Service Tax on Marketing of Film Songs on Sony Music: Supreme Court likely hear Matter on Next Month [Read Judgement]

The Supreme Court is likely to hear the issue of the levy of service tax on the marketing and promotion of film songs on Sony Music Entertainment India Private Limited next month. The tentative date is 7th October 2025.

An appeal filed by the GST department challenging the decision of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, which had decided in favor of Sony Music.

The facts is that, agreements between film production companies (FPCs) and Sony Music, under which the music rights of films were assigned to Sony. As per the Directorate General of GST Intelligence (DGGI), these contracts obligated Sony Music to incur specified amounts on marketing, publicity, and promotion of film songs and related material.

The department’s view was that such expenditure indirectly promoted the films themselves and, therefore, amounted to Sony providing BusinessAuxiliary Services (BAS) to film producers. Accordingly, service tax demands were raised for the period 2009 to 2017, invoking the extended limitation period.

Sony Music contended that its marketing activities were undertaken solely for commercial exploitation of its acquired music rights and not for the benefit of film producers. Once copyrights were assigned, Sony became the owner of the songs and videos, and the promotional spend was part of its business strategy to increase sales and popularity.

The Counsel for Sony argued before the tribunal that there was no “consideration” flowing from the producers to Sony that could constitute a taxable service. Marketing expenditure, they submitted, was only a condition of the agreement and not a payment for services rendered.

The CESTAT Mumbai quashed the Commissioner’s order that had confirmed service tax demands on Sony Music. The Tribunal held that the department had wrongly classified Sony’s marketing of film songs as a service to film producers. It clarified that promoting music could not automatically be equated with promoting films, and that the marketing expenditure was incurred by Sony for its own commercial benefit rather than as consideration from producers.

Since the agreements were in the nature of rights assignment and not a client-service provider relationship, the levy of service tax under Business Auxiliary Services had no legal footing, both before and after the negative list regime of July 2012.

In reaching its decision, the Tribunal also relied on precedents such as McDonalds India Pvt. Ltd. and Bhayana Builders (P) Ltd., which held that self-promotional expenses could not be treated as taxable services rendered to others.

The department, refusing to accept the Tribunal’s decision, filed a civil appeal before the Supreme Court. On September 9, 2025, the matter came up before a Bench of Justices Manoj Misra and Ujjal Bhuyan.

At the request of counsel, the Court adjourned the case and directed that it be listed after two weeks, making it likely that substantive hearings will commence in October 2025.

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