TaxTMI 
TaxTMI 
2024 (7) TMI 109
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....stwhile Section 65(105) (zzzz) of the Finance Act, 1994 ("the Act"). 2.2 Appellant was also engaged in providing services of screening of films etc., in his multiplex, on revenue sharing basis, to the distributors of the films, He was, not paying Service Tax on the services provided in connection with the screening of the films. 2.3 The department had issued a show cause notice (SCN) dated 12.09.2014 for the period 2009-10 to 2012-13, demanding, inter-alia, Service Tax amounting to Rs. 72,92,717/- in respect of screening of films under the category of Business Support Service, which was confirmed vide order in original dated 15.03.2016, against which the appellant had preferred an appeal before the CESTAT, which was decided vide Final Order No. ST/A/71279/2017-CU(DB) dated 29.08.2017 holding as follows: 7. Having considered contentions and on perusal of the facts on record, we are satisfied that there is no dispute of ST Appeal No. 70563/16 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 liab....
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.... (ii) I however drop the proceedings for imposing penalty." 2.6 This order was challenged by both appellant and revenue before the Commissioner (Appeal). Both the appeals filed by revenue and the appellant were disposed of by the impugned order. 2.7 Aggrieved appellant has filed this appeal. 2.8 Appeal filed by the revenue has been dismissed vide Final Order No 71696/2019 dated 04.09.2019 on the ground of monetary limit prescribed by F No 390/Misc/116/2017-JC dated 22.08.2019 for filing the appeal by revenue before the CESTAT 3.1 We have heard Shri Vineet Dubey, Advocate on the basis of Authorization (dated 23.01.2024 filed in court on 04.03.2024) given by Shri Harbir Singh, Advocate for the appellant and Shri A. K. Choudhary, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned counsel submits that:- • The appellant had not provided any support service to the film distributor as such there was no relevance of pre-negative service era. • In case of Inox Leisure Ltd. [Final Order No A/85216/2022 dated 14.03.2022] after taking note of the order of Allahabad Bench in the case of appellant the issue has been cons....
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....f the Tribunal largely pertained to the period of 2009-10 to 2012-13 i.e. pre negative list era while the present demand covered the period 2013-14 to 2014-15 i.e. post negative list era. According to appellant no.1, the exemption granted under SI. No. 47 of Notification No. 25/2012-ST dated 20.06.2012, on the above issue was not applicable for the period pertaining to 2013-14 to 2014-15 as the same was not available post implementation of negative list-based tax regime, and was made available only by inserting Sl. No. 47 in Notification 6/2015-ST dated 31.03.2015 effective from 01.04.2015. 6.1 I find that for the impugned period i.e. from 01.07.2012 to 31.03.2015, the Hon'ble High Court of Madras in the case of Mediatone Global Entertainment Ltd., Vs Chief CCE, Chennai reported as 2014 (34) STR (819) (Mad.) held that 'the variant modes of transaction between the distributor/sub-distributors of films and exhibitors of movie and thus revenue sharing arrangement between them are neither in the "Negative List Șervices" nor exempted'. Hon'ble Tribunal has however not taken cognizance of the above judgement of the Hon'ble High Court which was passed muc....
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....under: In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 25/2012-Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 467 (E), dated the 20th June, 2012, namely 46. Service provided by way of exhibition of movie by an exhibitor to the distributor or an association of persons consisting of the exhibitor as one of its members;"; (xii) after entry 46 so inserted, the following entry shall be inserted with effect from such date as the Central Government may, by notification in the Official Gazette, appoint, namely :- 47. Services by way of right to admission to, exhibition of cinematographic film, circus, dance, or theatrical performance including drama or ballet; From the above, it is evident that only from 01.04.2015 onwards the services provided....
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....o the film distributor has been shown as software expenses. It further appeared that the party had been showing the films on revenue sharing basis without transfer of copyright in their favour, which qualifies the taxable condition and thus the party appear liable to pay service tax on exhibition of film on the amount received under revenue sharing basis as provider of Business support service. 10 Further, the party has shown "A.C. Receipts (Theatre)" and "Maintenance Charges" in their Balance sheet, which they are collecting as theatre collection and expensing it for repairing & maintenance of "Air Condition" and "Theatre" respectively. This appear to have been done with the sole purpose of bifurcating the amount of sale of movie tickets, i.e. Theatre Receipt, A.C. Receipts (Theatre) and Maintenance Charges receipts. It appeared that the "A.C Receipts (Theatre)" and "Maintenance Charges" receipts is retained in full by the exhibitor (Theatre Owner) while the remaining amount of income on account of sale of movie tickets is being shared by each of the persons, which appeared liable to Service Tax under the category of Business Support Service" as per above said Circulars i....
