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TMI Blog2022 (5) TMI 1397X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant. 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. This issue had come up for consideration before a Division Bench of the Tribunal in PVS Multiplex India [ 2017 (11) TMI 156 - CESTAT ALLAHABAD ]. The Bench observed that as the appellant was screening films on revenue sharing basis, the appellant was not liable to pay service tax on the payments made to the distributors for screening the films. In view of the decision of the Supreme Court in Faqir Chand Gulati [ 2008 (7) TMI 159 - SUPREME COURT ] and the decision of the Tribunal in Mormugao Port Trust [ 2016 (11) TMI 520 - CESTAT MUMBAI] , no serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand was ultimately confirmed by the Commissioner by order dated 30.10.2018. The Commissioner noted that the bone of contention was whether the arrangement between the appellant and the distributors would lead to constitution of an Association of Persons or whether the same has to be treated on principal to principal basis. After placing reliance upon the judgment of the Supreme Court in Faqir Chand Gulati vs. Uppal Agencies Pvt. Ltd. -2008 (12) STR 401, the Commissioner observed that there was no doubt that the enterprise created by the Agreement between the appellant and the distributor was a joint venture. The Commissioner also relied upon the Circular dated 13.12.2011 issued by the Central Board of Excise and Customs regarding the levy of service tax on distributors of films and exhibitors of movies to reject the contention of the appellant that the transaction was on a principal to principal basis and accepted the contention of the Department that the transaction lead to the emergence of new entity having the character of Association of Persons. The Commissioner ultimately held that the bouquet of services rendered by the appellant to the Association of Persons would fall un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties as regards their respective roles and obligations; (vi) The Commissioner failed to appreciate that the essential parameters laid down for existence of a joint venture are (a) joint ownership and control, (b) sharing profits and losses, (c) salaries commonly and jointly fixed, and (d) community of interest and intention. A joint venture or association of persons cannot be said to be constituted/created in the absence of such parameters. In support of this contention, reliance has been placed on the following decisions of the Supreme Court: (a) G. Murgugesan and Brothers vs. Commissioner of Income-Tax, Madras 1973 (2) TMI 1 - Supreme Court; and (b) Faqir Chand Gulati vs. Uppal Agencies Pvt. Ltd. - 2008 (7) TMI 159 - Supreme Court; and (vii) No service, much less a service in the nature of BSS was provided by the appellant. 7. Shri Nitin Ranjan, learned authorised representative appearing for the Department has, however, supported the impugned and contended: (i) The appellant is not justified in asserting that the issue involved in this appeal stands decided in favour of the appellant in view of the earlier decisions of the Tribunal since these decisions are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciate this, it would be pertinent to refer to the agreement. 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. 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. 12. In the present case the Department has alleged that the appellant is providing infrastructure support services to the producers/distributors of films under BSS. 13. Such an arrangement between a distributor/producer and an exhibitor of films was examined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. Similar views were expressed by Division Benches of the Tribunal in The Asian Art Printers, Shri Vinay Kumar, M/s. Golcha Properties and Satyam Cineplexes Ltd. 15. 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. 16. This issue had come up for consideration before a Division Bench of the Tribunal in PVS Multiplex India. The Bench observed that as the appellant was screening films on revenue sharing basis, the appellant was not liable to pay service tax on the payments made to the distributors for screening the films. 7. Having considered contentions and on perusal of the facts on record, we are sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nical expertise necessary for commercial exploitation of the resource belonging to the Government. These PPP arrangements are described sometimes as collaboration, joint venture, consortium, joint undertaking, but regardless of their name or the legal form in which these are conducted. These are arrangements in the nature of partnership with each co-venturer contributing in some resource for the furtherance of the joint business activity. ................... 15. An analysis of this judgment shows that in order to constitute a joint venture, the arrangement amongst the parties should be a contractual one, the objective should be to undertake a common enterprise for profit. Joint control over strategic financial and operative decisions was held to be the key feature of a joint venture. The other obvious feature of a joint venture would be that the parties participate in such a venture not as independent contractors but as entrepreneurs desirous to earn profits, the extent whereof may be contingent upon the success of the venture, rather than any fixed fees or consideration for any specific services. 17. The question that arises for consideration is whether the activity under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act whether the movie runs well or not . However, there is no rental arrangement between the theater owner and the distributor as in the arrangement at paragraph 2.1 above . A view has been expressed that in this arrangement, the theater owner provides 'Business Support Service' to the distributor and hence is liable to pay service tax on the fixed amount received by the theater owner . 2.5. The matter has been examined. By definition 'Business Support Service' is a generic service of providing 'support to the business or commerce of the service receiver'. In other words the principal activity is to be undertaken by the client while assistance or support is provided by the taxable service provider. In the instant case the theatre owner screens/exhibits a movie that has been provided by the distributor. Such an exhibition is not a support or assistance activity but is an activity on its own accord. That being the case such an activity cannot fall under 'Business Support Service'. 3. In the light of above, it is clarified that screening of a movie is not a taxable service except where the distributor leases out the theater and the theater owner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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