Levy of ST post 1-7-12 on Film distribution, theatres etc

[RAJESH SANGHVI]

The assesee an Indian company procures film distribution rights under royalty agreement with foreign producers either on Minimum Guarantee (MG)  or percentage basis. In turn the exhibition rights of these films are given to distributors in India also on Minimum Guarantee basis. These film rights are also given to TV channels or these films are also exhibited in Cinemas either on fixed rent basis or sales revenue sharing basis. 

In Notification No. 25, Exempt services u/s 66B, in clause (15). Temporary transfer or permitting the use or enjoyment of a copyright covered under clauses (a) or (b) of sub-section (1) of section 13 of the Indian Copyright Act, 1957 (14 of 1957), relating to original literary, dramatic, musical, artistic works or cinematograph films;

Hence will such revenues by the said Indian company from MG or otherwise attract ST @12.36 % ??

AI Summary

Film Distribution Revenues and Service Tax: Understanding Exemptions and Implications Under Different Distribution Models An Indian company acquires film distribution rights from foreign producers under a royalty agreement, either on a Minimum Guarantee (MG) or percentage basis. These rights are then distributed to Indian distributors, TV channels, or cinemas. The query concerns whether such revenues are subject to a 12.36% Service Tax. One response indicates that exhibiting films in cinemas is exempt as it is considered an entertainment event, while another outlines different models of distribution and their tax implications, highlighting that service tax may apply depending on the arrangement, particularly when fixed film hire charges are involved.