Reliance and PVR challenge Service Tax on film Distribution
ONE of the new services introduced in the Finance Act, 2010, which did not get much publicity, is the service tax on film distribution – zzzzt – transferring temporarily or permitting the use or enjoyment of copyright. A representative of one of the top film producing companies in India attended our Seminar last year and represented to the Chairman, CBEC that the Department was attempting to tax film distribution as Business Auxiliary Service, which is not correct. Maybe this gave the idea to the Board to tax film distribution. Contrary to popular belief, the Film Industry is not a pot of gold – while a few producers make money, most of them lose large amounts of money – after a film is produced, it is very difficult to find a theatre to exhibit the movie and if at all, it is exhibited, it is difficult to get the money back – the poor rich people!
Now Reliance Big Entertainment and PVR Pictures have filed a writ in the Delhi High Court challenging the Service Tax on the transfer of copyright.