2020 (11) TMI 137 - AT - Service Tax

Renting of immovable property service - Appellant is providing service to the film Distributors by way of renting its theatre for screening the films - demand for the period October 2008 to March 2014 - HELD THAT - This issue also came up for consideration before a Division Bench of the Tribunal in - M/S. MOTI TALKIES VERSUS COMMISSIONER OF SERVICE TAX DELHI I 2020 (6) TMI 87 - CESTAT NEW DELHI . It was held that the demand of service tax under renting of immovable property service was not justified for the reason that the Appellant had not provided any service to the Distributor nor the Distributor had made any payment to the Appellant as a consideration for the alleged service - It is therefore 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. Car Parking Hire - Rentals from office space - INR Charges; news reel charges; show tax collection; etc. - Advertisements exhibited between movies - period 2008-09 and 2009-10 - HELD THAT - No service tax leviable as aggregate turnover was below Rs. 10 lakhs by virtue of Notification No.8/2008-ST dated 01.03.2008 and amending Notification No. 06/2005-ST dated 01.03.2005 for the period 2008-09 and 2009-10. Car Parking Hire - period 2010-11 - period 2011-12 - period 2012-13 (30.06.2012) - HELD THAT - Not taxable by virtue of exclusion provided for renting of land for parking purposes under Section 65 (105) (zzzz) of the Finance Act. Car Parking Hire - period 2012-13 (from 01.07.2012) - HELD THAT - Exempted as per Sl. No. 24 of Notification No. 25/2012-ST dated 20.06.2012 Car parking Hire - period 2013-14 - HELD THAT - Service Tax paid. Rent Received - Miscellaneous Receipt - Shorts Slides - Period 2010-11 - HELD THAT - No service tax leviable as aggregate turnover was below Rs. 10 lakhs by virtue of Notification No.06/2005-ST dated 01.03.2005 (Rs. 4, 84, 814/- after reducing car parking charge). Rent Received - Miscellaneous Receipt - Shorts Slides - Period 2011-12 - HELD THAT - No service tax leviable as aggregate turnover was below Rs. 10 lakhs by virtue of Notification No.06/2005-ST dated 01.03.2005 (Rs. 9, 48, 502/- after reducing car parking charge). Rent received - period 2012-13 (30.06.2012) - 2012-13 (from 01.07.2012 ) - 2013-14 - HELD THAT - Service Tax Paid. Miscellaneous Receipt - period 2012-13 (30.06.2012) - period 2012-13 (from 01.07.2012 ) - HELD THAT - Not Taxable under renting of immovable property service. Shorts and Slides - Period 2012-13 (30.06.2012) - period 2012-13 (from 01.07.2012) - HELD THAT - Not taxable under renting of immovable property service as it amounts to sale of space or time for advertisement. Shorts and Slides - period 2013-14 - HELD THAT - Not taxable by virtue of Section 66D(g) of the Finance Act i.e. selling of space or time slots for advertisement other than advertisements broadcast by radio or television . Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:

1. Whether the appellant provided "renting of immovable property" services to the film distributors.
2. Taxability of income under the heads "Miscellaneous Receipts," "Car Parking Hire," "Shorts and Slides," and "Rent Received."
3. Applicability of the extended period of limitation for the demand.

Issue-wise Detailed Analysis:

1. Renting of Immovable Property Services:

The appellant, an owner of a cinema hall, contended that it did not provide "renting of immovable property" services to film distributors. The agreements between the appellant and distributors transferred theatrical exhibition rights to the appellant for a share of the Net Box Office Collection (NBOC). The Department argued that the appellant provided interconnected services, including renting the theatre, which should be taxable under "renting of immovable property" service.

The Tribunal examined the agreements, particularly the one with M/s. A.A. Films, which indicated that the distributor granted theatrical rights to the appellant, who in turn agreed to share a percentage of NBOC. The Tribunal noted that the theatre was used and occupied by the appellant to screen films, not by the distributor. Thus, there was no renting or leasing arrangement.

The Tribunal referenced a similar case, Moti Talkies vs. Commissioner of Service Tax, where it was held that no service tax could be levied as the appellant did not provide any service to the distributor, nor did the distributor make any payment to the appellant. The Tribunal concluded that the appellant did not render "renting of immovable property" services to the distributors.

2. Taxability of Other Income Heads:

The Department also levied service tax on amounts shown under "Car Parking Hire," "Shorts and Slides," "Rent Received," and "Miscellaneous Receipts" in the appellant's balance sheet. The appellant argued that these incomes were not taxable under "renting of immovable property" service.

The Tribunal reviewed the details provided by the appellant:
- Car Parking Hire: Not taxable as it involved renting land for parking, which is excluded under Section 65 (105) (zzzz) of the Finance Act.
- Rent Received: Pertained to rentals from office space.
- Miscellaneous Receipts: Included INR charges, news reel charges, and show tax collection.
- Shorts and Slides: Related to advertisements exhibited between movies.

The Tribunal found that these incomes were either below the taxable threshold or exempt under relevant notifications and provisions. Therefore, the demand for service tax on these heads was not sustainable.

3. Extended Period of Limitation:

The appellant contended that the extended period of limitation could not be invoked, making the demand till March 2012 time-barred. The Tribunal did not find sufficient grounds for invoking the extended period of limitation, thus supporting the appellant's claim.

Conclusion:

The Tribunal set aside the impugned order dated January 25, 2016, confirming that the appellant did not provide "renting of immovable property" services to the film distributors. The demands for service tax on other income heads were also found unsustainable. The appeal was allowed, and all demands were set aside.