2024 (6) TMI 582 - AT - Service Tax

Taxability of Unincorporated Joint Ventures - Revenue sharing arrangements - support services of business or commerce (BSS) - appellant provided the cinema hall and other infrastructure to the distributor for exhibition of the movie in the theatre - non-payment of appropriate service tax on the amount received by the appellant for providing the the service - HELD THAT - A Division Bench of the Tribunal in PVS Multiplex India Pvt. Ltd. vs. Commissioner of Central Excise, Meerut-I 2017 (11) TMI 156 - CESTAT ALLAHABAD , after recording a finding that the appellant had screened films in the multiplex on a revenue sharing basis with the distributor, held that the appellant would not be liable to pay service tax on the amount that fell in the share of the distributor. A perusal of the decision of the Tribunal in Inox Leisure 2021 (10) TMI 893 - CESTAT HYDERABAD would indicate that not only was the earlier decision of the Tribunal in PVS Multiplex 2017 (11) TMI 156 - CESTAT ALLAHABAD followed, but independent findings were also recorded to hold that service tax could not be levied upon the appellant under BSS. This order of the Tribunal was assailed by the Department before the Supreme Court and the Supreme Court while dismissing the appeal specifically observed that the Tribunal had taken an absolutely correct view, to which the Supreme Court agreed. PVS Multiplex and Inox Leisure, therefore, lay down the correct law. The papers may now be placed before the Division Bench of the Tribunal for deciding the appeal.

Summary

Issues Involved:

a) Sustainability of the view expressed by the CESTAT in the case of PVS Multiplex and subsequently followed in the case of AB Motion Pictures in light of the decision of Madras High Court in Mediaone Global Entertainment Ltd.
b) Whether the circular upheld by the Hon'ble Madras High Court can be ignored by the CESTAT while deciding the concerned issue covered by the said circular.
c) Correct exposition of law on the subject by the Tribunal in the cases of PVS Multiplex and AB Motion Pictures.

Summary:

Issue (a): Sustainability of CESTAT's View in PVS Multiplex and AB Motion Pictures:

The Tribunal examined whether the decisions in PVS Multiplex and AB Motion Pictures can be sustained in light of the Madras High Court's decision in Mediaone Global Entertainment Ltd. The Tribunal noted that the Madras High Court upheld the Circular dated 13.12.2011, which clarifies the levy of service tax on revenue-sharing arrangements. The Tribunal found that the decision in Mediaone Global does not alter the legal position established by PVS Multiplex and AB Motion Pictures, which held that revenue-sharing arrangements do not necessarily imply provision of services unless a service provider and service recipient relationship is established. The Tribunal concluded that the decisions in PVS Multiplex and AB Motion Pictures lay down the correct law.

Issue (b): Circular's Applicability:

The Tribunal addressed whether the circular upheld by the Madras High Court can be ignored by the CESTAT. The Madras High Court in Mediaone Global observed that the facts of each case must be examined on merits and a decision must be taken on a case-to-case basis. The Tribunal concluded that the circular does not curtail the adjudicating authority's power to decide disputes and must be considered while deciding issues covered by it.

Issue (c): Correct Exposition of Law in PVS Multiplex and AB Motion Pictures:

The Tribunal reaffirmed that the decisions in PVS Multiplex and AB Motion Pictures correctly interpret the law. It was noted that the Supreme Court upheld the Tribunal's decisions in Inox Leisure, which followed PVS Multiplex and AB Motion Pictures. The Tribunal emphasized that service tax cannot be levied under "Business Support Service" (BSS) for revenue-sharing arrangements unless a service provider and service recipient relationship is established.

Conclusion:

The Tribunal concluded that the decisions in PVS Multiplex, AB Motions, and Inox Leisure lay down the correct law. The Circular dated 13.12.2011 and the Madras High Court's decision in Mediaone Global do not change the legal position expressed by these decisions. The reference was answered accordingly, and the papers were placed before the Division Bench for deciding the appeal.