Dharma Productions Pvt. Ltd. Vs State of Maharashtra (Bombay High Court)
Summary: The Bombay High Court allowed the writ petitions filed by Dharma Productions Pvt. Ltd. and Dharmatic Entertainment Pvt. Ltd. challenging GST demands arising from the licensing of copyrights in cinematographic films. The controversy concerned FYs 2017-18 to 2020-21, prior to 1 October 2021, when Entry 17(i) and Entry 17(ii) of Notification No. 11/2017-Central Tax (Rate) prescribed differential GST rates for intellectual property rights in goods other than Information Technology Software and intellectual property rights in Information Technology Software. Dharma Productions, as producer and original copyright holder, licensed theatrical and other rights in cinematographic films and discharged GST at 12% under Heading 9973/SAC 997332. The Department treated the transactions as licensing of Information Technology Software attracting GST at 18%.
The Court entertained the writ petitions notwithstanding the statutory appellate remedy before the GST Appellate Tribunal. It noted that the Tribunal was not functioning when the petitions were filed and, more importantly, held that the controversy did not involve disputed questions of fact but an error of law going to the root of jurisdiction. Relying particularly on Godrej Sara Lee Ltd. Vs. Excise and Taxation Officer-Cum-Assessing Authority & Ors., the Court held that availability of an alternative remedy does not mechanically bar exercise of writ jurisdiction where the controversy is purely legal or the authority has acted without jurisdiction.
The Court examined Heading 9973 and the statutory definition of “information technology software”. It observed that the definition requires a representation of instructions, data, sound or image recorded in machine-readable form which is capable of being manipulated or providing interactivity to a user. The impugned orders did not analyse how a cinematographic film, described by the Court as a passive audio-visual work incapable of execution, manipulation or interactivity, could satisfy that definition.
