
MAHYCO MONSANTO BIOTECH (INDIA) PVT LTD VS. UNION OF INDIA [LAWS(BOM)-2016-8-209] [REFERRED]
AD. AGE OUTDOOR ADVERTISING PRIVATE LIMITED VS. THE GOVERNMENT OF ANDHRA PRADESH [LAWS(APH)-2011-2-93] [REFERRED TO]
KMK EVENT MANAGEMENT LTD. VS. COMMISSIONER OF COMMERCIAL TAXES [LAWS(APH)-2014-12-74] [REFERRED TO]
VICEROY HOTELS LIMITED VS. COMMERCIAL TAX OFFICER AND THREE ORS [LAWS(APH)-2011-2-99] [REFERRED TO]
INDUS TOWERS LIMITED VS. STATE OF GUJARAT [LAWS(GJH)-2018-8-392] [REFERRED TO]
Batra's Positive Health Clinic Private Limited VS. State of Karnataka [LAWS(KAR)-2013-3-177] [REFERRED TO]
SAYAJI HOTELS LTD. VS. UNION OF INDIA (UOI) [LAWS(MPH)-2010-10-88] [REFERRED TO]
NATIONAL BUILDING CONSTRUCTION CORPN. LTD. VS. UNION OF INDIA [LAWS(GAU)-2012-6-164] [REFERRED TO]
BHARTI TELEMEDIA LTD VS. GOVERNMENT OF NCT OF DELHI [LAWS(DLH)-2011-9-3] [REFERRED TO]
TAPAN MUKHERJEE VS. MEDICAL COUNCIL OF INDIA [LAWS(CAL)-2018-11-28] [REFERRED TO]
G.S. PROMOTERS VS. THE UNION OF INDIA (UOI) AND ORS. [LAWS(P&H)-2010-12-120] [REFERRED TO]
WIPRO GE MEDICAL SYSTEMS PVT. LTD. VS. COMMR. OF S. T., BANGALORE [LAWS(CE)-2008-8-148] [REFERRED TO]
THE GRAND ASHOK VS. THE COMMISSIONER OF SERVICE TAX [LAWS(CB)-2009-1-3] [REFERRED TO]
TATA SKY LIMITED VS. STATE OF M.P. AND OTHERS [LAWS(MPH)-2010-8-112] [REFERRED TO]
CAP N CHOPS CATERERS VS. STATE OF HARYANA [LAWS(P&H)-2010-9-281] [REFERRED TO]
DASPALLA HOTELS LTD. VS. THE COMMISSIONER OF CENTRAL EXCISE [LAWS(CE)-2009-7-157] [REFERRED TO]
AGRAWAL COLOUR ADVANCE PHOTO SYSTEM VS. COMMISSIONER OF CENTRAL EXCISE, BHOPAL [LAWS(CE)-2010-5-121] [REFERRED TO]
SAMTECH INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE [LAWS(CE)-2012-3-123] [REFERRED TO]
MALABAR GOLD PRIVATE LIMITED VS. COMMERCIAL TAX OFFICER CIRCLE III [LAWS(KER)-2012-11-53] [REFERRED TO]
TATA SKY LIMITED VS. STATE OF PUNJAB AND ANR [LAWS(P&H)-2010-10-481] [REFERRED]
UNITED SPIRITS LTD. VS. COMMISSIONER OF SERVICE TAX, BANGALORE [LAWS(CE)-2011-5-49] [REFERRED TO]
CMC LTD. VS. COMMISSIONER OF SERVICE TAX [LAWS(CE)-2013-9-75] [REFERRED TO]
HICURE PHARMACEUTICALS PVT. LTD. VS. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT-3) [LAWS(KAR)-2015-9-295] [REFERRED TO]
M/S. CROMPTON GREAVES LTD. VS. M/S. ANNAPURNA ELECTRONICS [LAWS(KAR)-2013-8-51] [REFERRED TO]
SAYAJI HOTEL LTD. VS. COMMISSIONER OF C. EX. [LAWS(CE)-2010-9-80] [REFERRED TO]
MALABAR GOLD PRIVATE LIMITED VS. COMMERCIAL TAX OFFICER [LAWS(KER)-2013-6-170] [REFERRED TO]
SURYA TRANSFORMERS VS. COMMISSIONER OF CENTRAL EXCISE [LAWS(CE)-2012-3-120] [REFERRED TO]
XEROX INDIA LTD. VS. COMMISSIONER OF SERVICE TAX, DELHI [LAWS(CE)-2012-4-13] [REFERRED TO]
LSG SKY CHEFS (INDIA) PVT. LTD. VS. COMMR. OF SERVICE TAX, BANGALORE [LAWS(CE)-2008-4-91] [RELIED ON]
BHARTI AIRTEL LTD. VS. COMMISSIONER OF CENTRAL EXCISE, DELHI [LAWS(CE)-2012-5-74] [REFERRED TO]
BALLAL AUTO AGENCY VS. UNION OF INDIA AND ORS. [LAWS(KAR)-2014-11-345] [REFERRED TO]
DELTA COMMUNICATIONS VS. THE STATE OF KERALA [LAWS(KER)-2015-7-130] [REFERRED TO]
