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2022 (3) TMI 1256 - AT - Service TaxClassification of services - support services of business or commerce or not - business of exhibiting cinematographic films across India in theatres owned by it or taken on rent - HELD THAT - What also needs to be noticed is that if the appellant was providing such a service, it would be the producers/ distributors who would be making payments to the appellant, but what comes out from a perusal of the Agreement is that in consideration for the distributor agreeing to grant to the appellant the license to exploit the theatrical rights of a motion picture, the appellant would have to pay such revenue share to the distributor as provided for in the said clause. In fact, the distributor agreed to grant to the Appellant the non exclusive license to exploit the theatrical rights of a motion picture during the term. In MORMUGAO PORT TRUST VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, GOA- (VICE-VERSA) 2016 (11) TMI 520 - CESTAT MUMBAI , the Tribunal explained that public private partnerships between the Government/Public Enterprises and Private parties are in the nature of joint venture, where two or more parties come together to carry out a specific economic venture, and share the profits arising from such venture. Such public private partnerships are at times described as collaboration, joint venture, consortium or joint undertaking. Regardless of the name or the legal form in which the same are conducted, they are essentially in the nature of partnership with each co-venturer contributing some of the resources for the furtherance of the joint business activity. It is not possible to sustain the confirmation of the demand by the order dated 16.06.2016 passed by the Commissioner - Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the arrangement between the appellant and the distributors constitutes an Association of Persons (AOP) or a principal-to-principal basis. 2. Whether the services provided by the appellant fall under "support services of business or commerce" (BSS). 3. Whether the revenue sharing arrangement implies provision of services. 4. Whether the appellant is liable to pay service tax on the payments made to the distributors for screening the films. Detailed Analysis: Issue 1: Association of Persons (AOP) vs. Principal-to-Principal Basis The Commissioner determined that the arrangement between the appellant and the distributors constituted an AOP, relying on the Supreme Court judgment in Faqir Chand Gulati vs. Uppal Agencies Pvt Ltd. The Commissioner concluded that the enterprise created by the agreement was a joint venture, thus forming an AOP. This was based on the Circular dated 13.12.2011, which indicated that revenue/profit-sharing arrangements could lead to the emergence of a new entity with the character of an AOP. Issue 2: Classification under BSS The Commissioner classified the services rendered by the appellant under BSS, both before and after the amendment in the definition of BSS. The definition of BSS under Section 65(104c) of the Finance Act includes services provided in relation to business or commerce, such as infrastructural support services. The Commissioner held that the appellant provided infrastructure support services to the producers/distributors of films. Issue 3: Revenue Sharing Arrangement The appellant argued that a revenue-sharing arrangement does not necessarily imply the provision of services unless a service provider and service recipient relationship is established. The Tribunal in previous decisions, including Inox Leisure Ltd. vs. Commissioner of Service Tax, Hyderabad, and M/s. PVS Multiplex India Pvt. Ltd. vs. Commissioner of Central Excise, Meerut-l, concluded that such arrangements do not constitute the provision of services. The Tribunal emphasized that the agreements were on a principal-to-principal basis, and no service was provided by the appellant to the distributors. Issue 4: Liability to Pay Service Tax The Tribunal examined whether the appellant was liable to pay service tax on the payments made to the distributors. In Moti Talkies vs. Commissioner of Service Tax, Delhi-l, the Tribunal observed that the appellant did not provide any service to the distributors, and no consideration flowed from the distributors to the appellant. Similar views were expressed in other cases, such as The Asian Art Printers (Sheila Theatre) vs. Principal Commissioner of Service Tax, Delhi-l, and Satyam Cineplexes Ltd. vs. Principal Commissioner of Service Tax, Delhi-l. Conclusion: The Tribunal concluded that the appellant was not liable to pay service tax under BSS. The arrangement between the appellant and the distributors was on a principal-to-principal basis and did not constitute an AOP. The revenue-sharing arrangement did not imply the provision of services, and no service tax was payable on the payments made to the distributors. The Tribunal set aside the order dated 16.06.2016 passed by the Commissioner and allowed the appeal. The Supreme Court upheld this view, dismissing the Civil Appeal filed by the Department.
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