Dharma Productions has secured relief from the Bombay High Court in a Rs. 12.11 crores GST dispute concerning the licensing of copyright in its cinematographic films. The court quashed the tax demand after finding that the electronic delivery of film content could not, by itself, lead to its classification as “Information Technology Software”.
A bench comprising Justice M.S. Karnik and Justice Sandesh D. Patil was hearing petitions filed by Dharma Productions and Dharmatic Entertainment challenging the GST authorities’ classification of their film-rights licensing transactions. The dispute relates to the financial years 2017-18 to 2020-21, when licensing intellectual property rights in goods other than IT software attracted GST at 12%, while licensing of IT software was taxed at 18%. The demand against Dharma comprised Rs. 9.99 crores in tax, Rs.1.23 crores in interest and Rs. 99.99 lakhs as penalty.
Dharma, which produces, develops and finances films and owns copyrights in its productions, had entered into Rights Licence Agreements covering theatrical, sound, satellite and digital rights. It classified these transactions under SAC 997332, which specifically relates to licensing the right to broadcast and show original films, sound recordings and similar content, and paid GST at 12%.
The tax authorities subsequently treated the transactions as licensing of IT software and sought to apply the 18% rate. Among the material relied upon was a statement by Dharma’s Post-Production Head regarding the digital transmission of films.
The High Court, however, drew a distinction between the content itself and the manner in which it was delivered. It noted that SAC 997331 separately covers licensing of computer software and databases, while SAC 997332 specifically addresses cinematographic films and similar works.
The court observed that a film is a “passive audio visual work” and is not capable of execution, manipulation or interactivity in the manner contemplated by the statutory definition of software. It …read more
Disclaimer : This story is auto-aggregated by a computer program and has not been created or edited by FilmyFriday. Source:: BollywoodHungama
