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TMI Blog2024 (7) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1994 ("the Act"). 2.2 Appellant was also engaged in providing services of screening of films etc., in his multiplex, on revenue sharing basis, to the distributors of the films, He was, not paying Service Tax on the services provided in connection with the screening of the films. 2.3 The department had issued a show cause notice (SCN) dated 12.09.2014 for the period 2009-10 to 2012-13, demanding, inter-alia, Service Tax amounting to Rs. 72,92,717/- in respect of screening of films under the category of Business Support Service, which was confirmed vide order in original dated 15.03.2016, against which the appellant had preferred an appeal before the CESTAT, which was decided vide Final Order No. ST/A/71279/2017-CU(DB) dated 29.08.2017 holding as follows: 7. Having considered contentions and on perusal of the facts on record, we are satisfied that there is no dispute of ST Appeal No. 70563/16 fact that the appellant have been screening films in their multiplex on Revenue Sharing basis, which is undisputed finding recorded by the ld. Commissioner in the impugned order. Accordingly, we hold that the appellant is not liable to pay Service Tax for Screening of Films and payments to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allenged by both appellant and revenue before the Commissioner (Appeal). Both the appeals filed by revenue and the appellant were disposed of by the impugned order. 2.7 Aggrieved appellant has filed this appeal. 2.8 Appeal filed by the revenue has been dismissed vide Final Order No 71696/2019 dated 04.09.2019 on the ground of monetary limit prescribed by F No 390/Misc/116/2017-JC dated 22.08.2019 for filing the appeal by revenue before the CESTAT 3.1 We have heard Shri Vineet Dubey, Advocate on the basis of Authorization (dated 23.01.2024 filed in court on 04.03.2024) given by Shri Harbir Singh, Advocate for the appellant and Shri A. K. Choudhary, Authorized Representative for the revenue. 3.2 Arguing for the appellant learned counsel submits that:- * The appellant had not provided any support service to the film distributor as such there was no relevance of pre-negative service era. * In case of Inox Leisure Ltd. [Final Order No A/85216/2022 dated 14.03.2022] after taking note of the order of Allahabad Bench in the case of appellant the issue has been considered for the period July 2012 to 2014, and matter has been decided again in favour of the assessee. * The ground ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost negative list era. According to appellant no.1, the exemption granted under SI. No. 47 of Notification No. 25/2012-ST dated 20.06.2012, on the above issue was not applicable for the period pertaining to 2013-14 to 2014-15 as the same was not available post implementation of negative list-based tax regime, and was made available only by inserting Sl. No. 47 in Notification 6/2015-ST dated 31.03.2015 effective from 01.04.2015. 6.1 I find that for the impugned period i.e. from 01.07.2012 to 31.03.2015, the Hon'ble High Court of Madras in the case of Mediatone Global Entertainment Ltd., Vs Chief CCE, Chennai reported as 2014 (34) STR (819) (Mad.) held that 'the variant modes of transaction between the distributor/sub-distributors of films and exhibitors of movie and thus revenue sharing arrangement between them are neither in the "Negative List Șervices" nor exempted'. Hon'ble Tribunal has however not taken cognizance of the above judgement of the Hon'ble High Court which was passed much before the Final Order dated 29.08.2017 passed by the Hon'ble CESTAT 6.2 During the relevant period entry at serial no. (j) of the Section 66D of the Act, reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 25/2012-Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 467 (E), dated the 20th June, 2012, namely 46. Service provided by way of exhibition of movie by an exhibitor to the distributor or an association of persons consisting of the exhibitor as one of its members;"; (xii) after entry 46 so inserted, the following entry shall be inserted with effect from such date as the Central Government may, by notification in the Official Gazette, appoint, namely :- 47. Services by way of right to admission to, exhibition of cinematographic film, circus, dance, or theatrical performance including drama or ballet; From the above, it is evident that only from 01.04.2015 onwards the services provided by way of exhibition of movies by an exhibitor to the distributor or an association of persons consisting of the exhibitor as one of its members were exempted from payment of Service Tax. For the present demand no such exemption was available. 6.4 As regards the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of film on the amount received under revenue sharing basis as provider of Business support service. 