TaxTMI 
TaxTMI 
2021 (10) TMI 893
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....demand of Rs. 32,81,940/- proposed towards service tax under BSS under section 73(1A) of the Finance Act with interest and penalty. The said service is said to have been provided during the period 01.04.2012 to 30.06.2012. 3. The appellant is engaged in the business of exhibiting cinematographic films across India in theatres owned by the appellant or taken on rent. The appellant claims that it acquires the rights/license to exhibit the films at the designated theatres from various film distributors by entering into separate license agreements for each film. The consideration towards such license is paid by the appellant as per the agreed percentage of box office collection and such percentage varies from distributor to distributor, movie to movie and week to week, after the release date. 4. The Department issued two show cause notices dated 02.04.2014 and 22.05.2014 proposing to recover service tax of Rs. 2,67,79,932/- and Rs. 32,81,940/- with applicable interest and penalty for the period 09.05.2009 to 31.03.2012 and 01.04.2012 to 30.06.2012 respectively. 5. The show cause notices were adjudicated upon by a common order dated 30.03.2016 and the demands were confirmed for....
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....erut-l [2017 (11) TMI-156- CESTAT Allahabad]; (b) M/s. Moti Talkies vs. Commissioner of Service Tax, Delhi-l [2020 (6) TMI 87- CESTAT New Delhi]; (c) M/s. The Asian Art Printers (Sheila Theatre) vs. Principal Commissioner of Service Tax, Delhi-l [2020 (12) TMI 1012- CESTAT New Delhi]; (d) Shri Vinay Kumar, Proprietor of M/s. Regal Theatre vs. Principal Commissioner of Service Tax, Delhi-l [2020 (11) TMI 436- CESTAT New Delhi]; (e) M/s. Golcha Properties Pvt. Ltd. vs. Principal Commissoner of Service Tax, Delhi-l [2020 (11) TMI 137- CESTAT New Delhi]; and (f) Satyam Cineplexes Ltd. vs. Principal Commissioner of Service Tax, Delhi-l [2020 (8) TMI 1222- CESTAT New Delhi]; (ii) A revenue sharing arrangement in itself does not necessarily imply provision of service, unless service provider and service recipient relationship is established. In this connection reliance has been placed on the following decisions: (a) Mormugao Port Trust vs. Commissioner of Customs, Central Excise & Service Tax, Goa-(Vice-Versa) [2016 (11) TMI 520- CESTAT Mumbai]; (b) M/s. Old World Hospitality Limited vs. CST, New Delhi [2017 (2) TMI 1....
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....9 and 13.12.2011 issued by the Central Board of Excise and Customs in connection with service tax on movie theaters, the appellant is not justified in contending that service tax would not be leviable if revenue is shared between the appellant and the producers of films. 5. The contentions advanced by the learned Counsel for the appellant and the learned Authorised Representative appearing for the Department have been considered. 6. 'Support services of business or commerce' has been defined in sub-section 104(c) of section 65 of the Finance Act to mean as follows: "(104c) "Support services of business or commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfillment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational or administrative assistance in any manner, formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation.- For the pu....
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....lexes in the Territory during the Terms n the agreed language, for viewing in Designated Screens to any audience or by the general public on a regularly scheduled basis where a ticket for such viewing is issued by the Exhibitor for admission of any person to a Multiplex but excluding hotels/ restaurants/ bars/ pubs and other places. xxxxxxx 2. Distribution Strategy / Showcasing 2.1.1. The Parties agree and understand that SPE Films shall License the Motion Pictures for exploitation of Theatrical Rights and the Exhibitor shall exhibit the Motion Pictures during the Term of this Agreement, on the terms and conditions set out in this Agreement. 1.1.2. This Agreement shall be the master agreement governing the Motion Pictures for which the Theatrical Rights will be granted by SPE Films to the Exhibitor during the Term. The specific details in respect of each Motion Picture, pertaining to the Designated Screens, the number of Prints provided to Exhibitor, the Refundable Advance, publicity materials and quantities thereof, shall be set out in the Annexure for each Motion Picture and executed in writing from time to time when the Theatrical Rights of su....
