Anil Ambani Group firm Reliance Big Entertainment has challenged levy of service tax on sale of copyrights of movies and other artistic works in the Delhi High Court.

A bench, comprising Chief Justice Dipak Mishra and Justice Manmohan, has issued notices to the Centre, the Central Board of Excise and the Director General of Service Tax.

The court has directed that the matter be listed on August 2 for the next hearing.

The firm submitted that it is already paying sales tax and VAT to various state governments on sale and distribution of theatrical rights and other copyright-related work.

As laid down by the Supreme Court, a sale of goods which is taxed by state governments cannot be considered for service tax by the Central Government, the company said in its petition filed by counsel Rishi Agrawala.

Citing the Godfrey Philips India Ltd vs State of UP case, Reliance Big said that there should be no overlapping of the state and Centre's taxing powers.

"In the present case, the transfers of copyright is directly and squarely covered by entry 54 of List II of Schedule 7 of the Constitution, which authorises the state legislature to bring a sales tax on the sale of goods."

In Union Budget 2010, the government had decided to levy service tax of 10.3 per cent on transfer of copyrighted works.