Archive · 22 Sep 2026
Bombay High Court Quashes ₹79.7 Crore GST Demand
The Bombay High Court considered how films should be taxed under GST rules.
Tax officials treated the film licenses like computer software.
That classification meant an 18% tax rate.
Dharma Productions and Dharmatic Entertainment said their transactions were licenses for film rights instead.
They said the applicable rate was 12% during the years involved.
The court said a film is a passive audio-visual work, not software that users can run or change.
It also said the way a film is delivered cannot decide its tax classification.
The court therefore cancelled the tax demand and related orders.
The Bombay High Court quashed a GST demand exceeding ₹79.7 crore against Dharma Productions and Dharmatic Entertainment.
The dispute covered copyright licensing of films during the financial years 2017-18 through 2020-21.
Tax authorities classified the transactions as information technology software under SAC 998340, attracting 18% GST.
The companies argued that the transactions involved licensing intellectual property rights in films under SAC 997332, taxed at 12% during the relevant period.
The court ruled that digital delivery through links or hard disks does not turn a passive cinematographic film into software.
- Who
- The Bombay High Court, Dharma Productions Pvt. Ltd., Dharmatic Entertainment Pvt. Ltd., and GST authorities.
- What
- The court quashed a GST demand of more than ₹79.7 crore and related assessment and appellate orders.
- When
- The judgment was passed on September 10 and concerned financial years 2017-18 to 2020-21.
- Where
- The case was decided by the Bombay High Court in Mumbai.
- Why
- The court found that cinematographic films do not become information technology software merely because they are delivered digitally or on hard disks.
Dharma Productions and Dharmatic Entertainment
GST Authorities
Nature of the licensed content
Dharma Productions and Dharmatic Entertainment
The companies argued that they were licensing intellectual property rights in cinematographic films under SAC 997332.
GST Authorities
The tax authorities treated the transactions as licensing of information technology software under SAC 998340.
Effect of digital delivery
Dharma Productions and Dharmatic Entertainment
The companies’ position was that delivery through digital links or hard disks should not change the essential nature of film copyright licensing.
GST Authorities
The department argued for the software classification in transactions involving digitally delivered content.
Tax rate
Dharma Productions and Dharmatic Entertainment
The companies maintained that the applicable rate was 12% during the relevant period.
GST Authorities
The department’s software classification applied an 18% GST rate.
Court jurisdiction
Dharma Productions and Dharmatic Entertainment
The companies challenged the demands directly before the High Court.
GST Authorities
The department argued that the companies should use the alternative remedy before the GST Appellate Tribunal.
- Tax demand
- More than ₹79.7 crore
- Companies
- Dharma Productions Pvt. Ltd. and Dharmatic Entertainment Pvt. Ltd.
- Disputed period
- Financial years 2017-18 to 2020-21
- Department classification
- Information technology software under SAC 998340
- Department tax rate
- 18% GST
- Companies’ classification
- Licensing of intellectual property rights in cinematographic films under SAC 997332
- Companies’ tax rate
- 12% GST during the relevant period, before revision from October 1, 2021
- Judgment date
- September 10