TaxTMI 
TaxTMI 
2025 (7) TMI 213
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....uipment to screen the films; arrange power supply and provide the facilities to collect box office collections arising for screening the films owned/and provided by film Distributor/Sub-distributors. These facilities were provided under the provisions of mutual agreements between the appellant and the film Distributors/Sub-distributors (herein after referred to as the Distributors). 3. As per investigation conducted by the Department for the period 1.4.2009 to 31.03.2015, it was found that the appellant had short paid/not paid service tax on "Renting of Immovable Property" on screening of film, share of Net Box Office Collection NBOC, transfer of copyright and admission of entertainment. Show cause notice dated 20.10.2014 for the period 2009-10 amounting to Rs.3,57,37,074/- + Rs.25,37,265/-, show cause notice dated 21.04.2015 for the period 2013-14 amounting to Rs.82,21,912/- + Rs. 2,62,627/- and show cause notice dated 01-04-2016 for the period 2014-15 amounting to Rs.85,51,638/- + Rs.3,14,451/- were issued to the appellant. All the three show cause notices were adjudicated and by the impugned order Order-in-Original No.DL-GST-WEST-COM-19-18-19 dated 31.08.201....
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....pellant. 5. The learned Authorised Representative for the Revenue fairly agreed that the issue is covered by the decisions of this Tribunal. 6. Considering the agreement between the appellant with M/s. UTV, it is apparent from Clause 1 that the distributor grants Theatrical Exhibition Rights of the film to the appellant which implies that Theatrical Exhibition Rights are transferred by the distributor to the appellant. From the submissions of the appellant, we find that the film distributors entered into an agreement with the appellant to screen the movie in the theatre under two different situations i.e.: A. Agreement where right/license to exhibit the film is granted to the exhibitor by the distributor for specified number of shows and period; and, B. Agreement where theatrical exhibition rights in perpetuity to exhibit the films are guaranteed; 7. In the second case, the appellant would make payment to the distributor for the grant of the rights to screen the films and the payments were described as "Theatre Shares", "Fixed Hire", "Theatre Hire", which was specified percentage of the NBOC. 8. In the case of Moti Talkies Vs. Commissioner of Service T....
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....or who owns/operates chain of Multiplex theatres during the period, May 2009 to March 2012, to examine the issue whether the activity carried out by the appellant would be exigible to service tax under "Business Support Service". The Bench took note of the principle that a revenue sharing arrangement does not necessarily imply provision of services, unless the service provider and service recipient relationship is established as enunciated by the Tribunal in Mormugao Port Trust Vs. Commissioner of Customs, Central Excise & Service Tax, Goa 2017 100 VST 120 (CESTAT-Mum), which was affirmed by the Apex Court 2018 (19) GSTL J118 (SC) and held that the demand of service tax is unsustainable. The observations of the Tribunal are as under: "18. 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 clause 5.1 of the agreement is that in consideration for the distributor agreeing to grant to the appellant the licence to exploit the theatrical rights of a motion picture, the appellant would have to pay such revenue share to the di....
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....BOC and not on the part of the distributor as claimed by the appellant. In this regard, the appellant has relied on the provisions of Indian Copy Right Act, 1957. Section 14 Clause (d) of the Copy Right Act provides for the giving of copyright in case of cinematograph film, which is as under:- "Section 14: For the purposes of this Act, "copyright" means the exclusive right subject to the provisions of this Act, to do or authorise the doing of any of the following acts in respect of a work or any substantial part thereof, namely .............. ................ (d) In the case of cinematograph film, - (i) to make a copy of the film, including a photograph of any image forming part thereof; (ii) to sell or give on hire, or offer for sale or hire, any copy of the film, regardless of whether such copy has been sold or given on hire on earlier occasions; (iii) to communicate the film to the public;" 12. The very fact that the appellant have been exhibiting the films in their theatre implies that the right in the film was transferred to the appellant to screen the film in the theatre and thereby the appellant is engaged in ....
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....ant extracts of the Circular is reproduced below : - "(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 theatre and the theatre owner get a fixed rent. In such case, the service provided by the theatre owner would be categorized as "Renting of immovable property" for furtherance of business or commerce" and the theatre 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." Subsequently, CBEC issued another Circular No.148/17/2011-ST dated 13.12.2011. As per the Circular, where distributor or sub-distributor transfers the rights to exhibitor or theatre owner, the distributor or sub- distributor is liable to collect the service tax under "Copyright Service" & deposit it with the Government exchequer. The relevant extracts of the Circular is reproduce below: "3. The normal business practice in the industry is that the producer of the film, who owns the intellectual property rights of the film, temporarily transfers the rights to a person [normally distributor or any o....