PAYMENT TO CINE OR TV ARTISTS. LIABILITY UNDER RCM

[Sadanand Bulbule]

Dear experts

1] Serial number 9 of the Notification No.13/2017-Central Rate dated 28/06/2017 issued under Section 9[3] of the CGST Act, 2017 reads as under:

[9] Supply of services by a music composer, photographer, artist or the like by way of transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 relating to original dramatic, musical or artistic works to a music company, producer or the like.

Meaning:

2] Transfer or permitting the use or enjoyment of a copyright will be covered under Reverse charge mechanism to the extent of original literary, dramatic, musical and artistic works only. This is because only works covered under Section 13(1)(a) of the Copyright Act 1957 are specified in the Reverse Charge Notification[supra].

3] Section 13 of the Copyright Act 1957--Works in which copyright subsists.-

(1) Subject to the provisions of this section and the other provisions of this Act, copyright shall subsist throughout India in the following classes of works, that is to say,-

(a) original literary, dramatic, musical and artistic works;

Query:

In view of the legal position of both the GST Notification No.13/2017 and Section 13[1][a] of the Copyright Act 1957, whether the producer [recipient of services] of Cinema/TV serials is liable to pay GST under RCM on payment of remuneration paid to the artists [who are not liable for GST registration] for their performance of tasks entrusted to them?

Essentially such artists do not have their “owncreativity” or freedom to perform their own way except to perform tasks as per the directions of the director/producer. Under such circumstances, the role of Section 13[1][a] of the Copyright Act 1957 does not play at all.

I am of the considered opinion that, the producers cum recipient of such services are not liable to pay tax under RCM on payments made to such artists

Despite this position, the authorities are insisting the producers to pay tax under RCM on receipt of such services. So experts are requested to enlighten in depth with illustrations in the larger interest of all.

[Alkesh Jani]

Shri Sadanand Bulbuleji,

First of all I thank you for accepting my request. Of course in the discussion we may have different opinion but once it is adjudicated, I try to see all the possibilities which are in favour of TP.

As SCN and Order is not available, I am of the view that SCN must not have proposed the said activity as IPR. As the department has classified activity as IPR, is required to be reviewed.

The reply to SCN was made accepting as IPR and not as artistic work. In the latest judgement of the Hon’ble SC, end use of the goods and service is required to be taken into consideration before arriving for classification purpose. Further, as this is classification issue Section 74 cannot be invoked, as there is not intention to evade the payment of tax, as the producer of like were under Bonafide belief that the RCM is not applicable to them.

Summarising the above, I am of the view that whether the said activity can be classified under IPR and RCM is applicable or not can be contested. There may be other possibilities which can be suggested but only after going through SCN and Order.

Thanks

With Regards

[Sadanand Bulbule]

Dear Sir

Much obliged for your additional inputs. Plz share your personal email ID to my WhatsApp 94482 31388 for sharing further information in this regard. 

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir, This is not blind alley. You will get fair justice at the next appellate stage. Your knowledge coupled with your art of drafting and hard work will yield results in your favour on merits.

Might is NOT right.

Boss is always NOT right.

An adjudicating authority is NOT God.

The above facts cannot be denied/rebutted. You will get your destination.

[Sadanand Bulbule]

Dear Sirji

I am deeply indebted for your constant support and inspirational words. Let this discussion benefit the stakeholders and free them from the clutches of illegal tax demand. 🙏🙏

AI Summary

Reverse charge on artist payments depends on an actual transfer or licence of copyright, not mere task-based performance.
Whether producers must pay GST under the reverse charge entry for payments to cine/TV artists turns on whether those payments constitute a supply by way of transfer or permitting the use or enjoyment of a copyright in "original literary, dramatic, musical or artistic works". Key considerations are the statutory scope of clause (a) of Section 13(1) of the Copyright Act (original works), distinctions between dramatic works and cinematograph films, contractual allocation of performer's rights, and whether performers are first owners entitled to transfer copyright-if no copyright transfer or licence exists, commentators contend RCM is not triggered.