The Court held that where the contract price was inclusive of GST and fully paid, the supplier must bear the tax, though the department remains free to proceed against the recipient under the statute.
The Madras High Court has decreed a commercial suit filed by a film rights purchaser against the producer who failed to deposit GST collected on a dubbing rights assignment, directing the producer to pay Rs. 1,22,66,092 — the tax demand with interest raised by the department against the purchaser — with further interest [M/s SPM Arts LLP v. M/s Shri Abishek Pictures & Ors.].
Justice P.B. Balaji noted that the plaintiff had acquired dubbing rights in the Telugu film “Saakshyam” for Rs. 7.5 crore inclusive of GST, and paid the entire consideration by July 2018. The producer deposited GST on one invoice but not the Rs. 42,85,714 charged on the second. The department proceeded against the plaintiff, which has appealed after a 10% pre-deposit.
The Court held that the deed of assignment and the producer’s own letter placed the GST liability on the producer, and that the plaintiff, having paid the full price, was entitled to recover the tax arrears with interest. At the same time, it recognised that under Section 16(2) the authorities may still proceed against the recipient, and that the suit did not affect the pending statutory appeal.
The suit was decreed against the producer firm and its partner, who had been set ex parte, with interest at 24% per annum till the decree and 6% thereafter. Since the tax authorities were impleaded only at the stage of arguments, no decree was passed against them, though the producer was directed to bear their costs as well.
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