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2020 (1) TMI 886 - HC - VAT and Sales TaxValidity of assessment order - TN VAT Act - taxability of turnover received from the services rendered by the petitioner in regard to digital photography - HELD THAT:- Courts have consistently settled the position that the activity carried in this regard would only amount to a "contract of skill and labour" and not a "contract of sale". In a recent decision in the case of IMAGIC CREATIVE PVT. LTD. VERSUS COMMISSIONER OF COMMERCIAL TAXES & ORS. [2008 (1) TMI 2 - SUPREME COURT], a Bench of the Supreme Court considered the question of whether charges collected towards service rendered by an advertising agency for evolving of a prototype conceptual design upon which service tax had been collected would also be liable for tax under the Karnataka Value Added Tax Act, 2003 - After considering the nature of services rendered, the Bench concluded that payment of service tax and value added tax are mutually exclusive. Therefore, they should be held to be applicable exclusively having regard to the relevant parameters of the respective levies and bearing in mind the differences envisaged in a composite contact as contradistinguished from an indivisible contract. The former may consist of different elements each providing for, and attracting different levies. The resounding position of law as on date is thus to the effect that the activity of digital photography as carried on by the petitioner herein, is a service as contemplated under the provisions of the Finance Act, 1994 levying service tax and the petitioner is, already, remitting service tax on the said receipts. In such circumstances, there is no justification to subject the receipts to value added tax both on the reasoning that: (i) the activity in question is a contract for skill and labour and (ii) the levy of service tax and value added tax are mutually exclusive. Petition allowed.
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