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TMI Blog2021 (8) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax on 'convenience charges', 'pouring fees', 'other income', 'lease rent income', 'parking fees', 'service charges' and 'VPF charges'; (iii) Demand of service tax on 'advertisement income' under 'sale of space or time for advertisement income'; and (iv) Demand of service tax on foreign exchange expenses incurred under 'architect services' under the reverse charge mechanism. 3. The appellant is the owner of multiplexes, namely, Satyam Cineplex, located at different parts of India and is engaged in the business of exhibiting films in its theatre. The appellant claims that it entered into agreements with the film distributors, whereby the theatrical exhibition rights for exhibition of the film were transferred to the appellant either temporarily (i.e. for specified number of shows and period) or in perpetuity, depending on the agreement between the parties. The appellant further claims that it is in exercise of such rights obtained from the Distributors, that the appellant exhibited the movies in its theatres. 4. In lieu of obtaining such rights, the appellant agreed to share a specified percentage of Net Box Office Collection [NBOC ] with the distributors, subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income 50064563/- 9. Foreign Exchange Expenses Incurred 1302142/- 10. VPF Charges 56120/- 11. Service tax already paid (-) 14409194/- TOTAL Rs. 33,45,17,923/- 8. The aforesaid show cause notices were adjudicated upon by the Principal Commissioner by order dated 30.11.2015. Out of the total demand of Rs. 33,45,17,923/- raised in the show cause notices, demand of Rs. 19,19,92,658/- for the period October 2008 to March 2014 was sustained. The computation of the same issue-wise is given in the following Table: Serial No. Nature of Amount Service Tax proposed in Show Cause Notices (in Rs.) Service Tax confirmed in the order (in Rs.) Demand dropped by the impugned order (in Rs.) 1. Income from hiring charges 289725538/- 162445706/- 127279832/- 2. Convenience Charges 1717955/- 1537373/- 180582/- 3. Pouring Fees 1344150/- 1211697/- 132453/- 4. Other Income 1204302/- 844015/- 360287/- 5. Lease Rent Income 1277565/- 1138120/- 139445/- 6. Parking Fees 439966/- 393426/- 46540/- 7. Service Charges 1794817/- 1601939/- 192878/- 8. Advertisement Income 50064563/- 36915520/- 13149043/- 9. Foreign Exchange Expenses Incurred 1302142 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty' service by giving a finding that the appellant did not make any submission on this issue. The said finding in the impugned order is incorrect as the appellant had filed a reply to the first show cause notice dated 21.04.2014, wherein detailed submissions on this issue had been made; (vi) The demand on VPF charge has been confirmed under the category of 'renting of immovable property' service by the impugned order. The said amount is a subsidy paid by a film distributor towards the purchase of digital cinema projection equipment for use by a film exhibitor in the presentation of first release motion pictures. This is paid in the form of a fee per booking of a movie. The appellant duly deposited the service tax on such charges and the same has been acknowledged at paragraph 10.4 of the impugned order; (vii) Demand of service tax on income under the head 'advertisement income' shown in the balance sheet is not sustainable. The impugned order has given a finding that the appellant did not make any submission on this issue with respect to the first show cause notice dated 21.04.2014. The said finding is incorrect as the appellant had filed a reply to the first show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tomers and for getting the films exhibited in its theatre, the appellant entered into agreements with the film distributors under which the film distributors granted copyright license in the form of theatrical exhibition rights to the Appellant. As against the transfer of such rights, the Appellant agreed to pay certain amount to the distributors, generally fixed as a percentage of the NBOC. This has been held by the Principal Commissioner as providing 'renting of immovable property' service to the distributors. This issue has examined again by the Tribunal in Moti Talkies. 14. This issue also came up for consideration before a Division Bench of the Tribunal in Moti Talkies. 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. The relevant portion of the decision is reproduced below: "Agreements entered into between distributors and the Appellant, who is an exhibitor for screening pictures, have been considered to be agreements for "renting of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant as consideration for the alleged service. In fact, the appellant who has paid money to the distributors for the screening rights conferred upon the appellant. The 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. xxxx xxxx xxxx 23. The position in law does not change with effect from 1 July, 2012 because even under section 66B of the Finance Act, service tax is levied on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another. 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 from the distributor and, therefore, no se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merit, it would be appropriate to examine the same. 21. Learned counsel for the appellant made detailed submissions under the various heads. 22. In regard to convenience fees, pouring fees, parking fees and service charges, it was submitted that though the demand of service tax proposed in the show cause notice dated 21.04.2014 was under the category of 'renting of immovable property' services, the impugned order has confirmed the demand under the category of 'support services of business'. It was, therefore, submitted that the impugned order has gone beyond the show cause notice. In this connection, reliance was placed on a Division Bench decision of the Tribunal in M/s. Delhi Duty Free Services Pvt. Ltd. Vs. Commissioner CGST Division, Delhi South Commissionerate [2019 (8) TMI 1489- CESTAT New Delhi ]. 23. This submission advanced by the learned counsel for the appellant deserves to be accepted. It is apparent from a perusal of the show cause notice dated 21.04.2014 that demands were made under the category of 'renting of immovable property' service but the demands have been confirmed under the category of 'support services of business'. In Delhi Duty Free Services, the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Superior Films is in the nature of share towards the business rights granted by the appellant and cannot be considered towards provision of any 'renting of immovable property' service. Learned Counsel also pointed out that the appellant had deposited service tax on the amount received in lieu of space given to vendors under the 'renting of immovable property' service and this fact was stated in the reply filed to the show cause notice. 28. The submission made by the learned counsel for the appellant on this issue need to be accepted. Apart from the fact that the Principal Commissioner has not given any reason for sustaining the demand proposed in the show cause notice under this head, the appellant had also deposited service tax on the amount received in lieu of space given to vendors under 'renting of immovable property' service. Thus, the demand confirmed under this head cannot be sustained. 29. In regard to the confirmation of demand under 'other income' for the period 2008-09 to 2012-13 under the category of 'renting of immovable property' service, learned counsel for the appellant submitted that the finding recorded by the Principal Commissioner in the impugned order that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the tune of Rs. 2,78,52,905/-, which is more than the required amount. 2009-10 6,80,54,595 61699542 10.3% 6355053 2010-11 9,81,47,422 88982250 10.3% 9165171 2011-12 9,41,60,498 85367632 10.3% 8792866 2012-13 (till 30.06.2012) 1,21,58,951 10821423 12.36% 1337528 2012-13 (from 01.07.2012) 8,39,88,537 - - - Not taxable in terms of Section 66D(g) of the Finance Act, 1994; Demand has also been dropped in the impugned order (paragraph 8.3) 2013-14 7,35,20,504 - - - Not taxable in terms of Section 66D(g) of the Finance Act. Demand has been dropped in the impugned order (paragraph 8.3). 36. It is, therefore, clear from the aforesaid chart that the Principal Commissioner committed an error in confirming the demand under this head. Reverse Charge 37. The demand of service tax on 'foreign expenditure incurred' has been confirmed by the impugned order under 'reverse charge' holding that the appellant did not make any submission on this issue. 38. Learned counsel for the appellant submitted that in the reply filed to the show cause notice dated 21.04.2014, detail submissions were made in Ground G. Learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X
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