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TMI Blog2020 (12) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the agreements between the Appellant and the Distributors would also make it abundantly clear that it is the Appellant who makes payment to the Distributors for grant of theatrical rights. This clearly indicates the flow of service and the consideration. Thus, as it is the Appellant who pays a fixed consideration to the Distributor, no service tax can be levied on the Appellant - it is not possible to sustain the finding recorded by the Principal Commissioner that renting of immovable property service had been rendered by the Appellant to the film distributors. Renting of Immovable Property - amount received by the Appellant under miscellaneous receipts and license fee from Snack Bar - demand of service tax - HELD THAT:- The confirmation of demand of ₹ 36,000/- covered under renting of immovable property service is much below the threshold exemption of ₹ 10,00,000/- provided in the notification dated June 20, 2012 and hence not liable to service tax. The income received by the Appellant under Shots and Slides Hire income is on account of exhibition of advertisement films and slides of vendors, during the showcasing of movies. This income is not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maximum theatre share of ₹ 5,00,000/-. 3. The Department, however believed that the Appellant was providing various elements of inter connected services to the Distributors, such as renting/ letting/ leasing of theatre for exhibition of films; manpower to manage the theatre operations, provision of projector and other related equipment to screen the films; arranging of power supply and providing arrangements to collect the box office collections. According to the Department, the essential character of the bundle of services provided by the Appellant was in the nature of renting of immovable property service which would be taxable under section 65(105) (zzzz) of the Finance Act 1994 the Finance Act for the period up to June 30, 2012 and under section 66E(a) of the Finance Act read with section 66F(3)(b) of the Finance Act for the period from July 1, 2012 to March 31, 2014. The view of the Department was that copy rights of movies/ films were not transferred/ sold by the film Distributors, either temporarily or otherwise, and so the Appellant was only letting out its premises for exhibition of films to the Distributors. 4. The Appellant filed replies to the two show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... negative services regime w.e.f. 01.07.2012. xxxx xxxx xxxx 11.1 As regards to license fee, the noticee has admitted in their written submissions filed on 20.10.2014 that they had given their snack bar on license fee basis to M/s. Storage General Services Pvt. Ltd. for license fee of ₹ 9,000/- per quarter or ₹ 36,000 per annum for running the snack bar. They have also argued that though the services are covered under the Renting of immovable service, even after taking alongwith miscellaneous receipts, were much below the threshold exemption of ₹ 10 lacs as provided under Notification No. 8/2008 dated 01.03.2008 in each of the financial year and therefore not liable to service tax. 11.2 However, I have analysed the issue of their exhibition of films as Exhibitor vis-s-vis share from NBOC collections and held the same to be liable to service tax under renting of immovable service. Therefore, the threshold exemption is not available to them under Notification No.8/2008 dated 01.03.2008 and therefore I hold that they are liable to pay service tax for the period 2008-09 to 2012-13 on such services. Accordingly, the noticee is liable to pay service tax on am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a cinema hall. According to the Appellant, the theatrical exhibition rights were transferred to the Appellant under the agreements on the basis on which the Appellant exhibited the movies in the theatre. For obtaining such rights, the Appellant agreed to share a specified percentage of the Net Box Office Collection with the Distributors. 10. The agreements entered into between the Appellant and the film Distributors clearly indicate that the film Distributors had granted theatrical exhibition rights to the Appellant and in return of transfer of such rights, the Appellant had agreed to pay certain amount to the Distributors, fixed generally as a percentage of Net Box Office Collection. The Principal Commissioner found that the Appellant had provided renting of immovable property services. For an activity to fall under renting of immovable property services, the nature of the activity should be that of renting or letting or leasing or licensing or other similar arrangements of immovable property, for use in the course or furtherance of business or commerce. In other words, where an immovable property is given for use by the service recipient or where there is a transfer of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to exhibit the films is transferred to the appellant, either temporarily or in perpetuity, depending upon the nature of the agreements between the parties. xxxx xxxx xxxx 11. It is more than apparent from a bare perusal of the aforesaid agreements that they have been entered into between the appellant as an exhibitor and the distributors for screening of the films on the terms and conditions mentioned therein. The payments contemplated under the terms and conditions either require the exhibitor to pay a fixed amount or a certain percentage, subject to minimum exhibitor share or theatre share of effective shows in a week. xxxx xxxx xxxx 16. It is very difficult to even visualize 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 the distributors to the appellant for the alleged ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the license fee of ₹ 36,000/- received from M/s. Storage and General Services Pvt. Ltd., which was running a snack bar in the premises of the Appellant, has also been confirmed. 15. The confirmation of demand of ₹ 36,000/- covered under renting of immovable property service is much below the threshold exemption of ₹ 10,00,000/- provided in the notification dated June 20, 2012 and hence not liable to service tax. 16. The income received by the Appellant under Shots and Slides Hire income is on account of exhibition of advertisement films and slides of vendors, during the showcasing of movies. This income is not taxable w.e.f July 1, 2012 as it covered under the negative list provided under section 66 D(g) of the Finance Act, which relates to selling of space or time slots for advertisement, other than advertisement broadcast by radio or television. Even for the period prior to July 1, 2012, this service is in the nature of exhibiting shots/graphic films, still slides and cannot be classified as renting of immovable property service. 17. The interest amount income shown by the Appellant in its books of account represents the income earned by the App ..... X X X X Extracts X X X X X X X X Extracts X X X X
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