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2021 (10) TMI 893 - CESTAT HYDERABADLevy of service tax - Business Support services - services to distributors/producers in the nature of infrastructure support services - revenue sharing arrangement - Circular dated 13.12.2011 - section 65(104c) of the Finance Act - HELD THAT:- It would be seen from the agreement that the SPE Films is a producer/distributor 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 under the brand name “Inox” - 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. It was further made clear in the Agreement that either of the party shall not interfere or otherwise influence any decision of the other party in respect of the conduct of its business. Such an arrangement between a distributor/producer and an exhibitor of films was examined by a Division Bench of the Tribunal in Moti Talkies [2020 (6) TMI 87 - CESTAT NEW DELHI]. 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 the rights conferred upon the appellant and it was finally held that 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. 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 clause 5.1 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, clause 3.1 of the Agreement provides that distributor agreed to grant to the Appellant the non exclusive license to exploit the theatrical rights of a motion picture during the term. The impugned order has confirmed the demand on the basis that the appellant provided ‘infrastructure support services’ to the appellant. However, the show cause notice alleged that the appellant was providing ‘operational and administrative assistance’ with supplier. The Commissioner could not have gone beyond the scope of the show cause notice to confirm the demand. This apart, 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 service tax can be levied on the appellant under BSS. Appeal allowed.
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