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2022 (3) TMI 52 - AT - Service TaxNon-payment of service tax - renting of immovable property service - Business Support Services - amount received as a share of the Net Box office collections from screening movies in the cinemas. Levy of penalty - renting of immovable property service - appellant already paid service tax and interest - applicability of section 73(3) in view of the exception provided in section 73(4) of Finance Act - HELD THAT:- The period involved in this case is 1.04.2010 to 31.12.2014 and the show cause notice was issued on 13.01.2015. When the audit was conducted, the appellant had paid service tax on the rent received as on 24.01.2012 in respect of the shops in the mall. This amount has already been appropriated. Thus, section 73(3) applies to this case and no SCN should have been issued - no case has been made out by the Revenue to justify the imposition of penalty upon the appellant under section 78 insofar as this part of the demand is concerned. The appellant has not contested and is still not contesting the demand of service tax. Business Support Services - whether service tax can be levied on the cinema owner’s share of the Net Box office collections? - HELD THAT:- Movies are made by producers investing money and the producer acquires the copy right to the movies which, he then transfers to various distributors across the country for a consideration. The distributors, in turn, enter into agreements with various cinema/ theater owners and provide license/ right to screen the movie in their theaters. The Net Box Office collections, i.e, the proceeds of sales of tickets minus some expenses such as taxes are shared between the cinema owners and the distributors. The question as to whether the share of collections received by the cinema owners can be taxed has been decided in negative by this Tribunal in the case of M/S. MOTI TALKIES VERSUS COMMISSIONER OF SERVICE TAX, DELHI I [2020 (6) TMI 87 - CESTAT NEW DELHI] where it was held that Though, “renting of immovable property” is a declared service under section 66E of the Finance Act, then too under section 67(1) of the Finance Act, the value shall, in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him. The appellant is not receiving any payment to the distributor and, therefore, no service can be said to have been provided by the appellant. No case law has been brought before us where the share of the cinema owners in the Box Office collections is held to be exigible to service tax. Therefore, the issue stands decided that no service tax can be charged. Allegation that a joint venture has been created and that joint venture is an unincorporated business entity and the service has been rendered by the appellant to such a business entity and that business entity is paying the appellant for allowing the business entity to use the appellant’s premises and other support - HELD THAT:- There are nothing in the records to indicate that there was an express or implied agreement to form a joint venture. There is no joint ownership or control of the property the appellant is the owner of the distributors. The distributors own the licensing rights to the movies. They lease the rights temporarily to the appellant. The distributor has no control over how the movies will be screened which is completely up to the appellant. Since the distributor is giving rights to screen the movies, as a consideration, it receives a share of the net box office collections. There is nothing on record to show that there is an agreement to share profits and losses. Only the collections are shared after some deductions. If, for instance, the total expenses incurred by the appellant in running the theatre is much more than its collections from the movie, it will incur losses - The quantum of consideration is not a fixed amount but a share of collections. The distributor does not assume any business risks in screening the movies. Therefore, we find no evidence whatsoever in this arrangement of forming an unincorporated joint venture. The impugned order is modified by setting aside the demand of service tax under the category of business support services along with interest. The demand of service tax on renting of immovable property service is upheld - Appeal allowed in part.
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