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2022 (5) TMI 1397 - AT - Service TaxClassification of services - Business Support Service or not - business of exhibiting cinematographic films across India in theatres owned by it or taken on rent - revenue sharing arrangement - 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? - HELD THAT:- 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 rights conferred upon the appellant. 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 service tax can be levied on the appellant under BSS. Appeal allowed - decided in favor of appellant.
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