TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 173
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....ry service and for the failure of the Appellant to pay appropriate service tax for the period from 2009-2010, 2012-2013, proceedings were initiated and a show cause notice was issued on 30.09.2014. Thereafter, Adjudication authority confirmed the demand of duty vide impugned order dated 18.02.2015. Aggrieved by said order, present appeal is filed. Accordingly, show cause notice issued for levy of service tax under copy right service effect from 01.07.2010 vide Notification No. 24/2010-ST dated 22.06.2010. The show cause notice concluded that after introduction of Negative list of services from 01.07.2012, the service tax on temporary transfer permitting the use of copyright in respect of cinematography films are fully exempted from 01.07.2012 to 31.03.2013 (subsequently available only for exhibition in Cinema Hall or Cinema theaters). 3. When the appeal came up for hearing, the Learned Counsel for the Appellant submits that the entire period is beyond the normal period of limitation and demand confirmed by invoking the extended period of limitation is prima facie unsustainable. The Learned Counsel further submits that even if it is assumed that the Appellant had failed to pay serv....
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....ourts. The Learned Counsel relied on the following decisions in support of the same. i. M/s Ved Security Vs. CCE, Ranchi (2019 (6) TM-383-Cestat-Kolkat ii. M/s Lord Krishna Infra Pvt. Ltd Vs. CCE (2019 (2) TMI-1563-CESTAT iii. M/s Firm Foundation & Housing Pvt. Ltd Vs. Principle Commissioner in Writ Petition No. 21799/2017 the Hon'ble High Court of Madras. 7. The Learned Counsel draw our attention to the Chart reflecting the demand covered by impugned order:- Period Service tax payable under different category of service Total Distribution Cinematographic film (BAS) Temporary transfer of copyright (Copyright Service) 2009-10 370490 NIL 370490 2010-11 227697 NIL 227697 2011-12 2243775 NIL 2243775 2012-13 1998652 4552435 6551087 Total - 9393050 8. As regarding the demand under the category of business auxiliary service, the Learned Counsel submits that the appellant is involved in distribution of films of other producers to various theater, collect the revenue from exhibition of films from theater, transfer the collected amount to the account of the producer and receiving the commission as per the agreement ....
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....r of the film, the distributor and exhibition of the film by theater owners. The producer transfers the copyright to the distributor for exhibition of film in various theaters in different cities. The distributor enters into agreement with the theater owners for exhibition of the film on income sharing basis. The theater owner after deduction of his share pays the amount to distributor. The distributor retains his share as per the pre-agreed terms and in consistent with the industry norms and pays the balance share to the producer. In this regard, Learned Counsel submits that the issue regarding demand of service tax on such distribution ship agreement is settled as per the decision of this Tribunal in the matter of M/s Balaji Enterprises Vs. Commissioner of Central Excise & ST, Jaipur (2020 (33) GSTL 97 (Tri. -Del) where it is held that:- " 25. In the present case, as noticed above, the show cause notice, even after reproducing the seven clauses of Section 65(19), does not specify which particular clause was attracted and it only mentions that "the assessee is an authorized distributor appointed by M/s. TTSL for selling CDMA handsets along with connection to the customers. The e....
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....s go to the distributor but the theatre owner receives a fixed sum depending upon the number of days of screening In this arrangement, the advertisement and display of posters etc. is done by the distributor. Under this arrangement, the fixed amount contracted is given to the theatre owner by the distributor irrespective of the fact whether the movie runs well or not. However, there is no rental arrangement between the theatre owner and the distributor as in the arrangement at paragraph 2.1 above. A view has been expressed that in this arrangement, the theatre owner provides 'Business Support Service' to the distributor and hence is liable to pay service tax on the fixed amount received by the theatre 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 ....
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....6B of the Finance Act, service tax is levied on the value of all services other than those services specified in the Negative List. 13. As regarding demand under copy right service, Learned Counsel submits that the Appellant is a distributor of cinematic film. The Appellant had also produced one Malayalam feature film "JAWAN OF VELLIMALA" during 2011-2013 and certificate was issued on 17.10.2012. The Learned Counsel draw our attention to the certificate for the release issued by the Central Board of Film Certification and submits that the Appellant had entered into agreement on 01.02.2012 with Central Advertising agency, Cochin for assigning to the assignee, the exclusive telecast right, worldwide satellite television broadcast, direct home...etc for a consideration as specified in clause 3 and all other rights connected thereof with a perpetual period. Thus it is construct a permanent sale or transfer of the copyright in respect of Malayalam film and not a temporary transfer of permitting the use of enjoyment of any copyright thereof. And as per the Circular (supra), permanent transfer of intellectual right does not amount to rendering service. This regard the Learned Counsel dra....
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....bed under law for the time being in force. As the phrase 'law for the time being in force' implies such laws as are applicable in India, IPRs covered under Indian law in force at present alone are chargeable to service tax and IPRs like integrated circuits or undisclosed information (not covered by Indian law) would not be covered under taxable services. 9.2. A permanent transfer of intellectual property right does not amount to rendering of service. On such transfer, the person selling these rights no longer remains a 'holder of intellectual property right' so as to come under the purview of taxable service. Thus, there would not be any service tax on permanent transfer of IPRs. 9.3 In case a transfer or use of an IPR attracts cess under Section 3 of the Research and Development Cess Act, 1986, the cess amount so paid would be deductible from the total service tax payable (refer Notification No. 17/2004-S.T.. dated 10-9-2004). 15. Learned Authorized Representative (AR) reiterated the finding in the impugned order and also draw our attention to the judgment of the Hon'ble High Court in the matter of M/s. AGS Entertainment Private Limited Vs. UOI & Commissioner ....
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....that transfer only assigning a copyright of a cinematography film undertaken by the Appellant and pursued that it is not taxable under the revenue sharing arrangements except to a distributor taken a leased theater for exhibiting the movie and theater owners get a fixed rate. Same would be tax under the head renting of immovable property. However the act of temporary transfer of permitting the use or enjoyment of copyright of cinematographic film and sound recording services are taxable under Copyright services in terms of Section 65(105)(zzzt) of Finance Act, 1994 from 01.07.2010 r/w Section 18 of Copyright Act, 1957. The Learned AR also draw our attention to the various modes of transaction in the film industry which include part financing of film, localize marketing of film, selection of exhibition halls and managing the logistics of physical print distribution. 17. Heard both sides. As regarding demand under copyright, we find that as per the agreement entered by the Appellant with Central Advertising Agency on 01.02.2012, it is an absolute assignment to the assignee or their authorized person for the telecast right and as per clause 12, the sole and exclusive right for the en....