TaxTMI 
TaxTMI 
2020 (6) TMI 87
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....). It is the dismissal of the appeal by the Commissioner (Appeals) by order dated 12 July 2016, that has led to the filing of this appeal. 2. The appellant is the owner of a cinema hall situated at Chandni Chowk, New Delhi and is engaged in the business of exhibiting films in its theatre. The copy right over the films is owned by the distributors. The appellant enters into agreements with the film distributors to obtain such copy rights under which the right to exhibit the films is transferred to the appellant, either temporarily or in perpetuity, depending upon the nature of the agreements between the parties. 3. An investigation was carried out by the Department and a view was entertained that the appellant was providing various elements of interconnected services to the film distributors like lending of theatre for exhibition of films, manpower to manage, control and make arrangements, projector and other related equipments to screen the films, arranging power supply and providing arrangements to collect the box office collections, with predominance of "renting of immovable property" services. This service of "renting of immovable property" provided by the appellant to the....
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....Counsel for the appellant and the learned Authorised Representative of the Department, it would be necessary to examine the two agreements executed between the appellant, as owner of the cinema hall, and the distributors of the films. The relevant clauses of one such agreement dated 27 May, 2009 executed between the appellant and a distributor called R.S. Enterprises are as follows:- "This Article of agreement made and entered herein Delhi between R.S. Enterprises Delhi (referred as Distributors as party of 1st part) and the under mentioned Exhibitor (referred as party of the 2nd part) for screening the picture/s on the terms and conditions mentioned hereunder and overleaf: M/s. Moti Talkies Station: Delhi. Name of Picture/s Run Period of Run Terms & Conditions "AB HUM SE NA TAKRANA" ADDITIONAL TERMS Screening Date 29th May, 2009 onwards. 1st 7 days Theatre Share Rs....xxx... (Rupees .....xxx...... Including all sort of Publicity for 28 effective shows in a week against the theatre capacity of Rs............ Per show i.e. Rs.......... weekly. OR Distributor's share @......... with the option, that distributor may pay Theat....
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....OVAL OF OUR PRINCIPAL:- Article of agreement made and entered herein Delhi between VISHAL ENTERTAINMENT CORPORATION Delhi (referred as Exhibitors as party of 1st part) and the under mentioned Exhibitor (referred as party of the 2nd part) for screening the picture/s on terms and conditions mentioned hereunder and overleaf: MOTI CINEMA Station Delhi Through:_________ Phone: Name of Picture/s Run Period of Run TERMS & CONDITIONS EK MAIN EK TUM TOTAL TERMS Screening Date 9.12.2011 I ONE WEEK Theatre share Rs. 1,10,000/- ONE LAKH TEN THOUSAND ONLY Including all sort of publicity for 28 effective shows in a week against the theatre capacity of Rs........ per show i.e. Rs...... Weekly. OR Distributor's share @........... with the option, that distributor may pay Theatre Hire of charge percentage for any week during the period of run. OR FIXED HIRE payable by the exhibitor Rs........ Rupees.............. ADVANCE 1. That Exhibitor hereby agrees and undertakes to abide by all the TERMS & CONDITIONS, whether PRINTED/TYPED OR IN AND-WRITTEN. No further dispute can be arisen over beyond these terms & conditio....
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....14. "Taxable service", prior to 1 July 2012 under section 65 (105) (zzzz) of the Finance Act means: 65 (105) (zzzz): "any service provided or to be provided to any person, by any other person, by renting of immovable property or any other service in relation to such renting for use in the course of or for furtherance of, business or commerce. Explanation(1) xxxxxxxxxxxxx Explanation(2) xxxxxxxxxxxxx 15. Thus, for the appellant to be providing any taxable service to the distributor prior to 1 July 2012 it is necessary that the service provided should be by renting of immovable property or any other service in relation to such renting for use in the course of or for furtherance of, business or commerce. "Renting of immovable property" has been defined under section 65(90a) of the Finance Act to include renting, letting, leasing, licensing, or other similar arrangements of immovable property for use in the course or furtherance of business or commerce. 16. It is very difficult to even visualise that the appellant is providing any service to the distributor by renting of immovable property or even any other service in relation to such renting. The agree....
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....ough the said agreement which has been made available along appeal memorandum and find that clause no. 8, 13 and 14 are relevant. xxxxxxxxxxxxxxxxxxx From the above conditions it can simply be construed that the effective control and possession of right remained with the distributor so far as screening/non-screening of the film is concerned. Further, the conditions delineated in the agreement makes it incumbent upon the Appellant that he cannot arbitrarily dis-continue the screening and that he will have to compensate for any loss and damage. Therefore, the Appellant's contention that the transaction of the distributor granting to the Appellant the license to exploit the Theatrical Rights in films is on Principal to Principal basis cannot be acceded to because the distributor has not granted the license thereby allowing the Appellant to screen the film on his own in as much as the fact that the sole and absolute option to screening or to withdraw the screening at any time lies with the distributor only. Further, the Appellant has also contended that the entire revenue in the nature of ticket sales is his income and he is incurring the expenditure in the nature of ....
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....ned, the issue with regard to its classification under Renting of Immovable Property Services stands settled by virtue of the above Circular. However, with regard to confusion relating to provision of Business Support Service, I have gone through page 155 of the Appeal which contains an agreement of the Appellant with M/s Yaman Enterprises. I have carefully gone through the said Agreement and find that the same is dated 13.06.2013 which means that the Agreement has been put to action after 01.07.2012 when the service are categorized as declared services and bundled service with pre-dominance of Renting of Immovable Property Services." 18. It is not possible to accept the reasonings given by the Commissioner (Appeals) for confirming the demand of service tax under "renting of immovable property" for the simple reason that the appellant has not provided any service to the distributors nor the distributors have made any payment to the appellant as consideration for the alleged service. In fact, the appellant who has paid money to the distributors for the screening rights conferred upon the appellant. The Commissioner (Appeals) completely misread the agreements entered into between ....