Dharma Productions wins Rs. 12.11 crores GST case | Indian Movie News
Dharma Productions has secured aid from the Bombay High Court in a Rs. 12.11 crores GST dispute regarding the licensing of copyright in its cinematographic movies. The court quashed the tax demand after discovering that the digital supply of movie content couldn’t, by itself, lead to its classification as “Information Technology Software”.
A bench comprising Justice M.S. Karnik and Justice Sandesh D. Patil was listening to petitions filed by Dharma Productions and Dharmatic Entertainment difficult the GST authorities’ classification of their film-rights licensing transactions. The dispute relates to the financial years 2017-18 to 2020-21, when licensing mental property rights in items other than IT software program attracted GST at 12%, while licensing of IT software program was taxed at 18%. The demand against Dharma comprised Rs. 9.99 crores in tax, Rs.1.23 crores in curiosity and Rs. 99.99 lakhs as penalty.
Dharma, which produces, develops and funds movies and owns copyrights in its productions, had entered into Rights Licence Agreements overlaying theatrical, sound, satellite tv for pc and digital rights. It categorised these transactions under SAC 997332, which particularly relates to licensing the best to broadcast and show unique movies, sound recordings and related content, and paid GST at 12%.
The tax authorities subsequently handled the transactions as licensing of IT software program and sought to apply the 18% price. Among the fabric relied upon was a assertion by Dharma’s Post-Production Head concerning the digital transmission of movies.
The High Court, however, drew a distinction between the content itself and the style in which it was delivered. It famous that SAC 997331 individually covers licensing of pc software program and databases, while SAC 997332 particularly addresses cinematographic movies and related works.
The court noticed that a movie is a “passive audio visual work” and shouldn’t be succesful of execution, manipulation or interactivity in the style contemplated by the statutory definition of software program. It additional discovered that the authorities had not produced technical evidence, executable programming or software program structure to set up in any other case.
The bench also held that relying on the mode of transmission — whether or not through encrypted exhausting disks or electronically — couldn’t decide the GST classification. According to the court, classification had to be based on the important character of the availability.
The court additional criticised the authorities for relying on the Post-Production Head’s assertion without furnishing it to Dharma and for introducing an OIDAR-services argument only at the reply stage, fairly than in the unique show trigger notices.
The petitions had been accordingly allowed, with the court holding that the authorities had proceeded on an faulty legal premise in treating the licensing of copyright in cinematographic movies as IT software program.
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Dharma Productions wins Rs. 12.11 crores GST case | Watch Online Free
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