9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (3) TMI 1322 - AT - Service TaxClassification of services - Business Support Services or not - business of exhibiting cinematographic films across India in theatres owned by it or taken on rent - appellant acquires the rights/ license to exhibit the films at the designated theatres from various distributors by entering into separate license agreements for each film - It was alleged that the agreement between the appellant and the distributors created an Association of Persons so as to undertake jointly the activities of screening of the films - HELD THAT - The agreement in the present appeal is almost the same as the agreement in other appeals that have been decided including that in INOX LEISURE LTD. VERSUS COMMISSIONER OF SERVICE TAX, HYDERABAD 2021 (10) TMI 893 - CESTAT HYDERABAD It would be seen from the agreement that the producer/distributor is engaged in the business of production and distribution of films, while the appellant is an exhibitor engaged in the business of exhibition of films and owns/operates a chain of multiplex theatres. The exhibitor decides which screens would play the motion picture, the numbers of shows, the show timings and the ticket pricing including the right to decide on a week to week basis, whether or not to continue to exhibit the motion picture. The distributor/producer had granted the exhibitor the non exclusive license to exploit the theatrical rights of a motion picture and each party was entitled to conduct its business in its absolute and sole discretion. 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. The Tribunal held that such public private partnerships meet the test laid down by the Supreme Court in FAQIR CHAND GULATI VERSUS UPPAL AGENCIES PVT. LTD. 2008 (7) TMI 159 - SUPREME COURT , for ascertaining whether or not the arrangement is one of joint venture. In view of the decision of the Supreme Court in Faqir Chand Gulati and the decision of the Tribunal in Mormugao Port Trust, no service tax can be levied on the appellant under BSS. It is not possible to sustain the confirmation of the demand by the order dated 17.12.2018 passed by the Commissioner - Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether the arrangement between the appellant and film distributors constitutes an Association of Persons (AOP) or a principal-to-principal basis. 2. Classification of services provided by the appellant under "Support Services of Business or Commerce" (BSS). 3. Applicability of service tax on revenue-sharing arrangements between the appellant and film distributors. 4. Interpretation and applicability of the Circulars issued by the Central Board of Excise and Customs. Issue-wise Detailed Analysis: 1. Association of Persons (AOP) vs. Principal-to-Principal Basis: The primary contention was whether the agreement between the appellant and distributors constituted an AOP or was based on a principal-to-principal relationship. The Commissioner relied on the Supreme Court's judgment in Faqir Chand Gulati vs. Uppal Agencies Pvt Ltd and the Circular dated 13.12.2011, concluding that the arrangement created a joint venture, thus forming an AOP. However, the Tribunal noted that the agreements were similar to those in previous cases like Inox Leisure Ltd., where it was determined that the relationship was principal-to-principal. The Tribunal emphasized that the appellant operated independently, deciding on various aspects of film exhibition, and paid the distributors for screening rights, not vice versa. 2. Classification under "Support Services of Business or Commerce" (BSS): The Commissioner classified the services provided by the appellant under BSS, as defined in section 65(104c) of the Finance Act. The Tribunal, however, referred to previous decisions, including Moti Talkies and The Asian Art Printers, which clarified that the appellant did not provide any service to the distributors. Instead, the appellant paid the distributors for the rights to screen films, indicating no service provision from the appellant to the distributors. 3. Applicability of Service Tax on Revenue-Sharing Arrangements: The Tribunal examined whether revenue-sharing arrangements implied a service provider-service recipient relationship. It referred to decisions in Mormugao Port Trust and Old World Hospitality, which explained that such arrangements, particularly in joint ventures, do not constitute a service provision. The Tribunal highlighted that the appellant's payments to distributors were for screening rights, not for any services rendered to the distributors, thus negating the applicability of service tax. 4. Interpretation and Applicability of Circulars: The Tribunal scrutinized the Circulars dated 23.02.2009 and 13.12.2011. The 2009 Circular clarified that screening a movie is not a taxable service unless the theater owner receives fixed rent from the distributor. The 2011 Circular, which suggested that revenue-sharing arrangements could create a new taxable entity, was deemed inapplicable for periods before its issuance. The Tribunal concluded that the appellant's activities did not fall under the BSS category, as per the definitions and clarifications provided in these Circulars. Conclusion: The Tribunal set aside the Commissioner's order, emphasizing that the appellant's arrangement with distributors was on a principal-to-principal basis, not constituting an AOP. The services provided by the appellant did not fall under BSS, and the revenue-sharing model did not imply a service provider-service recipient relationship. The Tribunal's decision was supported by previous judgments and Circulars, leading to the dismissal of the service tax demand. The appeal was allowed, and the demand confirmed by the order dated 17.12.2018 was set aside.
|
