2017 (11) TMI 156 - AT - Service Tax

Levy of service tax - screening of films - whether the appellant is liable to pay service tax on the screening of films in their multiplex? - Held 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 - demand set aside. Renting of immovable property service - Held that - we allow this appeal by way of remand to the ld. Commissioner, so as to reconcile the payments made by the tenants for the period prior to 30/09/2011. The appellant is also directed to reconcile their accounts and if any amount is payable by them for the period subsequent to 30/09/2011, calculate the same and after depositing the tax, if any, intimate to the Adjudicating Authority. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Liability to pay service tax on the screening of films in the multiplex.
2. Liability to pay service tax under the head renting of immovable property.

Analysis:
1. Liability for Screening of Films:
The issue revolved around whether the appellant is liable to pay service tax on the screening of films in their multiplex and payments to distributors. The Tribunal noted that the appellant operated their cinema theatre in collaboration with a film distributor on a revenue-sharing basis. The appellant retained a part of the income in lieu of exhibiting movies, as per agreements with the film distributors. The Tribunal referred to a CBEC Circular stating that where the arrangement is on a principal-to-principal basis, the distributor is liable to pay service tax. Consequently, the Tribunal held that the appellant is not liable to pay service tax for screening films and payments to distributors in their theatre.

2. Renting/Business Support Service:
Regarding the renting/business support service, the appellant explained that they had deposited 50% of the service tax amount prior to a specified date under a stay order granted by the Supreme Court. However, for the period after the specified date, there was no stay, and the appellant was paying regularly without dispute. The Tribunal acknowledged this submission and found no issue with the appellant's compliance post the specified date.

3. Differential Tax Demand:
A minor issue arose concerning a differential tax demand of a specific amount due to a variance in accounting methods between receipts (cash basis) and financial accounts (accrual basis). The appellant requested a remand for proper reconciliation. The Tribunal agreed and remanded the matter back to the Adjudicating Authority for reconciliation and directed the appellant to provide calculations for consideration in accordance with the law.

In conclusion, the appeal was allowed in part and remanded in part. The Tribunal directed the appellant to reconcile accounts, pay any outstanding tax amounts if applicable, and provide necessary calculations for the differential tax demand. The appellant was entitled to consequential benefits, and the amount deposited under a specific scheme was duly acknowledged and appropriated in the impugned order.