Revenue-sharing film exhibition agreements were not Business Support Service; service tax, interest and penalty failed.

Revenue-sharing between a cinema exhibitor and film distributors was held not to be taxable as Business Support Service because the agreements operated on a principal-to-principal basis. The exhibitor merely screened films in its multiplex and paid the distributors a pre-decided share of revenue for exhibition rights; no service was rendered by the exhibitor to the distributor and no consideration flowed from the distributor to the exhibitor. The Tribunal treated the arrangement as neither a joint venture nor a support service, and followed earlier Tribunal rulings, including the appellant's own case, as upheld by the Supreme Court. Service tax, interest and penalty therefore could not survive.

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Issues: Whether the revenue-sharing arrangement between the cinema exhibitor and film distributors constituted a taxable Business Support Service so as to attract service tax, interest and penalty.

Analysis: The appeals turned on the nature of the arrangement under which the appellant screened films in its multiplex and paid the distributors a pre-decided share of revenue for exhibition rights. The Tribunal followed the settled view that such agreements operate on a principal to principal basis, that the exhibitor does not render any service to the distributor, that no consideration flows from the distributor to the exhibitor, and that the arrangement does not amount to a joint venture or Business Support Service. The issue was treated as already settled by earlier Tribunal decisions, including the appellant's own case, which had been upheld by the Supreme Court.

Conclusion: The activity was not taxable as Business Support Service and the demands of service tax, interest and penalty could not survive.

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