9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (3) TMI 52 - AT - Service TaxNon-payment of service tax - renting of immovable property service - Business Support Services - amount received as a share of the Net Box office collections from screening movies in the cinemas. Levy of penalty - renting of immovable property service - appellant already paid service tax and interest - applicability of section 73(3) in view of the exception provided in section 73(4) of Finance Act - HELD THAT - The period involved in this case is 1.04.2010 to 31.12.2014 and the show cause notice was issued on 13.01.2015. When the audit was conducted, the appellant had paid service tax on the rent received as on 24.01.2012 in respect of the shops in the mall. This amount has already been appropriated. Thus, section 73(3) applies to this case and no SCN should have been issued - no case has been made out by the Revenue to justify the imposition of penalty upon the appellant under section 78 insofar as this part of the demand is concerned. The appellant has not contested and is still not contesting the demand of service tax. Business Support Services - whether service tax can be levied on the cinema owner s share of the Net Box office collections? - HELD THAT - Movies are made by producers investing money and the producer acquires the copy right to the movies which, he then transfers to various distributors across the country for a consideration. The distributors, in turn, enter into agreements with various cinema/ theater owners and provide license/ right to screen the movie in their theaters. The Net Box Office collections, i.e, the proceeds of sales of tickets minus some expenses such as taxes are shared between the cinema owners and the distributors. The question as to whether the share of collections received by the cinema owners can be taxed has been decided in negative by this Tribunal in the case of M/S. MOTI TALKIES VERSUS COMMISSIONER OF SERVICE TAX, DELHI I 2020 (6) TMI 87 - CESTAT NEW DELHI where it was held that Though, renting of immovable property is a declared service under section 66E of the Finance Act, then too under section 67(1) of the Finance Act, the value shall, in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him. The appellant is not receiving any payment to the distributor and, therefore, no service can be said to have been provided by the appellant. No case law has been brought before us where the share of the cinema owners in the Box Office collections is held to be exigible to service tax. Therefore, the issue stands decided that no service tax can be charged. Allegation that a joint venture has been created and that joint venture is an unincorporated business entity and the service has been rendered by the appellant to such a business entity and that business entity is paying the appellant for allowing the business entity to use the appellant s premises and other support - HELD THAT - There are nothing in the records to indicate that there was an express or implied agreement to form a joint venture. There is no joint ownership or control of the property the appellant is the owner of the distributors. The distributors own the licensing rights to the movies. They lease the rights temporarily to the appellant. The distributor has no control over how the movies will be screened which is completely up to the appellant. Since the distributor is giving rights to screen the movies, as a consideration, it receives a share of the net box office collections. There is nothing on record to show that there is an agreement to share profits and losses. Only the collections are shared after some deductions. If, for instance, the total expenses incurred by the appellant in running the theatre is much more than its collections from the movie, it will incur losses - The quantum of consideration is not a fixed amount but a share of collections. The distributor does not assume any business risks in screening the movies. Therefore, we find no evidence whatsoever in this arrangement of forming an unincorporated joint venture. The impugned order is modified by setting aside the demand of service tax under the category of business support services along with interest. The demand of service tax on renting of immovable property service is upheld - Appeal allowed in part.
Issues Involved:
1. Demand of service tax on renting of immovable property. 2. Demand of service tax on business support services. 3. Imposition of penalties. Detailed Analysis: 1. Demand of Service Tax on Renting of Immovable Property: The appellant, M/s Five Vision Promoters Private Limited, did not dispute the demand of service tax amounting to ?29,91,662 on renting of immovable property and paid the same during the audit. However, the appellant contested the penalty imposed on this amount. The appellant argued that the show cause notice (SCN) should not have been issued as they had already paid the service tax and interest before the issuance of the SCN, in accordance with Section 73(3) of the Finance Act, 1994. The appellant further asserted that Section 73(4), which makes Section 73(3) inapplicable in cases of fraud, collusion, willful misstatement, suppression of facts, or intent to evade payment of service tax, did not apply to their case. The appellant provided evidence of payment through various challans and argued that the demand was time-barred, citing relevant case laws. The Departmental Representative contended that the appellant had not paid interest before the issuance of the SCN and that the appellant's case was covered by Section 73(4) due to non-disclosure of the service. The Commissioner upheld the demand, stating that the appellant had admitted the short payment and paid the service tax and interest when pointed out during the audit. Upon review, the Tribunal found that the appellant had paid the service tax before the SCN and the interest after the SCN. The Tribunal agreed with the appellant that Section 73(3) applied and no SCN should have been issued. The Tribunal found no evidence of fraud, collusion, willful misstatement, suppression of facts, or intent to evade payment. Consequently, Section 73(4) did not apply, and no penalty was justified. The demand of service tax on renting of immovable property was upheld, but the penalties were set aside. 2. Demand of Service Tax on Business Support Services: The appellant disputed the demand of ?1,31,21,900 on business support services. The appellant operated three movie theatres and entered into agreements with film distributors for temporary transfer of copyrights for screening movies. The Department alleged that this arrangement created an unincorporated joint venture, with the appellant providing business support services to the joint venture, and demanded service tax on the appellant's share of the Net Box Office collections. The appellant argued that the arrangement did not constitute a joint venture and that the transaction was one of temporary transfer of copyright, not exigible to service tax. The appellant cited CBEC’s Circular No. 148/17/2011-S.T. and Supreme Court decisions to support their position that no joint venture was formed. The appellant provided detailed criteria to demonstrate the absence of a joint venture, including the nature of agreements, control, and risk-sharing. The Tribunal reviewed the submissions and found that the arrangement did not result in an unincorporated joint venture. The Tribunal noted that the agreements were for the transfer of copyrights, the appellant operated the theatres independently, and the distributors did not share control, losses, or risks. The Tribunal also referenced previous Tribunal decisions that held no service tax was payable on the cinema owner's share of Net Box Office collections. The Tribunal concluded that there was no joint venture and no service tax was chargeable on the appellant's share of the Net Box Office collections. The demand of service tax under the category of business support services was set aside. 3. Imposition of Penalties: Given the findings on the two main issues, the Tribunal set aside all penalties imposed on the appellant. The penalties related to the demand on renting of immovable property were found unjustified as the appellant had complied with Section 73(3). For the demand on business support services, since the demand itself was set aside, the penalties were also annulled. Conclusion: The appeal was allowed. The demand of service tax on renting of immovable property was upheld, with penalties set aside. The demand of service tax on business support services was set aside, and all penalties imposed on the appellant were annulled.
|
