2020 (11) TMI 137

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..... The Appellant had entered into agreements with films Distributors under which the theatrical exhibition rights for exhibition of the films were transferred to the Appellant, either for a specified number of shows and period or in perpetuity. It is in exercise of such rights obtained from the Distributors that the Appellant exhibited movies in its theatre. In lieu of obtaining such rights, the Appellant agreed to share a specified percentage of Net Box Office Collection with the Distributors, subject to the conditions specified in the agreements. In one such agreement dated August 29, 2012 entered into between M/s. A.A. Films and the Appellant, the Appellant agreed to share 50%/40% of the Net Box Office Collection, with M/s. A.A. Films subject to a maximum theatre share of Rs. 2,80,000/-. 3. The Department, however believed that the Appellant was providing various elements of inter connected services to the Distributors, such as renting/ letting/ leasing of theatre for exhibition of films; manpower to manage the theatre operations, provision of projector and other related equipment to screen the films; arranging of power supply and providing arrangements to collect the box offi....

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....tantiate my findings. 9.20 In view of above, the noticee's plan that there is no provision of service and hence no service tax liability is found baseless and thus their activities are rendered liable to service tax under the major head 'Renting of Immovable Property', which is taxable under erstwhile Section 65 (105) (zzzz) of the Act ibid upto 30.06.2012. Further the service provided by the noticee to the Distributors remained taxable under clause (a) of Section 66E of the Act ibid as "Declared Services" and is not covered in the negative list as provided under Section 66D of the Act after introduction of negative services regime w.e.f. 01.07.2012." 6. The impugned order has also confirmed the demand for income under the heads "miscellaneous receipt", "car parking higher", "shots and slides" and "rent receipt" shown in the balance sheet. 7. Shri B.L.Narasimhan learned counsel appearing for the Appellant has made the following submissions: (i) The Appellant is not providing 'renting of immovable property' services to the Distributors. For an activity to fall under 'renting of immovable property' services, the nature of the activity should be that of renting....

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....ributors as "rent received", which also reflects the intention of the two parties. The Supreme Court has in Associated Hotels of India Ltd. Vs R. N. Kapoor [MANU/SCI0168/1959] held that the real test to decipher an agreement is the intention of the parties. (iv). Hiring of theatre will therefore fall under 'renting of immovable property' service at least, for all those agreements which use the term 'theatre hire' and therefore taxable; (v). The agreement between the appellant and M/S Associated Soapstone uses the term monthly rent. All such agreements are clearly taxable under 'renting of immovable property' service; and (vi). Even short-term renting of vacant land for business or commerce purpose is taxable under renting of immovable property service w.e.f July 1, 2010 in view of the judgment of the Allahabad High Court in Commissioner of Service Tax, Noida vs Greater Noida Development Authority [2015 (40) S.T.R 46 (All.)]. Thus, car parking hire charges, whether in the open or inside the building, are taxable under this head. 9. The submissions advanced by learned counsel for the Appellant and the learned Authorised Representative of the Depa....

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....s only) for 28 effective shows in a week. (Terms of Theatre share or percentage (%) whichever beneficial to the distributor) 1. The Distributor hereby irrevocably assigns, in perpetuity to the Exhibitor, on en- exclusive basis, the theatrical exhibition rights on 2D on 35MM Physical Print format and 1.5k/2K Digital Format Licensed Theatre(s) only at the location (and not outside) as mentioned above or as per details in Annex-1 only in relation to the above mentioned Film. No other rights whatsoever shall be to be assigned hereunder. 2. Net Box Office Collection (NBOC) shall be calculated as gross box-office receipts, less entertainment tax (if applicable, news reel hire (@0.3%) and municipal show tax (if applicable). xxxx xxxx xxxx 6. Exhibitor shall retain the Distributor's Share in trust and pay, after adjustment of the Advance or non-refundable Minimum Guarantee, the Distributor's Share that may accrue to the Distributor ten (10) days of completion of every week to which it pertains, whether or not the bill pertaining to the exhibition is received by the Exhibitor, failing which the Exhibitor shall pay the Distributor's S along with interest a....

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....t to screen the films and at no point of time, the theatre is used by the Distributor. 15. Learned Authorised Representative of the Department has referred to certain other agreements. These agreements do not form part of the show cause notice and therefore, it will not be appropriate to examine them. The agreement with M/s. A.A. Films that was enclosed as the seventh relied upon document has only to be examined. A perusal of the agreement between the Appellant and the Distributor would also make it abundantly clear that it is the Appellant who makes payment to the Distributor for grant of theatrical rights. This clearly indicates the flow of service and the consideration. Thus, as it is the Appellant who pays a fixed consideration to the Distributor, no service tax can be levied on the Appellant. 16. This issue also came up for consideration before a Division Bench of the Tribunal in Moti Talkies. It was held that the demand of service tax under 'renting of immovable property' service was not justified for the reason that the Appellant had not provided any service to the Distributor, nor the Distributor had made any payment to the Appellant as a consideration for the alleged....

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....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 the appellant as an exhibitor of the films and the distributors to arrive at a conclusion that the appellant was providing the service of ―renting of immovable property. xxxx xxxx xxxx 23. The position in law does not change with effect from 1 July, 2012 because even under section 66B of the Finance Act, service tax is levied on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another. Though, ―renting of immovable property‖ is a declared service under section 66E of the Finance Act, then to....