Theatre services post-2011 taxable; penalties justified under Finance Act. Legal questions referred to resolve conflicting decisions.

The tribunal upheld that services provided by the theatre owner post-01.05.2011 fall under "Business Support Services" and are taxable. Penalties imposed under Sections 77 and 78 of the Finance Act, 1994 were deemed justified for non-compliance. The tribunal acknowledged conflicting decisions in similar cases and referred the matter to a larger bench to resolve legal questions on the applicability of judicial precedents and the binding nature of the CBEC circular upheld by the Madras High Court.

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Issues Involved:
1. Classification of services provided by the theatre owner to distributors/sub-distributors under "Business Support Services".
2. Applicability of service tax for the period before and after 01.05.2011.
3. Validity of penalties imposed under Sections 77 and 78 of the Finance Act, 1994.
4. Reliance on judicial precedents and circulars in determining the tax liability.

Detailed Analysis:

1. Classification of Services under "Business Support Services":
The core issue was whether the services provided by the theatre owner to distributors/sub-distributors for the exhibition of movies fall under the definition of "Business Support Services" as per Section 65(104) of the Finance Act, 1994. The adjudicating authority and Commissioner (Appeal) concluded that the theatre owner provided infrastructural support services, which are taxable under "Business Support Services." The appellants argued that their activities were not support services but rather a principal-to-principal revenue-sharing model, which should not attract service tax.

2. Applicability of Service Tax Before and After 01.05.2011:
The Commissioner (Appeal) differentiated the applicability of service tax based on the amendment in the definition of "Business Support Services" effective from 01.05.2011. For the period before 01.05.2011, the demand was dropped as the services did not fall under the then-existing definition. However, post-amendment, the services were considered taxable due to the inclusion of "operational or administrative assistance in any manner."

3. Validity of Penalties Imposed:
The adjudicating authority imposed penalties under Sections 77 and 78 of the Finance Act, 1994, citing the appellant's failure to register, pay service tax, and file returns. The authority noted that the appellant's actions indicated an intention to evade tax, justifying the imposition of penalties and the invocation of the extended period for demand.

4. Reliance on Judicial Precedents and Circulars:
The appellant relied on the CESTAT decision in AB Motion Pictures and other similar cases, arguing that their situation was identical and should not attract service tax. However, the revenue contended that these decisions were not accepted and were under appeal. The adjudicating authority and Commissioner (Appeal) relied on the CBEC Circular dated 13.12.2011, which was upheld by the Madras High Court in Mediaone Global Entertainment Ltd., to support their stance on taxability.

Conclusion:
The tribunal upheld the view that the services provided by the theatre owner post-01.05.2011 fall under "Business Support Services" and are taxable. The penalties were deemed justified due to the appellant's non-compliance with statutory provisions. However, the tribunal acknowledged conflicting decisions in similar cases and referred the matter to a larger bench to resolve the legal questions, specifically the applicability of judicial precedents and the binding nature of the CBEC circular upheld by the Madras High Court.

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