2018 (7) TMI 264 - AT - Service Tax

Classification of services - hire charges collected towards letting out of the studio for shooting - whether for the period upto 1.6.2007, the respondents are liable to pay service tax for letting out the studio under the category of Video Tape Production? - Held that - The activity of letting out the studio will not come within the definition of Video Tape Production. The Board s Circular dated 9.7.2001 referred to by the ld. AR has clarified so as to include the letting out of studio, other facilities such as lights, gadgets etc. falling under Video Tape Production services. The said Circular extends beyond the definition provided in the statute. Appeal dismissed - decided against Revenue.

Summary

Issues:
Whether letting out a studio for shooting films amounts to providing facilitation activity in relation to Video Tape Production and attracts service tax liability for the period up to 1.6.2007.

Analysis:
The case involved a dispute regarding the liability to pay service tax on the hire charges collected for letting out a studio for film and TV serial production. The issue arose when renting of immovable property was brought under taxable services from 1.6.2007. The department contended that letting out the studio for shooting films constituted facilitation activity related to Video Tape Production, thus attracting service tax. The original authority upheld the demand, interest, and penalties, but the Commissioner (Appeals) later set them aside, leading to the Revenue's appeal.

The Revenue argued that the activity fell under Video Tape Production as per the definitions in sections 65(119) and 65(120) of the Finance Act, 1994, supported by a CBEC Circular. On the other hand, the respondent's counsel relied on a previous Tribunal decision in their favor, emphasizing that letting out the studio did not align with the Video Tape Production definition. The Tribunal examined the definitions provided by the Revenue and concluded that letting out the studio did not fall within the scope of Video Tape Production.

Regarding the CBEC Circular referenced by the Revenue, the Tribunal noted that it extended the definition beyond what was provided in the statute. The Tribunal emphasized that CBEC Circulars are not binding and highlighted that the respondent had been paying service tax on rent received since 1.6.2007 when immovable property renting became taxable. Citing a previous decision in the respondent's favor, the Tribunal upheld the Commissioner (Appeals) decision to set aside the demand, ultimately dismissing the Revenue's appeal for lack of merit.

In conclusion, the Tribunal upheld the impugned order, dismissing the Revenue's appeal and allowing a miscellaneous application for a change of cause title.