Bombay High Court quashes Rs 79.7 crore GST demand on Dharma Productions

The Bombay High Court has overturned a Goods and Services Tax (GST) demand of approximately Rs 79.73 crore against Dharma Productions Pvt. Ltd. and Dharmatic Entertainment Pvt. Ltd.

The dispute centered on whether the licensing of copyrights in cinematographic films should be classified as Information Technology (IT) software. Tax authorities had treated transactions from FY 2017-18 to FY 2020-21 as IT software licensing, applying an 18% GST rate.

The Court ruled that a cinematographic film cannot be classified as IT software simply because it is supplied or transferred in a digital format. The decision clarifies that the delivery method does not alter the fundamental nature of an audio-visual work, a ruling that may impact the wider Indian entertainment and media industry regarding digital distribution and copyright licensing.