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2022 (3) TMI 509 - AT - Service TaxQuantification of demand - Business Support Service - whether the services provided by the Theatre Owner to the Distributors/sub distributors by way of providing cinema hall and other infrastructure for the exhibition of the movies in the theatre fall under the definition of Business Support Services? - HELD THAT - Though in our view the impugned order needs to be upheld, but in view of the decision of the CESTAT, in the case of AB Motion Pictures, 2019 (4) TMI 2043 - CESTAT CHANDIGARH and several other decisions on the issue referred in this decision we would refer this matter to Hon ble President for resolving the difference in the view taken by us and that taken in earlier decisions, as per the law laid down in the varius cases The issue is referred to the Hon ble President for constituting a larger bench, to resolve the following questions of law - a) Whether the view expressed by the CESTAT in case of M/S PVS MULTIPLEX INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I 2017 (11) TMI 156 - CESTAT ALLAHABAD , and subsequently followed in the case of AB MOTIONS PVT LTD. VERSUS COMMISSIONER OF C.E. S.T., LUDHIANA 2019 (4) TMI 2043 - CESTAT CHANDIGARH , can be sustained in view of the decision of Hon ble Madras High Court in case of MEDIAONE GLOBAL ENTERTAINMENT LTD. VERSUS THE CHIEF COMMISSIONER OF CENTRAL EXCISE AND OTHERS 2013 (7) TMI 22 - MADRAS HIGH COURT . b) Whether the circular which has been upheld by the Hon ble Madras High Court, can be ignored by the CESTAT, while deciding the concerned issues squarely covered by the said circular. c) Whether the decisions rendered by the tribunal in case of PVS Multiplex and AB Motion Pictures are correct exposition of the law on the subject.
Issues Involved:
1. Classification of services provided by the theatre owner to distributors/sub-distributors under "Business Support Services". 2. Applicability of service tax for the period before and after 01.05.2011. 3. Validity of penalties imposed under Sections 77 and 78 of the Finance Act, 1994. 4. Reliance on judicial precedents and circulars in determining the tax liability. Detailed Analysis: 1. Classification of Services under "Business Support Services": The core issue was whether the services provided by the theatre owner to distributors/sub-distributors for the exhibition of movies fall under the definition of "Business Support Services" as per Section 65(104) of the Finance Act, 1994. The adjudicating authority and Commissioner (Appeal) concluded that the theatre owner provided infrastructural support services, which are taxable under "Business Support Services." The appellants argued that their activities were not support services but rather a principal-to-principal revenue-sharing model, which should not attract service tax. 2. Applicability of Service Tax Before and After 01.05.2011: The Commissioner (Appeal) differentiated the applicability of service tax based on the amendment in the definition of "Business Support Services" effective from 01.05.2011. For the period before 01.05.2011, the demand was dropped as the services did not fall under the then-existing definition. However, post-amendment, the services were considered taxable due to the inclusion of "operational or administrative assistance in any manner." 3. Validity of Penalties Imposed: The adjudicating authority imposed penalties under Sections 77 and 78 of the Finance Act, 1994, citing the appellant's failure to register, pay service tax, and file returns. The authority noted that the appellant's actions indicated an intention to evade tax, justifying the imposition of penalties and the invocation of the extended period for demand. 4. Reliance on Judicial Precedents and Circulars: The appellant relied on the CESTAT decision in AB Motion Pictures and other similar cases, arguing that their situation was identical and should not attract service tax. However, the revenue contended that these decisions were not accepted and were under appeal. The adjudicating authority and Commissioner (Appeal) relied on the CBEC Circular dated 13.12.2011, which was upheld by the Madras High Court in Mediaone Global Entertainment Ltd., to support their stance on taxability. Conclusion: The tribunal upheld the view that the services provided by the theatre owner post-01.05.2011 fall under "Business Support Services" and are taxable. The penalties were deemed justified due to the appellant's non-compliance with statutory provisions. However, the tribunal acknowledged conflicting decisions in similar cases and referred the matter to a larger bench to resolve the legal questions, specifically the applicability of judicial precedents and the binding nature of the CBEC circular upheld by the Madras High Court.
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