Reliance Big Entertainment Ltd., the film maker and distributor owned by billionaire Anil Ambani, asked an Indian court to stop the government from collecting service tax on copyright transfers as it is unconstitutional.
The federal tax transgresses the authority of India’s states, which already levy a value added tax on the same transactions, according to the writ filed at the New Delhi High Court and heard yesterday.
PVR Pictures Ltd. and other Indian studios and distributors filed similar petitions according to their lawyer Tarun Gulati. The new service tax on copyright transfers of 10.3 percent would apply whenever a producer acquired a right in a movie or when a distributor sold rights to theater exhibitors or to satellite channels, Reliance Big’s lawyer Ameet Naik said.
“The entire entertainment industry would be affected because the service tax puts a burden on the entire value chain,” Naik said.
Indian Finance Minister Pranab Mukherjee announced the levy, which took effect on July 1, in the annual budget on Feb. 26.
The petitions will be heard on August 2 for interim relief by the Delhi High Court as the service tax on copyrights will only become effective on August 5, said Naik.
“We have not received any communication whatsoever,” Dipankar Aaron, spokesman for the Central Board of Excise & Customs, said in an interview. Commissioner of Service Tax R.D. Negi wasn’t immediately available for comment.
Reliance Big has an equity stake in Steven Spielberg’s DreamWorks SKG.
The case is Reliance Big Entertainment Ltd. v. The Union of India WP C 4416/2010 in the High Court, New Delhi.