<h1>Supreme Court Overrules Karnataka HC: Service Tax and VAT Payments in Composite Contracts Are Mutually Exclusive.</h1> The Supreme Court has overruled the Karnataka High Court's decision in a case involving an advertising agency and the imposition of Sales Tax and Service Tax on the same transaction. The case questioned whether charges for creating prototype conceptual designs, already taxed under the Finance Act, were also subject to the Karnataka Value Added Tax Act. The High Court had upheld the Sales Tax demand, viewing the service as an indivisible activity. However, the Supreme Court determined that payments for service tax and VAT are mutually exclusive, emphasizing that different elements of a composite contract can attract different types of taxes.