ORIENTAL BANK OF COMMERCE VS. STATE OF U P [LAWS(ALL)-2008-2-114] [REFERRED TO]
MAA SHARSA WINE TRADERS VS. UNION OF INDIA [LAWS(MPH)-2008-3-37] [REFERRED TO]
MADRAS HIRE PURCHASE ASSOCIATION VS. UNION OF INDIA [LAWS(MAD)-2009-6-242] [REFERRED TO]
YOGENDRA KUMAR JAISWAL AND ORS. VS. STATE OF BIHAR AND ORS. [LAWS(SC)-2015-12-75] [REFERRED TO]
UCO BANK VS. RAJINDER LAL CAPOOR [LAWS(SC)-2008-3-196] [REFERRED TO]
SOUNDARYA DECORATORS (P) LTD VS. ASSISTANT COMMISSIONER (CT) ADDL [LAWS(MAD)-2019-9-674] [REFERRED TO]
M/S. TATA SKY LTD., REPRESENTED THROUGH ITS MANAGING DIRECTOR AND CEO VS. STATE OF ORISSA AND OTHERS [LAWS(ORI)-2012-4-40] [REFERRED TO]
QUIPPO OIL AND GAS INFRASTRUCTURE LIMITED AND ORS. VS. STATE OF TRIPURA AND ORS. [LAWS(TRIP)-2014-11-75] [REFERRED TO]
Essar Telecom Infrastructure Pvt. Ltd. by Nagaraju Nara - Finance and Accounts Executive VS. Union of India (UOI) - by its Secretary Ministry of Finance, Dept. of Revenue Government of India, State of Karnataka - by its Finance Secretary and Dep [LAWS(KAR)-2011-4-120] [REFERRED TO]
SUN DIRECT TV PVT LTD VS. STATE OF UP [LAWS(ALL)-2012-7-88] [REFERRED TO]
SKY GOURMET CATERING PRIVATE LIMITED VS. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES [LAWS(KAR)-2011-4-11] [REFERRED TO]
MC DONALDS INDIA PVT. LTD. VS. COMMISSIONER OF TRADE AND TAXES, NEW DELHI [LAWS(DLH)-2017-5-208] [REFERRED TO]
ASIAN OILFIELD SERVICES, A COMPANY, INCORPORATED UNDER THE COMPANIES ACT, 1956 VS. THE STATE OF TRIPURA AND ORS. [LAWS(TRIP)-2015-5-4] [REFERRED TO]
TIM DELHI AIRPORT ADVERTISING PVT. LTD. VS. SPECIAL COMMISSIONER-II, DEPARTMENT OF TRADE & TAXES AND ORS. [LAWS(DLH)-2016-5-1] [REFERRED TO]
NEWSCO INTERNATIONAL ENERGY SERVICES INC. VS. STATE OF TRIPURA [LAWS(TRIP)-2016-2-27] [REFERRED TO]
PERFECT VENDING INDIA PVT. LTD VS. CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL [LAWS(MAD)-2014-7-120] [REFERRED TO]
FUTURE GAMING SOLUTIONS PVT. LTD. VS. UNION OF INDIA AND OTHERS [LAWS(SIK)-2012-11-3] [REFERRED TO]
M/S. FUTURE GAMING SOLUTIONS INDIA PRIVATE LIMITED VS. UNION OF INDIA [LAWS(SIK)-2013-9-4] [REFERRED TO]
BHARAT HOTELS LTD. VS. COMMISSIONER OF CENTRAL EXCISE (ADJUDICATION) [LAWS(DLH)-2017-11-422] [REFERRED TO]
P.K. SHEFI VS. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL AND ORS. [LAWS(MAD)-2015-6-391] [REFERRED TO]
FUTURE GAMING & HOTEL SERVICES (PVT.) LTD. VS. UNION OF INDIA [LAWS(SIK)-2015-10-8] [REFERRED TO]
FEDERATION OF HOTELS AND RESTAURANTS ASSOCIATION OF INDIA AND ORS. VS. UNION OF INDIA AND ORS. [LAWS(DLH)-2016-8-32] [REFERRED TO]
ESSAR TELECOM INFRASTRUCTURE PVT LTD VS. UNION OF INDIA [LAWS(KAR)-2011-4-83] [REFERRED TO]
FOXTEQ SERVICES INDIA LTD VS. COMMISSIONER OF SERVICE TAX [LAWS(MAD)-2013-4-8] [REFERRED TO]
M/S DOMINOS PIZZA OVERSEAS FRANCHISING B.V. VS. STATE OF U.P. AND OTHERS [LAWS(ALL)-2016-11-30] [REFERRED TO]
INDIAN COFFEE WORKERS CO-OPERATIVE SOCIETY LIMITED VS. UNION OF INDIA [LAWS(MPH)-2016-7-115] [REFERRED]
TRIPTI ALCOBREW PVT LTD VS. STATE OF M P AND OTHERS [LAWS(MPH)-2018-6-54] [REFERRED TO]
JUDGEMENT
-
(1.) LEAVE granted.
