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2023 (1) TMI 108 - AT - Service TaxLevy of service tax - Renting of immovable property service - revenue sharing arrangement - existence of service provider or service recipient relationship or not - respondent was engaged in lending the theatre to the film distributors/sub-distributors for depicting the films, whose copyrights were retained by the distributors - inter-connected services with predominance of the service of renting of immovable property to the distributor. HELD THAT:- According to the respondent, the viewers visit the theatre for entertainment and the consideration is paid to the respondent for the same. The distributor and the theatre owner i.e. respondent have come together on a common platform under revenue sharing arrangement. Therefore, the two have provided the service jointly to each other and are working for the mutual benefit of both the parties. Both the parties are working independently and the share of the Distributor is given by the respondent from the gross receipts from movie tickets - This would be apparent from the agreement executed between the respondent and Mukta Arts which provides that out of the total revenue generated from the screening of films, the respondent would retain a fixed gross revenue and pay balance to the distributor. Further, as per the agreement, the gross revenue is to be distributed in the following ratio on weekly basis. This Division Bench of the Tribunal in INOX LEISURE LTD. VERSUS COMMISSIONER OF SERVICE TAX, HYDERABAD [2021 (10) TMI 893 - CESTAT HYDERABAD], examined the same issue, as has been raised in this appeal, namely whether service tax would be leviable if revenue is shared between the appellant and the producer of films and held that even in such a situation no service tax can be levied - It was held in the case 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. A revenue sharing arrangement would, therefore, 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 VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX, GOA- (VICE-VERSA) [2016 (11) TMI 520 - CESTAT MUMBAI], M/S. OLD WORLD HOSPITALITY LIMITED VERSUS CST, NEW DELHI [2017 (2) TMI 1176 - CESTAT NEW DELHI] and DELHI INTERNATIONAL AIRPORT P. LTD. & MUMBAI INTERNATIONAL AIRPORT P. LTD. VERSUS UNION OF INDIA & ORS. [2017 (2) TMI 775 - DELHI HIGH COURT] - In the present case, there is no service provider or service recipient relationship. The contention advanced by the learned authorised representative for the department cannot be accepted. Thus, no illegality was committed by the Principal Commissioner in discharging the show cause notice - The appeal is dismissed.
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