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.

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.