TaxTMI 
TaxTMI 
2022 (4) TMI 253
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.... of box office collection. Such percentage varies from distributor to distributor, movie to movie and week to week after the release date. 3. The Department issued a show cause notice dated 14.10.2014 proposing to recover service tax demand of Rs. 74,62,10,986/- along with the applicable interest and penalty for the period 2009-10 to 2013-14. It was alleged that the agreement between the appellant and the distributors created an Association of Persons so as to undertake jointly the activities of screening of the films. The appellant, it was further stated, had provided services to the Association of Persons which appeared to be classifiable under "support services of business or commerce" [BOC ] 4. The appellant filed a reply to the show cause notice but the demand was ultimately confirmed by the Commissioner by order dated 16.06.2016. The Commissioner noted that the bone of contention was whether the arrangement between the appellant and the distributors would lead to constitution of an Association of Persons or whether the same has to be treated on principal to principal basis. After placing reliance upon the judgment of the Supreme Court in Faqir Chand Gulati vs. Uppal Age....
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....ent sought to include all services which were in the nature of assistance provided for the running of a business or commercial enterprise. As discussed, certain specific services rendered by the notice find mention in the definition itself. Even those services which may not find mention in the definition, but are rendered by the notice during the course of the business of exhibiting a film, would be covered by the main definition of Business Support Services. This is because by conducting themselves in the given manner the notice provides support to the business or commerce of the AOP in the aforesaid manner to administer and operationalize the successful run of the exhibited film. The main part of the definition has remained unaltered and existed ever since its introduction and stands satisfied for all relevant period. 36. In light of the above discussions, I hold that the bouquet of services rendered by the notice to the Association of Persons would fall under the category of Business Support Services, both prior to, and after, its amendment." 6. Shri Gopal Mundhra assisted by Ms. Ginita Bodani and Shri Akash Khandelwal, learned counsel for the appellant made the foll....
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....n for existence of a joint venture are (a) joint ownership and control, (b) sharing profits and losses, (c) salaries commonly and jointly fixed, and (d) community of interest and intention. A joint venture or association of persons cannot be said to be constituted / created in the absence of such parameters. In support of this contention, reliance has been placed on the following decisions of the Supreme Court: (a) G. Murgugesan and Brothers vs. Commissioner of Income-Tax, Madras [1973 (2) TMI 1- Supreme Court]; and (b) Faqir Chand Gulati vs. Uppal Agencies Pvt. Ltd. [2008 (7) TMI 159- Supreme Court ]; and (vii) No service, much less a service in the nature of BSS was provided by the appellant. 7. Shri Nitin Ranjan, learned authorised representative appearing for the Department has, however, supported the impugned and contended: (i) The appellant is not justified in asserting that the issue involved in this appeal stands decided in favour of the appellant in view of the earlier decisions of the Tribunal since these decisions are not in the context of BSS service provided by the appellant to the distributors/producers; (ii) The produce....
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....st the same as the agreement in other appeals that have been decided including that in Inox Leisure Ltd. It would be seen from the agreement that the producer/distributor is engaged in the business of production and distribution of films, while the appellant is an exhibitor engaged in the business of exhibition of films and owns/operates a chain of multiplex theatres. The exhibitor decides which screens would play the motion picture, the numbers of shows, the show timings and the ticket pricing including the right to decide on a week to week basis, 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. The relevant clauses of the agreement are reproduced below: " KINESIS FILMS PVT LTD. This agreement ('Arrangement') made and entered herein at Mumbai between KINESIS FILMS PVT. LTD., Mumbai (referred as 'Distributor') and the under mentioned Exhibitor (referred as 'Exhibitor') for screening of the film on the terms & condition mentioned hereunder: PIC....
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....." 12. In the present case the Department has alleged that the appellant is providing infrastructure support services to the producers/distributors of films under BSS. 13. 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 rights conferred upon the appellant. The observations of the Bench are as follows: "11. It is more than apparent from a bare perusal of the aforesaid agreements that they have been entered into between the appellant as an exhibitor and the distributors for screening of the films on the terms and conditions mentioned therein. The payments contemplated under the terms and conditions either require the exhibitor to pay ....
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....e 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) 17. This apart, a revenue sharing arrangement does not necessarily imply provision of services, unless the service provider and service recipient relationship is established. This is what was observed by the Tribunal in Mormugao Port Trust, Old World Hospitality and Delhi International Airport. 18. In Mormugao Port Trust, the Tribunal explained that public private partnerships between the Government/Public Enterprises and Private parties are in the nature of joint venture, where two or more parties come together to carry out a specific economic vent....
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....neurs 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 consideration fixed as a quid pro quo for any particular service of a partner. All the resources and contribution of a partner enter into a common pool of resource required for running the joint enterprise and if such an enterprise is successful the partners become entitled to profits as a reward for the risks taken by them for investing their resources in the venture. A contractor-contractee or the pri....
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....ty 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 supplied) 21. The subsequent Circular dated 13.12.2011 issued by the Central Board of Excise and Customs, apart from the fact that it would not be applicable for confirming a demand for any period prior to 13.12.2011, would also not come to the aid of the Department. The relevant portion of the Circular is reproduced below: 9. Thus, where the distributor or sub-distributor or area distributor enters into an arrangemen....