TaxTMI 
TaxTMI 
2021 (8) TMI 1222
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts theatre for screening films; (ii) Demand of service tax on 'convenience charges', 'pouring fees', 'other income', 'lease rent income', 'parking fees', 'service charges' and 'VPF charges'; (iii) Demand of service tax on 'advertisement income' under 'sale of space or time for advertisement income'; and (iv) Demand of service tax on foreign exchange expenses incurred under 'architect services' under the reverse charge mechanism. 3. The appellant is the owner of multiplexes, namely, Satyam Cineplex, located at different parts of India and is engaged in the business of exhibiting films in its theatre. The appellant claims that it entered into agreements with the film distributors, whereby the theatrical exhibition rights for exhibition of the film were transferred to the appellant either temporarily (i.e. for specified number of shows and period) or in perpetuity, depending on the agreement between the parties. The appellant further claims that it is in exercise of such rights obtained from the Distributors, that the appellant exhibited the movies in its theatres. 4. In lieu of obtaining such rights, the appellant agreed to share a specified percentag....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er Income 1204302/- 5. Lease Rent Income 1277565/- 6. Parking Fees 439966/- 7. Service Charges 1794817/- 8. Advertisement Income 50064563/- 9. Foreign Exchange Expenses Incurred 1302142/- 10. VPF Charges 56120/- 11. Service tax already paid (-) 14409194/- TOTAL Rs. 33,45,17,923/- 8. The aforesaid show cause notices were adjudicated upon by the Principal Commissioner by order dated 30.11.2015. Out of the total demand of Rs. 33,45,17,923/- raised in the show cause notices, demand of Rs. 19,19,92,658/- for the period October 2008 to March 2014 was sustained. The computation of the same issue-wise is given in the following Table: Serial No. Nature of Amount Service Tax proposed in Show Cause Notices (in Rs.) Service Tax confirmed in the order (in Rs.) Demand dropped by the impugned order (in Rs.) 1. Income from hiring charges 289725538/- 162445706/- 127279832/- 2. Convenience Charges 1717955/- 1537373/- 180582/- 3. Pouring Fees 1344150/- 1211697/- 132453/- 4. Other Income 1204302/- 844015/- 360287/- 5. Lease Rent Income ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of immovable property' service by the impugned order without giving any specific finding on the same. To this extent, the impugned order is a non-speaking and the demand is liable to be set aside on this ground alone; (v) The demand on the amount under 'other income' has been confirmed for the period 2008-09 to 2012-13 under the category of 'renting of immovable property' service by giving a finding that the appellant did not make any submission on this issue. The said finding in the impugned order is incorrect as the appellant had filed a reply to the first show cause notice dated 21.04.2014, wherein detailed submissions on this issue had been made; (vi) The demand on VPF charge has been confirmed under the category of 'renting of immovable property' service by the impugned order. The said amount is a subsidy paid by a film distributor towards the purchase of digital cinema projection equipment for use by a film exhibitor in the presentation of first release motion pictures. This is paid in the form of a fee per booking of a movie. The appellant duly deposited the service tax on such charges and the same has been acknowledged at paragraph 10.4 of the impugned or....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reply and pass a fresh order. 11. The submissions advanced by the learned counsel for the appellant and the learned Authorised Representative appearing for the Department have been considered. 12. The issue raised under various heads can be considered now. Renting of immovable property service 13. According to the appellant, as owner of multiplexes, it exhibits the films for the entertainment of the customers and for getting the films exhibited in its theatre, the appellant entered into agreements with the film distributors under which the film distributors granted copyright license in the form of theatrical exhibition rights to the Appellant. As against the transfer of such rights, the Appellant agreed to pay certain amount to the distributors, generally fixed as a percentage of the NBOC. This has been held by the Principal Commissioner as providing 'renting of immovable property' service to the distributors. This issue has examined again by the Tribunal in Moti Talkies. 14. 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 n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t making any payment to the appellant. Thus, no consideration flows from the distributors to the appellant for the alleged service. xxxx xxxx xxxx 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 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al Commissioner failed to consider it. The impugned order, therefore, for this reason alone, in so far as the demand raised in the first show cause notice is concerned, deserves to be set aside. 20. Learned Authorised Representative of the Department submitted that the matter may be remanded to the Principal Commissioner to pass a fresh order after considering the reply. However, as learned Counsel for the appellant and learned Authorised Representative have made submissions on merit, it would be appropriate to examine the same. 21. Learned counsel for the appellant made detailed submissions under the various heads. 22. In regard to convenience fees, pouring fees, parking fees and service charges, it was submitted that though the demand of service tax proposed in the show cause notice dated 21.04.2014 was under the category of 'renting of immovable property' services, the impugned order has confirmed the demand under the category of 'support services of business'. It was, therefore, submitted that the impugned order has gone beyond the show cause notice. In this connection, reliance was placed on a Division Bench decision of the Tribunal in M/s. Delhi Duty Free Services Pv....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 26. The impugned order, to the extent it has confirmed the demand of service tax under these four heads is, therefore, liable to be set aside. 27. In regard to the service tax confirmed under the head 'lease rent', learned counsel for the appellant submitted that the demand has been confirmed without giving any specific finding even though detail submissions were made by the appellant in paragraphs B.53 to B.57 of the submissions dated 21.10.2014. Learned counsel also submitted that the amount received from M/s. Superior Films is in the nature of share towards the business rights granted by the appellant and cannot be considered towards provision of any 'renting of immovable property' service. Learned Counsel also pointed out that the appellant had deposited service tax on the amount received in lieu of space given to vendors under the 'renting of immovable property' service and this fact was stated in the reply filed to the show cause notice. 28. The submission made by the learned counsel for the appellant on this issue need to be accepted. Apart from the fact that the Principal Commissioner has not given any reason for sustaining the demand proposed in the show cause notic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llant. This fact was stated in the reply to the show cause notice. 35. The period-wise demand and whether service tax was paid or not is given below in the following tabular form: Financial Year/Income heads Advertisement Income Taxable Income after cum-tax benefit Rate of service tax Amount of service tax Service Tax paid/not paid 2008-09 1,97,53,869 17580873 12.36% 2172996 The total service tax to be paid comes to Rs. 2,78,23,614/-, However, the Appellant has discharged service tax on advertisement income to the tune of Rs. 2,78,52,905/-, which is more than the required amount. 2009-10 6,80,54,595 61699542 10.3% 6355053 2010-11 9,81,47,422 88982250 10.3% 9165171 2011-12 9,41,60,498 85367632 10.3% 8792866 2012-13 (till 30.06.2012) 1,21,58,951 10821423 12.36% 1337528 2012-13 (from 01.07.2012) 8,39,88,537 - - - Not taxable in terms of Section 66D(g) of the Finance Act, 1994; Demand has also been dropped in the impugned order (paragraph 8.3) 2013-14 7,35,20,504 - - - Not taxable in terms of Section 66D(g) of the Finance Act. Demand has....