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TMI Blog2020 (6) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... r service in relation to such renting. The agreements that have been executed between the appellant and the distributors confer rights upon the appellant to screen the film for which the appellant is making payment to the distributors. The distributors are not making any payment to the appellant. Thus, no consideration flows from the distributors to the appellant for the alleged service. It is not possible to accept the reasonings given by the Commissioner (Appeals) for confirming the demand of service tax under renting of immovable property for the simple reason that the appellant has not provided any service to the distributors nor the distributors have made any payment to the appellant as consideration for the alleged service. In fact, the appellant who has paid money to the distributors for the screening rights conferred upon the appellant. The position in law does not change with effect from 1 July, 2012 because even under section 66B of the Finance Act, service tax is levied on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another. Though, renting of imm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quipments to screen the films, arranging power supply and providing arrangements to collect the box office collections, with predominance of renting of immovable property services. This service of renting of immovable property provided by the appellant to the film distributor would be taxable under section 65 (105) (zzzz) of the Finance Act for the period upto 30 June, 2012 and under section 66E (a) of the Finance Act read with section 66F (3) (b) of the Finance Act for the period from 1 July, 2012 to 31 March, 2014. The Department believed that for the said renting of immovable property service, the appellant received charges in the garb of sharing cum / theatre hire but did not discharge the service tax liability. 4. Details of the amount demanded in the two show cause notices dated 21 April, 2014 and 20 April, 2015 are as follows:- Sl.No. Show Cause Notice Date Period Demand Amount (Rs.) 1. 21 April, 2014 April, 2008 to March, 2013 ₹ 46,67,592/- 2. 20 April, 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reunder and overleaf: M/s. Moti Talkies Station: Delhi. Name of Picture/s Run Period of Run Terms Conditions AB HUM SE NA TAKRANA ADDITIONAL TERMS Screening Date 29th May, 2009 onwards. 1st 7 days Theatre Share Rs....xxx... (Rupees .....xxx...... Including all sort of Publicity for 28 effective shows in a week against the theatre capacity of Rs............ Per show i.e. Rs.......... weekly. OR Distributor s share @......... with the option, that distributor may pay Theatre Share or charge percentage for any week during the period of run. OR Fixed Hire payable by the exhibitor shall be ₹ 25000/- Twenty five thousand. xxxxxxxxxxxxxxxxxxxxxxxxxx 3. That exhibitor hereby agrees and undertakes to make all payment/s in the name of Distributor (10) Ten days before from the date of release either in Cash, Demand-Draft or Pay-Order payable at Delhi or as desired by the distributor in writing Payment is the essence of the contract. xxxxx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Run Period of Run TERMS CONDITIONS EK MAIN EK TUM TOTAL TERMS Screening Date 9.12.2011 I ONE WEEK Theatre share ₹ 1,10,000/- ONE LAKH TEN THOUSAND ONLY Including all sort of publicity for 28 effective shows in a week against the theatre capacity of Rs........ per show i.e. Rs...... Weekly. OR Distributor s share @........... with the option, that distributor may pay Theatre Hire of charge percentage for any week during the period of run. OR FIXED HIRE payable by the exhibitor Rs........ Rupees.............. ADVANCE 1. That Exhibitor hereby agrees and undertakes to abide by all the TERMS CONDITIONS, whether PRINTED/TYPED OR IN AND-WRITTEN. No further dispute can be arisen over beyond these terms conditions. 2. That the exhibitor has agreed to provide Daily Four (4) shows at normal usual show timing i.e. (12.30 Noon, 3.30 Matinee, 30 Evening and 9.30 Night) 3. That exhibitor hereby agrees and undertakes to make all payments/in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h renting for use in the course of or for furtherance of, business or commerce. Explanation(1) xxxxxxxxxxxxx Explanation(2) xxxxxxxxxxxxx 15. Thus, for the appellant to be providing any taxable service to the distributor prior to 1 July 2012 it is necessary that the service provided should be by renting of immovable property or any other service in relation to such renting for use in the course of or for furtherance of, business or commerce. Renting of immovable property has been defined under section 65(90a) of the Finance Act to include renting, letting, leasing, licensing, or other similar arrangements of immovable property for use in the course or furtherance of business or commerce. 16. It is very difficult to even visualise that the appellant is providing any service to the distributor by renting of immovable property or even any other service in relation to such renting. The agreements that have been executed between the appellant and the distributors confer rights upon the appellant to screen the film for which the appellant is making payment to the distributors. The distributors are not making any payment to the appellant. Thus, no consideration flows from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as screening/non-screening of the film is concerned. Further, the conditions delineated in the agreement makes it incumbent upon the Appellant that he cannot arbitrarily dis-continue the screening and that he will have to compensate for any loss and damage. Therefore, the Appellant s contention that the transaction of the distributor granting to the Appellant the license to exploit the Theatrical Rights in films is on Principal to Principal basis cannot be acceded to because the distributor has not granted the license thereby allowing the Appellant to screen the film on his own in as much as the fact that the sole and absolute option to screening or to withdraw the screening at any time lies with the distributor only. Further, the Appellant has also contended that the entire revenue in the nature of ticket sales is his income and he is incurring the expenditure in the nature of payment to the distributor, payment of show tax/entertainment tax, etc. xxxxxxxxxxxxxxxxxxxxxxxxx The conditions mentioned hereinabove and contained in the agreement under consideration and further submission of the Appellant recorded on the body of the impugned order clearly show that the observa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Enterprises. I have carefully gone through the said Agreement and find that the same is dated 13.06.2013 which means that the Agreement has been put to action after 01.07.2012 when the service are categorized as declared services and bundled service with pre-dominance of Renting of Immovable Property Services. 18. It is not possible to accept the reasonings given by the Commissioner (Appeals) for confirming the demand of service tax under renting of immovable property for the simple reason that the appellant has not provided any service to the distributors nor the distributors have made any payment to the appellant as consideration for the alleged service. In fact, the appellant who has paid money to the distributors for the screening rights conferred upon the appellant. The Commissioner (Appeals) completely misread the agreements entered into between the appellant as an exhibitor of the films and the distributors to arrive at a conclusion that the appellant was providing the service of renting of immovable property . 20. In regard to the period from 1 July 2012 to 31 March 2014, it would be pertinent to refer to section 65 B (41) of the Finance Act which defines renti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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