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Bombay HC Quashes ‘Dharma’ Tax Demand: Films Not IT Software Under GST
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Storyboard•25-09-2026, 13:48
Bombay HC Quashes ‘Dharma’ Tax Demand: Films Not IT Software Under GST
- •The Bombay High Court ruled that cinematographic films are not IT software under GST, even if delivered digitally.
- •The court set aside a tax demand of over Rs 79.7 crore against Dharma Productions and Dharmatic Entertainment.
- •Tax authorities had classified film licensing as IT software services (18% GST), while companies argued it was intellectual property licensing (12% GST).
- •The High Court rejected the argument that delivery method determines GST classification, stating films lack software characteristics.
- •The judgment distinguishes between content nature and delivery method, affirming that digital transmission doesn't alter a film's tax classification.
Key Questions Answered
The Bombay High Court ruled that a cinematographic film cannot be classified as information technology software under the GST law simply because it is delivered digitally or on a hard disk, thereby setting aside the disputed tax demand for FY18 to FY21.
Tax authorities treated the licensing transactions as IT software under SAC 998340 subject to an 18% GST, whereas the companies argued the transactions involved licensing intellectual property rights in films falling under SAC 997332 with a 12% GST rate.
The court held that a cinematographic film is a passive audio-visual work lacking software characteristics like executability or interactive manipulation, and noted there is no statutory basis to treat electronic digital content as software.
