HC bench rules HDMC ad tax not in conflict with GST

Court maintains the two taxes are levied for two different types of transactions

The Dharwad Bench of Karnataka High Court has ruled that Good & Services Tax (GST) levied on display of advertisements on outdoor media, and the advertisement tax levied by Hubbali-Dharwad Municipal Corporation (HDMC) on media assets licensed out by the civic body are for two distinctly different transactions and hence will not be deemed as a case of double taxation. The GST can be passed on by the media asset licensee to the advertiser, whereas the ad tax levied on the media owner is linked to the license for advertising that is awarded by the local body.

As reported in Times of India, the ruling followed the dismissal of a petition filed by the Hubbali-Dharwad Advertisers Association in December 2014 whereby the body had cited that the ad tax levied by HDMC would be at conflict with the GST that was coming into effect. It was maintained that since GST subsumed a gamut of good and services taxes that were enforced then, the ad tax could also be similarly subsumed. However, the Court ruling has cited that the GST and ad tax levied by HDMC are for two different types of transactions.

This ruling will have a bearing on any similar situations faced by outdoor media owners in other cities and towns.

It may be recalled that a month ago, in early April the Nagpur Bench of Bombay High Court had also allowed Nagpur Municipal Corporation (NMC) to levy license fee on media assets set up in areas within the corporation’s jurisdiction. The NMC was levying licence fee as mandated in the scheduled rates of the outdoor advertisement policy 2001. A body of outdoor media owners had petitioned contending that the license fee imposed by the civic body was illegal in the wake of implementation of GST.