Five major Indian film companies lodged suits against the federal government on Wednesday and Thursday over the controversial 10.3% service tax on copyright transfers that came into effect July 1.
Petitioners Reliance Big Pictures, PVR Pictures, Balaji Telefilms, Yash Raj Films and UTV Motion Pictures argue that copyright transfers are treated as sales of goods at the state level and are already taxed there. Treating the same copyrights as a service and taxing it at the federal level would amount to double taxation, the petitioners’ lawyers said, calling it unconstitutional.
Tarun Gulati, who is representing all the companies except Reliance, said: “Copyrights are intangible property and are liable to value added tax. Charging service tax on the transfer of copyrights is a clear transgression of the powers of the states to levy tax on the sale and purchase of goods. The industry will not be able to survive if this duality of taxation is not done away with.”
The cases against the government were filed in the Mumbai and New Delhi high courts. The first hearing is on August 2.