CHENNAI: The Madras high court on Thursday dismissed pleas moved by music composers A R Rahman and G V Prakash challenging notices issued by the Goods and Service Tax (GST) department demanding service tax for permanent transfer of copyrights of their musical works to producers of movies.
Dismissing the pleas, Justice Anita Sumanth directed them to move their appeals before the appellate authority concerned.
Challenging the notice dated October 17, 2019, Rahman contended that a composer of a musical work becomes the absolute owner of the copyright for their work under the Copyrights Act and subsequent transfer of such rights to producers of movie are exempted from tax.
“In terms of Section 13(1)(a) of the Copyright Act, copyright subsists in musical work and the composer is the sole and absolute owner of such right. The said rights are assigned to the producer of movies under agreements executed with the producers which makes them the absolute owner of the copyright,” Rahman said.
“Such permanent transfer of copyright is not a service for the purpose of levy of service tax. Even temporary transfer or permitting enjoyment of copyright falling under the Copyright Act is exempted from service tax,” he added.
Moreover, Section 65B (44) of the Finance Act, 1994 defines ‘service’ and specifically excludes transfer of title in goods by way of sale, gift or in any other manner, Rahman asserted.
Opposing the pleas, the department submitted that the composers had approached the high court without exploiting the appeal provision available in the department.
The department added that the notices had been issued based on material evidence available to prove tax evasion by the composers.
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