The Madras High Court reportedly stayed an order passed by a Commissioner of Goods and Services Tax (GST) and Central Excise on October 17, accusing the Oscar-winning music composer A R Rahman of evading payment of service tax, and directing him to pay arrears amounting to Rs.6.79 crore, excluding interest related to period from April 2013 to June 2017, along with a penalty of another Rs.6.79 crore.
The Commissioner of GST and Central Excise (Chennai South), K.M. Ravichandran in his order stated that intelligence gathered by the Directorate General of GST Intelligence (DGGSTI) indicated that the composer was not discharging service tax correctly on payments received by him. Hence, an inquiry was initiated, and it was found that the composer was earning income by composing music for movies, receiving royalties for public performances of his music works, and by conducting live concerts both within the country as well as in foreign nations. Excluding considerations received in foreign currency directly from the organizers abroad, the official held that all other services were taxable.
The Contentions put forward by A R Rahman attorney was that the show-cause notice has misinterpreted the provisions of the Copyright Act and presumed producer as the first owner of musical works. 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 movies is exempted from tax. Moreover, section 65B (44) of the Finance Act, 1994 defines ‘service’ and specifically excludes the transfer of title in goods by way of sale, gift or in any other manner.