A recent Supreme Court judgment solely relied on software experts and an advanced English dictionary.
SC takes techie help to exempt animation files from customs duty
NEW DELHI: A recent Supreme Court judgment solely relied on software experts and an advanced English dictionary to ascertain whether imported Motion Capture Animation Files are exempt from customs duty. The Customs department disagreed, but Chennai based M/s Pentamedia Graphics Ltd contested the denial of customs tax relief.
Judges faced two notifications on the issue. If the files can be manipulated, then it is tax-free. If not, then files must be taxed. Essential to determining whether or not these animation files could be taxed was the explanation of an amended law that allows tax relief to importers of animation files that can be manipulated. These files are largely used in 3-D movies, animated movies and cartoon strips.
The legal definition of computer software is “any representation of instructions, data, sound or image, including source code or object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user through an automatic data processing machine.”
A bench of justices Ashok Bhan and Markandey Katju first consulted a US software expert C Downton who said, “Computer and microprocessors postulate that if a software is required to load a programme on the computer, then the programme which has to be loaded on the computer does not cease to be a software and the same continues to be a software.”
However, Prof S Raman, Associate Professor, Department of Computer Science and Engineering at IIT, Madras, said, “The motion capture animation files, normally referred to as software in the industry, can only be manipulated and modified by 3-D animation software to apply the motion to computer graphics models in the computer. Therefore these files are recorded in a readable machine form and are capable of being manipulated.”
Judges said the goods imported by Pentamedia Graphics are computer software recorded in a machine readable form and capable of being manipulated by means of an automatic data processing machine. Therefore the Motion Capture Animation Files should be tax free.
The Fine Print
Tax exemption previously applied only to software files that could be manipulated and this did not include animation films like the The Incredibles
Now the Supreme Court has allowed tax relief to animation files that can be manipulated
These include 3D movies, animated movies and cartoons
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