Bombay HC in Dharma Productions Case, rejects 18% GST in Film Copyright Licensing; Digital Delivery doesn’t make it ‘Software’
Bombay HC held that licensing of cinematographic film rights by the producer/original copyright holder to distributors is classifiable under SAC 997332, and cannot be treated as licensing of Information Technology Software merely because the film content is delivered digitally. The Court held that the mode of transmission, whether through encrypted hard disks or electronically, cannot determine classification, which must depend on the essential character of the supply; equating digital content with software had no statutory basis. It further noted that administrative clarifications supported classification under SAC 997332 taxable at 12% for the relevant pre-1 October 2021 period, and that the benefit of the “as is where is” regularisation could not be selectively denied to the producer in the upstream transaction. The Court also found that the impugned orders suffered from jurisdictional errors, relied on a statement of the petitioner’s Post-Production Head that had not been furnished to the petitioner, and failed to independently deal with its submissions; accordingly, the writ petitions were allowed.