10 Further, the party has shown "A.C. Receipts (Theatre)" and "Maintenance Charges" in their Balance sheet, which they are collecting as theatre collection and expensing it for repairing & maintenance of "Air Condition" and "Theatre" respectively. This appear to have been done with the sole purpose of bifurcating the amount of sale of movie tickets, i.e. Theatre Receipt, A.C. Receipts (Theatre) and Maintenance Charges receipts. It appeared that the "A.C Receipts (Theatre)" and "Maintenance Charges" receipts is retained in full by the exhibitor (Theatre Owner) while the remaining amount of income on account of sale of movie tickets is being shared by each of the persons, which appeared liable to Service Tax under the category of Business Support Service" as per above said Circulars issued by CBEC 11. In view of above facts, the amount of Tax Dues not paid/short paid by the party, under various categories of services is summed up as under: [Figure in Rupees] S No Name of Service Service Tax not paid/short paid inclusive of Cess 1 Sale of space or time for advertiseme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der any of the taxable service category of 'renting of immovable property" or 'Business Support Service' depending upon the arrangement between the film distributor and theatre owner 17 Based on the representations received wherein it has been requested to clarify on the taxability of consideration earned by the distributors/sub-distributors/area distributors of Indian & Foreign films in the form of 'revenue share' from the exhibitors of the movie, and on revenue retained as percentage by the exhibitors of the movie from the sale of tickets, the C.B.E.C. issued Circular No. 148/17/2011-ST dated 13-12-2011 clarifying the issue, in following term: Para 10 of the aforesaid Circular dated 13-12-2011, states as under: "the arrangements entered into by the distributor or sub-distributor or area distributor etc. and the exhibitor or theatre owner etc, in exhibiting the film produced by the oroducer, the original copyright holder, the arrangements and their respective service tax classification is tabulated as under: Type of Arrangement Movie exhibited on whose account Service Tax Implication Principal-to- Principal Basis Movie being exhibited by theatre owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Shri Kalyan Singh, authorized signatory of the party the following two facts emerge namely: A. M/s Mukta Movie Distributor purchased the copyright of film from producer. Copyright was not purchased by the PVS Multiplex i.e. exhibitor of film. B. M/s PVS Multiplex exhibited the film in their theatre on revenue sharing arrangement on behalf of distributor as copyright was not transferred to them. 20. The above said facts further gain strength from the balance sheet where the amount received from screening of film has been shown as theatre income and payment to the film distributor has been shown as software expenses 21. As per para 10 of Circular dated 13.12.2011, in the arrangement "Principal to Principal basis" where the Movie being exhibited on behalf of Distributor or Sub-Distributor or Area Distributor or Producer etc.- i.e. no copyrights are temporarily transferred, the Service Tax Implication is under Business Support Service / Renting of Immovable Property Service, as the case may be, to be provided by Theatre Owner or Exhibitor. In the view of above said circular and considering the statement of Sh. Kalyan Singh it appears that M/s PVS Multiplex is showing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve said Circular. [Figure in Rupees] Year AC Receipts (Theatre) Maintenance Charges 2014-15 NIL 2081907 25. In view of the above, it appears that the party is liable to pay Service tax for the period 2014-15 on amount retained during the course of providing "Business Support Service" to film distributor as per chart mentioned below: [Figure in Rupees] Taxable Amount of Theatre Receipt AC Receipts (Theatre) Maintenance Charges Total Taxable Amount 15698301 NIL 2081907 17780208 Year Total Taxable Amount Service Tax (@12%) Education Cess (@2%) H.S.Education Cess (@1%) Total Service Tax 2014-15 17780208 2133625 42673 21337 2197635 26. It further appears that the party had deliberately and willfully refrained from showing the amount received on account of screening of the movie in their ST-3 return with intent to evade payment of service tax. It appears that the party has not paid Service Tax to the tune of Rs. 21,97,635/- [Service Tax: Rs, 21,33,625.00; Edu. Cess: Rs. 42,673.00; SHE Cess: Rs 21,337.00] (Rupees twenty one lakh ninety seven thousand six hundred and thirty five only) for the period 2014-15. 27. Fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the earlier show cause notice dated 12.09.2014 for the period for the period 2008-09 to 2012-13. Order in original adjudicating the said show cause notice has been set aside by the Allahabad Bench vide its Final Order No. ST/A/71279/2017-CU(DB) dated 29.08.2017, referred in para 2.3 above and the matter remanded back to original authority for reconsideration of certain demands which are other than the demands in respect of screening of films and payments to the distributors in their theatre" . However the demand in the present two show cause notices is only in respect of the demands which have been set aside by this bench vide order dated 29.08.2017 4.6 We also note that issue for the period post 01.07.2012, was considered by the Mumbai Bench in case of INOX Leisure and bench has vide Final Order No A/85216/2022 dated 14.03.2022 has held as follows: "3. The Department issued two show cause notices dated 14.10.2014 and 13.10.2015 proposing to recover service tax demand of Rs.65,46,68,211/- along with the applicable interest and penalty for the period July 2012 to December 2014. It was alleged that the agreement between the appellant and the distributors created an Association of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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. 11. In the present case the Department has alleged that the appellant is providing infrastructure support services to the producers/distributors of films under BSS. 12. Such an arrangement between a distributor/producer and an exhibitor of films was examined by a Division Bench of the Tribunal in Moti Talkies. The Department alleged that the agreement was for 'renting of immovable property' as defined under section 65(90a) of the Finance Act. This contention was not accepted by the Tribunal and it was observed that the appellant did not provide any service to the distributors nor the distributors made any payments to the appellant as consideration for the alleged service. In fact, it was the appellant who had paid money to the distributors for the screening rights conferred upon the appellant. The observations of the Bench are as follows: "11. It is more than apparent from a bare perusal of the aforesaid agreements that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant the non exclusive license to exploit the theatrical rights of a motion picture during the term. 15. 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 satisfied that there is no dispute of fact that the appellant have been screening films in their multiplex on Revenue Sharing basis, which is undisputed finding recorded by the ld. Commissioner in the impugned order. Accordingly, we hold that the appellant is not liable to pay Service Tax for Screening of Films and payments to distributors in their theatre." (emphasis supplied) 16. This apart, a revenue sharing arrangement does not necessarily imply provision of services, unless the service provider and service recipient relationship is established. This is what was observed by the Tribunal in Mormugao Port Trust, Old World Hospitality and Delhi International Airport. 17. In Mormugao Port Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c 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 undertaken by a co- venture (partner) for the furtherance of the joint venture (partnership) can be said to be a service rendered by such co-venturer (partner) to the Joint Venture (Partnership). In our view, the answer to this question has to be in the negative inasmuch as whatever the partner does for the furtherance of the business of the partnership, he does so only for advancing his own interest as he has a stake in the success of the venture. There is neither an intention to render a service to the other partners nor is there any consideration fixed as a quid pro quo for any particular service of a partner. All the resources and contribution of a partner enter into a common pool of resource required for ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 get a fixed rent. In such case, the service provided by the theater owner would be categorized as 'Renting of immovable property for furtherance of business or commerce' and the theater owner would be liable to pay tax on the rent received from the distributor. The facts of each case and the terms of contract must be examined before a view is taken. 4. All pending cases may be disposed of accordingly. In case any difficulty is faced in implementing these instructions, the same may be brought to the notice of the undersigned." (emphasis supplied) 20. The subsequent Circular dated 13.12.2011 issued by the Central Board of Excise and Customs, apart from the fact that it would not be applicable for confirming a demand for any period prior to 13.12.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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