Bombay High Court Quashes ₹79.7 Crore GST Demand Against Dharma Productions
The Bombay High Court has quashed a tax demand of over ₹79.7 crore against Dharma Productions and Dharmatic Entertainment, holding that cinematographic films cannot be classified as information technology software under GST merely because they are delivered digitally.
A bench of Justices MS Karnik and Sandesh Patil ruled on September 10 that the mode of delivery—whether physical encrypted hard disks or electronic transmission—cannot determine GST classification. The court rejected the tax department's argument that digital delivery changed the nature of the transaction, noting that films are passive audio-visual works incapable of the manipulation or interactivity required to qualify as IT software under GST law.
The dispute concerned copyright licensing of films for financial years 2017-18 to 2020-21. Tax authorities had demanded 18% GST by classifying the transactions as IT software licensing, while the companies argued for the lower 12% rate applicable to intellectual property rights in cinematographic films.