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....or any show, at its sole and absolute discretion. xxxxxxxxx 5. CONSIDERATION 5.1 In consideration of SPE Films agreeing to grant to the Exhibitor, the License to exploit the Theatrical Rights of a Motion Picture, the Exhibitor shall pay to SPE Films, such revenue share (the "Revenue Share") in respect of the Motion Picture, as is set out hereinunder. The Revenue Share shall be computed on the Net Collections received by the Exhibitor from the exhibition of the Hindi Motion Pictures produced and/or distributed by SPE Films across all the Multiplexes, as the case may be: 5.1.1 1st Exhibition Week: 50% of the Net Collections 5.1.2 2nd Exhibition Week: 42.5% of the Net Collections 5.1.3 3rd Exhibition Week: 37.5% of the Net Collections 5.1.4 4th Exhibition Week onwards till the last Exhibition Week: 30% of the Net Collections. 5.2 This Revenue Share shall be applicable for all the Motion Pictures that are granted by SPE Films to the Exhibitor for exploitation during the Term. This Revenue Share shall be maintained throughout the Term of this Agreement and for all Motion Pictures and Multiplexes. xxxxxxxxx ....
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....sis, whether or not to continue to exhibit the motion picture. The distributor/producer had granted the exhibitor the non exclusive license to exploit the theatrical rights of a motion picture and each party was entitled to conduct its business in its absolute and sole discretion. It was further made clear in the Agreement that either of the party shall not interfere or otherwise influence any decision of the other party in respect of the conduct of its business. 12. Such an arrangement between a distributor/producer and an exhibitor of films was examined by a Division Bench of the Tribunal in Moti Talkies. The Department alleged that the agreement was for 'renting of immovable property' as defined under section 65(90a) of the Finance Act. This contention was not accepted by the Tribunal and it was observed that the appellant did not provide any service to the distributors nor the distributors made any payments to the appellant as consideration for the alleged service. In fact, it was the appellant who had paid money to the distributors for the screening the rights conferred upon the appellant. The observations of the Bench are as follows: "11. It is more than apparent ....
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....istributor as provided for in the said clause. In fact, clause 3.1 of the Agreement provides that distributor agreed to grant to the Appellant the non exclusive license to exploit the theatrical rights of a motion picture during the term. 15. This issue had come up for consideration before a Division Bench of the Tribunal in PVS Multiplex India. The Bench observed that as the appellant was screening films on revenue sharing basis, the appellant was not liable to pay service tax on the payments made to the distributors for screening the films. "7. Having considered contentions and on perusal of the facts on record, we are satisfied that there is no dispute of fact that the appellant have been screening films in their multiplex on Revenue Sharing basis, which is undisputed finding recorded by the ld. Commissioner in the impugned order. Accordingly, we hold that the appellant is not liable to pay Service Tax for Screening of Films and payments to distributors in their theatre." (emphasis supplied) 16. This apart, a revenue sharing arrangement does not necessarily imply provision of services, unless the service provider and service recipient relationship is establishe....
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....venture, the arrangement amongst the parties should be a contractual one, the objective should be to undertake a common enterprise for profit. Joint control over strategic financial and operative decisions was held to be the key feature of a joint venture. The other obvious feature of a joint venture would be that the parties participate in such a venture not as independent contractors but as entrepreneurs desirous to earn profits, the extent whereof may be contingent upon the success of the venture, rather than any fixed fees or consideration for any specific services. 17 The question that arises for consideration is whether the activity undertaken by a co- venture (partner) for the furtherance of the joint venture (partnership) can be said to be a service rendered by such co-venturer (partner) to the Joint Venture (Partnership). In our view, the answer to this question has to be in the negative inasmuch as whatever the partner does for the furtherance of the business of the partnership, he does so only for advancing his own interest as he has a stake in the success of the venture. There is neither an intention to render a service to the other partners nor is there any co....
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....ommerce of the service receiver'. In other words the principal activity is to be undertaken by the client while assistance or support is provided by the taxable service provider. In the instant case the theatre owner screens/exhibits a movie that has been provided by the distributor. Such an exhibition is not a support or assistance activity but is an activity on its own accord. That being the case such an activity cannot fall under 'Business Support Service'. 3. In the light of above, it is clarified that screening of a movie is not a taxable service except where the distributor leases out the theater and the theater owner get a fixed rent. In such case, the service provided by the theater owner would be categorized as 'Renting of immovable property for furtherance of business or commerce' and the theater owner would be liable to pay tax on the rent received from the distributor. The facts of each case and the terms of contract must be examined before a view is taken. 4. All pending cases may be disposed of accordingly. In case any difficulty is faced in implementing these instructions, the same may be brought to the notice of the undersigned." (emphasis suppl....