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....ce. 15. .... 16. And whereas, the party is the owner of three theaters and they are engaged in providing the Service of screening of film supplied by a film distributor. As per Board's Circular No 109/03/2009 dated 23' February, 2009, it has been clarified that the activity of screening of film supplied by a film distributor would fall under any of the taxable service category of 'renting of immovable property" or 'Business Support Service' depending upon the arrangement between the film distributor and theatre owner 17 Based on the representations received wherein it has been requested to clarify on the taxability of consideration earned by the distributors/sub-distributors/area distributors of Indian & Foreign films in the form of 'revenue share' from the exhibitors of the movie, and on revenue retained as percentage by the exhibitors of the movie from the sale of tickets, the C.B.E.C. issued Circular No. 148/17/2011-ST dated 13-12-2011 clarifying the issue, in following term: Para 10 of the aforesaid Circular dated 13-12-2011, states as under: "the arrangements entered into by the distributor or sub-distributor....
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.... during the course of his statement dated 18.10.2013 (Reply to Query No. 7). He stated that there was no written agreement between the party and the film distributor namely Mukta Movie Distributor and as per his knowledge, Mukta Movie Distributor purchases copy right of the film from the film producer and pays the service tax and exhibits the film in their theatre on revenue sharing arrangement. From the above fact as tendered by Shri Kalyan Singh, authorized signatory of the party the following two facts emerge namely: A. M/s Mukta Movie Distributor purchased the copyright of film from producer. Copyright was not purchased by the PVS Multiplex i.e. exhibitor of film. B. M/s PVS Multiplex exhibited the film in their theatre on revenue sharing arrangement on behalf of distributor as copyright was not transferred to them. 20. The above said facts further gain strength from the balance sheet where the amount received from screening of film has been shown as theatre income and payment to the film distributor has been shown as software expenses 21. As per para 10 of Circular dated 13.12.2011, in the arrangement "Principal to Principal basis" where the....
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....that the "A.C. Receipts (Theatre)" and "Maintenance Charges" receipt in full is retained by the exhibitor (Theatre Owner) and the remaining amount of income on account of sale of movie tickets is being shared by each of the persons, which appears liable to Service Tax. From this, it appears that it is not merely a renting of premises to the distributor but giving the support service, which is leviable to service tax under the category of 'Business Support Service" as per the Board's above said Circular. [Figure in Rupees] Year AC Receipts (Theatre) Maintenance Charges 2014-15 NIL 2081907 25. In view of the above, it appears that the party is liable to pay Service tax for the period 2014-15 on amount retained during the course of providing "Business Support Service" to film distributor as per chart mentioned below: [Figure in Rupees] Taxable Amount of Theatre Receipt AC Receipts (Theatre) Maintenance Charges Total Taxable Amount 15698301 NIL 2081907 17780208 Year Total Taxable Amount Service Tax (@12%) Education Cess (@2%) H.S.Education Cess (@1%) Total Service Tax 2014-15 17....
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....Hon'ble Madras High Court in case of M/s Mediatone Global Entertainmenmt Ltd [2014 (34) STR 819 (Mad)] relied in the impugned as the said decisions has considered the provisions as introduced after introduction of negative list. The show cause notice defines the strict boundaries for adjudication and subsequent proceedings. Thus any order which travels beyond the boundaries laid down by the show cause notice is bad in law and needs to be set aside for the same reason. 4.5 We also find that the show cause notices have been issued completely on the basis of the earlier show cause notice dated 12.09.2014 for the period for the period 2008-09 to 2012-13. Order in original adjudicating the said show cause notice has been set aside by the Allahabad Bench vide its Final Order No. ST/A/71279/2017-CU(DB) dated 29.08.2017, referred in para 2.3 above and the matter remanded back to original authority for reconsideration of certain demands which are other than the demands in respect of screening of films and payments to the distributors in their theatre" . However the demand in the present two show cause notices is only in respect of the demands which have been set aside by this bench vide ....
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.... agreement in the present appeal is almost 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. 11. In the present case the Department has alleged that the appellant is providing infrastructure support services to the producers/distributors of films under BSS. 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....
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....ed by Division Benches of the Tribunal in The Asian Art Printers, Shri Vinay Kumar, M/s. Golcha Properties and Satyam Cineplexes Ltd. 14. What also needs to be noticed is that if the appellant was providing such a service, it would be the producers/ distributors who would be making payments to the appellant, but what comes out from a perusal of the Agreement is that in consideration for the distributor agreeing to grant to the appellant the license to exploit the theatrical rights of a motion picture, the appellant would have to pay such revenue share to the distributor as provided for in the said clause. In fact, the 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 t....
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....l expertise necessary for commercial exploitation of the resource belonging to the Government. These PPP arrangements are described sometimes as collaboration, joint venture, consortium, joint undertaking, but regardless of their name or the legal form in which these are conducted. These are arrangements in the nature of partnership with each co-venturer contributing in some resource for the furtherance of the joint business activity. ................... 15. An analysis of this judgment shows that in order to constitute a joint 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 a....
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....ributor irrespective of the fact whether the movie runs well or not. However, there is no rental arrangement between the theater owner and the distributor as in the arrangement at paragraph 2.1 above. A view has been expressed that in this arrangement, the theater owner provides 'Business Support Service' to the distributor and hence is liable to pay service tax on the fixed amount received by the theater owner. 2.5. The matter has been examined. By definition 'Business Support Service' is a generic service of providing 'support to the business or commerce 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 o....