TMI Blog2023 (9) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... e right to distribute and show original films by way of broadcasting the same. In the instant case, admittedly, licence is given by the distributor to the exhibitor for the purpose of exhibition in theatres, which means the exhibitor can only show the film by exhibiting the same in a theatre but cannot broadcast the same and show the film - The exhibitor in the instant case merely exhibits the film in a theatre but does not broadcast the said original film and show it. Thus the SAC 997332 is not appropriate and applicable to the instant case. In the instant case, the applicant obtains the distribution licence of the film from the producer and thus owns the copyright of the said film through the licence. The applicant in turn licences the exhibitor granting permission to exhibit the film, usually intended for theatres. It is pertinent to mention here that the film is included in the audiovisual works. Also the Note to the SAC 999614 stipulates that the transaction between the distributor and exhibitor is covered under the said SAC. The applicant in the instant case licences/grants permission to the exhibitor to exhibit the film and hence the impugned service is squarely covered unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant proposed to enter into the business of Licensing services for the right to broadcast and show original films, sound recordings, radio and television programmes etc., and thus filed the instant application. 4.2 The applicant submitted that there are seven stages that lead to production of the film and up to the point of distribution namely Development, Financing, Pre-production, Production, Post-production, Marketing and Distribution and confined to the issue of Movie/Film distribution and furnished the following note on it.- a) Film Distribution is the process of making a movie available for viewing by an audience. This is normally the task of a professional film distributor, who would determine the marketing and release strategy for the film, the media by which a film is to be exhibited or made available for viewing and other matters. The film may be exhibited directly to the public either through a movie theatre or television- or personal home viewing (including physical media, video-on-demand, download, television programs through broadcast syndication). b) A distributor is responsible for the marketing of the film. The distribution company may be the same with, or diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t between the distributor and the exhibitor would still remain a distribution service and not a licensing agreement as the consideration is still a revenue share or a commission. The Department has failed to note that the classification is not determined on the basis of the manner of determination of consideration for the service, but depends on the nature of agreement between the parties and also on what kind of rights and liabilities which creates from them. The attempt by the Department to classify the distribution service under SAC 999614 is absolutely incorrect and merits no consideration. Some of the inspecting officers are mis-interpreting the said service as falling under SAC 999614. Thus, the correct classification is prayed for through the instant application. d) The classification of film distribution throughout India is under SAC 9973 attracting a GST @12%, which is followed and approved by all the GST authorities. Applicant furnished copies of invoices collected from distributors all over the country, in support of their contention, which would makes it clear that it is an accepted classification, classified according to the scheme of classification of film distributio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to audio visual related services, performing arts and other live entertainment, performance by artists, museum and preservation services, services of athletes and related support services, amusements etc., Therefore, as per our opinion, the classification under SAC 997332 is most specific and appropriate and is in accordance with the classification of services under GST. i) It is our humble submission that Film distribution service which includes leasing and licensing of films for exhibition in theatres is classified under SAC 997332, all over India, and is more specific, appropriate and there is no ambiguity at all and also in view of the fact that the services are related only to entertainment industry and not connected to recreation, cultural and sports. j) The primary objective of the GST Act is to raise the revenue, resort should not be had, for purpose of classification to the scientific and technical meaning of the terms and expressions used therein, but to their popular meaning, that is to say, the meaning attached to that by those using the product. The burden of proof that a product is classifiable under a particular tariff head is on the revenue and must be discharged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; used in manufacturing of food foodstuff would fall within Entry 56 of the Notification No.ST-2-7218/10/6(43)/77. The Supreme Court held that Toodstuff shall be given its natural meaning according to day-to-day affairs i.e. anything with nutritive value consumed for sustaining one's life. Furthermore, Tood essence' is added only for ornamental value. They have no nutritive value and hence cannot be considered as foodstuff in Entry 56. The Bombay High Court in Nirlon Synthetic Fibres Vs UOI [(1999) 110 ELT 445] observed that the common parlance test can only be used by the courts when the tariff rates explanatory notes are ambiguous and not in any other case. In CCE Vs Wood Polymers Ltd., [(1998) 97 ELT 193], the Supreme Court held that the classification under the CT Act is primarily based upon parameters laid down in the Act itself, followed by description attached to Section Notes, Chapter Notes read with Explanatory 8s Exemption. Hon hie Karnataka High Court in the matter of Diebold Systems Pvt. Ltd., Vs The Commissioner of Commercial ... on 31 January 2005 Equivalent citations : ILR 2005 KAR 2210, 2006 144 STC 59 Kar while deciding that ATM machine is not a computer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act. 7. We have considered the submissions made by the applicant in their application for advance ruling. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts along with the arguments made by the applicant the submissions made by their learned representative during the time of hearing. 8. The applicant is an exhibitor of films and intends to venture into the business of distribution of films for exhibition in theatres. Therefore, the applicant sought advance ruling in respect of the classification of the intended service. They contend that their service falls under Licensing sendees for the Right to Broadcast and Show Original Films, Sound Recordings, Radio and Television Programmes etc., and hence is covered under SAC 997332. Further the applicant also furnished the competing classification under SAC 999614 which covers Motion Picture, Videotape and television programme distribution service. 9. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices for the right to broadcast and show original films, sound recordings, radio and television programme etc. This service code includes:- - licensing services for the right to reproduce, distribute or incorporate entertainment, musical such as broadcasting and showing of original films, sound recordings, radio and television programmes, prerecorded tapes and videos Explanatory notes pertaining to competing classification :- 9996 - Recreational, cultural and sporting services 99961 - Audiovisual and related services 999614 - Motion picture, videotape and television programme distribution services This service code includes:- i. distribution of audiovisual works, including granting permission to exhibit, broadcast and rent audiovisual works that are implicitly or explicitly protected by a copyright owned or controlled by the licensor, usually intended for theatres, television, home video market etc., such as live action or animated films, videos, digital media, etc. ii. management sendees for motion picture rights Note : This product is transacted between the distributor and the exhibitor, television network, television station, video rental store etc. This service code does not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n picture, videotape and television programme distribution services. Further, Explanatory Notes specify that the services covered under SAC 999614 includes (i) distribution of audiovisual works, including granting permission to exhibit, broadcast and rent audiovisual works that are implicitly or explicitly protected by a copyright owned or controlled by the licensor, usually intended for theatres, television, home video market etc., such as live action or animated films, videos, digital media, etc. and (ii) management services for motion picture rights. Also, the Note to the said SAC stipulates that This product is transacted between the distributor and the exhibitor, television network, television station, video rental store etc. . 14. In the instant case, the applicant obtains the distribution licence of the film from the producer and thus owns the copyright of the said film through the licence. The applicant in turn licences the exhibitor granting permission to exhibit the film, usually intended for theatres. It is pertinent to mention here that the film is included in the audiovisual works. Also the Note to the SAC 999614 stipulates that the transaction between the distributor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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