Relief to BBMP: Karnataka High Court rejects Ad firm’s claim on Tax dues [Read Judgment]

Relief to BBMP: Karnataka High Court rejects Ad firm’s claim on Tax dues [Read Judgment]

Bruhat Bengaluru Mahanagara Palike - Karnataka High Court - claim on tax dues - Taxscan

The Karnataka High Court while granting the relief to Bruhat Bengaluru Mahanagara Palike rejected the ad firm’s claim on tax dues.

The appellant, M/s Serve and Volley Outdoor Advertising Private Limited being in the business of outdoor advertisement, responded to a tender, inviting potential bidders to develop and maintain the road medians and also to earn revenue from the same. Plaintiff entered into three agreements with  Bruhat Bengaluru Mahanagara Palike as the successful bidder.

The plaintiff was permitted and licenced to beautify the road medians at the specified locations under the agreement and was allowed to install translite boxes in the road medians for displaying commercial advertisements of its clients. The plaintiff undertook to pay advertisement tax, cess and other statutory dues to Bruhat Bengaluru Mahanagara Palike, which is a Municipal Corporation for the City of Bengaluru (BBMP) at the rates prescribed from time to time.

On the other hand, the respondent contended that the appellant fell into arrears in the payment of license fees and other dues. Hence, a demand notice was issued claiming arrears of license fee, advertisement tax, etc.

The appellant also preferred a claim for Rs.1,90,00,000/- as compensation against respondent and pursuant to an order passedan Arbitrator was appointed. However, the claim of the appellant was dismissed by award.

it is clear that the period of limitation, whether for a suit or an arbitration is the same under Section 474 of the KMC Act even though the word “arbitration” is not found in the said provision. The reason being, the judgment in Panchu Gopal Bose clearly states that the period of limitation for the commencement of arbitration runs from the date on which, had there been no arbitration clause, the cause of action would have accrued.

Therefore, the period of limitation as prescribed for a suit in Section 474 of the KMC Act, i.e., to commence a civil action, would also be the same for the commencement of an arbitration.

Hence, the expression “suit” in Section 474 of the KMC Act would take within its scope and ambit the expression “arbitration” also. This is because arbitration is an alternative dispute resolution mechanism to a suit. In the circumstances, the period of limitation for making claims by respondent by way of a suit or arbitration is six years from the date when the cause of action arose.

The division bench of Justices B.V. Nagarathna and N.S.Sanjay Gowda upheld the verdict of a city court rejecting the claim of M/s Serve and Volley Outdoor Advertising Private Limited with regard to tax revenue.

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