The Preservation and Promotion of the Arts (PAPOA), which has offices in Friargate and Leyland Business Park, also said it gave away books during a cultural event at an industrial unit in Ryton in Gateshead in September 2017.
The court heard PAPOA told Gateshead Council it should be exempt from business rates for a five-month period because its premises had been used for charitable purposes during that time.
The company said the event took place at the unit in January, with books given away and copies of work from artists including the street artist Banksy put on display.
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The judge found in favour of the council and ordered PAPOA to pay the outstanding business rates of Â£4,863.55 and Â£85 costs.
Lindsay Murray, Gateshead Council’s service director for trading and commercialisation, said: “If PAPOA’s intention in holding the event was truly to support the advancement of arts in Gateshead then I am afraid their methods are woefully counterproductive.
"Business rates avoidance schemes such as this have a significant detrimental impact on the Council’s ability to fulfil its cultural ambitions.
“The Council’s ability to deliver on those ambitions has been put under severe pressure in recent years by cuts to public funding.
“It is troubling then, that PAPOA was trying avoid paying business rates, the effect of which is that it makes it more difficult for the Council to actually support artists.
“We hope this result will serve notice to any organisation which tries to avoid paying legitimate business rates, which are so vital to our economy, that we will pursue them through the courts.”
PAPOA said they had appealed the ruling but declined to comment further.