(2.) WHETHER the charges collected towards the services for evolution of prototype conceptual design (i. e. creation of concept), on which service tax had been paid under the Finance act, 1994 as amended from time to time is liable to tax under the Karnataka Value Added tax Act, 2003 (the Act) is the question involved in this appeal which arises out of a judgment and order dated 29. 11. 2006 passed by a Division Bench of the Karnataka High court in STA No. 7 of 2006.Appellant is an advertising agency. It provides for advertisement services. It creates original concept and design advertising material for their clients and design brochures, annual reports etc. The contrast between the appellant and their clients does not appear to have been entered into in writing as no written contract as such has been placed before us.
We may notice a purchase order and the invoice which have been produced before us and the authenticity whereof is not in question:
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JUDGEMENT_496_JT1_2008Html2.htm
(3.) THEY filed their returns both under the Finance Act, 1994 as also the Act. An order of assessment was passed by the Assessing Authority in terms of Section 12 of the Karnataka Sales Tax Act and Rule 3 of the Karnataka Sales Tax Rules, material portion whereof reads as under: "in view of the above discussions, I hereby complete the assessment for the year 2003-2004 under section 12 (3) of the KST Act 1957 by confirming the turnovers proposed in the proposition notice.JUDGEMENT_496_JT1_2008Html3.htm
After passing of the order of assessment, a raid was conducted. A criminal proceeding was initiated against the appellant-company. An application was filed by it before the appropriate authority under Section 60 of the act for classification and advance rulings. By reason of the order dated 30th September, 2005, it was held :
"the issue is examined in detail and it is seen that in the sale of the advertisement material, the background activity such as conceptualization is no doubt an idea but creation of advertisement is a comprehensive activity leading to creation of goods in question. Even when any other goods are produced there is some idea and thought regarding the shape and size etc. Therefore, to separate design and concept taking the sale value of merely the advertisement material as brochure etc. is improper. It is further seen that in the bills there is separate charge made as content development concept, design, photography scanning and other charges such as system charges including colour sketch pen or computer used design software etc. , Ultimately, the brochures come out. Considering the entire ambit of activity of the dealer it is seen that it is a comprehensive contract or supply of printed material developed by the company. The bills also indicate the entire activity though separated is a comprehensive work. Such creation of activity tantamounts to making indivisible contract in a divisible contract. Therefore, this Authority rules that entire sale value including the creation of concept etc. done by the company forms a part of the value of sale of such brochures and liable to tax at 4% on the entire proceeds received including those relating to concept charges, system charges etc. In short, this Authority rules that the sale of printed material with a background of providing the concept is an indivisible activity liable to tax at 4% as a whole. "
(Emphasis supplied) ;
(2.) WHETHER the charges collected towards the services for evolution of prototype conceptual design (i. e. creation of concept), on which service tax had been paid under the Finance act, 1994 as amended from time to time is liable to tax under the Karnataka Value Added tax Act, 2003 (the Act) is the question involved in this appeal which arises out of a judgment and order dated 29. 11. 2006 passed by a Division Bench of the Karnataka High court in STA No. 7 of 2006.
(3.) THEY filed their returns both under the Finance Act, 1994 as also the Act. An order of assessment was passed by the Assessing Authority in terms of Section 12 of the Karnataka Sales Tax Act and Rule 3 of the Karnataka Sales Tax Rules, material portion whereof reads as under: "in view of the above discussions, I hereby complete the assessment for the year 2003-2004 under section 12 (3) of the KST Act 1957 by confirming the turnovers proposed in the proposition notice.
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