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

Service tax on film exhibition: theatrical fixed-hire exempt, rent and revenue-sharing models attract taxable services and collection obligations.
Service tax depends on the contractual model: exhibitor paying fixed consideration for theatrical exhibition is exempt under Notification No.25/2012 as a negative-list entertainment event (exemption does not extend to television). Fixed rent arrangements are taxable as Renting of Immovable Property, and revenue-sharing arrangements are taxable as Business Support Services. Distributors acting as service providers must collect service tax on fixed film-hire charges received from exhibitors, the burden of which falls on the exhibitor unless contractually allocated otherwise.