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TMI Blog2024 (8) TMI 1053X X X X Extracts X X X X X X X X Extracts X X X X ..... rged to the exhibitor on ticket sale to be borne by the patron. This was not a levy of contemporary times but one that has a hoary past and, interestingly enough in India, much to do with struggle for freedom from the colonial yoke. A tax that was permitted, as resource measure, to the 'subsidiary states' by the 'Paramount dispensation' under treaty, the Government of India Act, 1919 devolved it initially to the provincial governments of Bengal and Bombay before extending the privilege to other provinces by the Government of India Act, 1935. The framers of the Constitution considered it fit to be excluded from the taxing power of the Union by emplacing it in List II of the Seventh Schedule and there it remained with constituent states according exemptions in keeping their respective policies concerning the product of an industry which, by the last quarter of the previous century, had grown to be the biggest in the world. 2. There is a purpose behind this prefacing narrative for it is moot if a tax, enacted by the Union to subject 'services' to levy under residuary empowerment during the relevant time, can alter the contours of a transaction already being taxed for over a century b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reed rate and the amount remaining after all payouts retained with them and it is this amount that the service tax authorities brought the levy to bear upon besides some minor amounts which the exhibitor had segregated in their annual financials towards advertisement and transport. 4. The demand straddles the 'negative list' era as well as the preceding regime and, thereby, the first of the notices for Rs. 70,19,786, issued on 29th September 2014, for 2009-10 to 2012- 13, charges the levy for having provided 'support service of business or commerce', 'selling of space or time slots for advertisement service' and 'goods transport by road service' followed by periodical demands of Rs. 13,13,554 and of Rs. 5,43,896 on 22nd April 2015 and 12th February 2016. The confirmation of all three, along with imposition of penalty of Rs. 70,19,786 under section 78 of Finance Act, 1994 and of Rs. 1,85,745 under section 76 of Finance Act, 1994, is cause of cavil in this appeal. The impugned order placed overwhelming reliance on circular [circular no. 148/17/2011-ST dated 13th December 2011] of Central Board of Excise & Customs (CBEC) clarifying that '9. Thus, where the distributor or sub-distri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is attributed in the impugned circular to misinterpretation of the earlier stance offering sufficient justification to re-visit the controversy. 6. The principal contention of the appellant is that the agreements have been misconstrued for contriving a new entity birthed therefrom and that the circular of 2011 has been inappropriately relied upon by disregard of the clear instructions in that of 2009 inasmuch as the former has not disowned the exhortation that each arrangement must be scrutinized for ascertaining the elements of service, as set out in Finance Act, 1994, as prelude to tax. Contending that the earlier circular was not superseded by the later, it was posited that its binding nature should not have been lost on the adjudicating authority. Denying that there was any intent of collaboration for sharing of risk and return as to insinuate a 'joint venture', it was further contended that there was no service rendered by the appellant except to cinema patrons as to warrant conformity with description of service in section 65(104c), or section 65B (44) in the 'negative list' regime, of Finance Act, 1944 for which the grounds of appeal refers to explanatory communication [let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenge to finding in adjudication therein that exhibitor was provider of the same service, and by citing support of precedent decisions, thus '3.(i) The issue involved in the appeal has been decided in favour of the appellant in the following decisions of the Tribunal: (a) M/s. PVS Multiplex India Pvt. Ltd. vs. Commissioner of Central Excise, Meerut-l 2017 (11) TMI-156- CESTAT Allahabad = 2017-TIOL-4130-CESTATALL ; (b) M/s. Moti Talkies vs. Commissioner of Service Tax, Delhi-l 2020 (6) TMI 87- CESTAT New Delhi = 2020- TIOL-922-CESTAT-DEL (c) M/s. The Asian Art Printers (Sheila Theatre) vs. Principal Commissioner of Service Tax, Delhi-l 2020 (12) TMI 1012- CESTAT New Delhi;' (d) Shri Vinay Kumar, Proprietor of M/s. Regal Theatre vs. Principal Commissioner of Service Tax, Delhi-l 2020 (11) TMI 436- CESTAT New Delhi; (e) M/s. Golcha Properties Pvt. Ltd. vs. Principal Commissioner of Service Tax, Delhi-l 2020 (11) TMI 137- CESTAT New Delhi = 2020-TIOL-1619- CESTAT-DEL ; and (f) Satyam Cineplexes Ltd. vs. Principal Commissioner of Service Tax, Delhi-l 2020 (8) TMI 1222- CESTAT New Delhi; and that the decisions in '(a) Mormugao Port Trust vs. Commissioner of Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice tax under "renting of immovable property" for the simple reason that the appellant has not provided any service to the distributors nor the distributors have made any payment to 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." ( emphasis supplied ) 13. Similar views were expressed by Division Benches of the Tribunal in The Asian Art Printers, Shri Vinay Kumar, M/s. Golcha Properties and Satyam Cineplexes Ltd. 14. 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 clause 5.1 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 appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant observations of the Tribunal in Mormugao Port Trust are reproduced below: "12 .......................... In our view this arrangement in the nature of the joint venture where two parties have got together to carry out a specific economic venture on a revenue sharing model. Such PPP arrangement are common nowadays not only in the port sector but also in various other sectors such as road construction, airport construction, oil and gas exploration where the Government has exclusive privilege of conducting businesses. In all such models, the public entity brings in the resource over which it has the exclusive right, whether land, water front or the right to exploit the said land and water front, and the private entities brings in the required resources either capital, or technical expertise necessary for commercial exploitation of the resource belonging to the Government. These PPP arrangements are described sometimes as collaboration, joint venture, consortium, joint undertaking, but regardless of their name or the legal form in which these are conducted. These are arrangements in the nature of partnership with each coventurer contributing in some resource for the further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usal of the circular led the Tribunal to conclude therein that '19. The Circular dated 23.02.2009 issued by the Central Board of Excise and Customs, infact supports the case of the appellant. The relevant portion of the Circular, which is in connection with service tax on movie theatres, is reproduced below: 2.4. The arrangement most commonly entered into between a theater owner and a distributor is that the theater owner screens the movie for fixed number of days under a contract. The proceeds earned through sale of tickets go to the distributor but the theatre owner receives a fixed sum depending upon the number of days of screening. In this arrangement, the advertisement and display of posters etc. is done by the distributor. Under this arrangement, the fixed amount contracted is given to the theater owner by the distributor irrespective of the fact whether the movie runs well or not. However, there is no rental arrangement between the theater owner and the distributor as in the arrangement at paragraph 2.1 above. A view has been expressed that in this arrangement, the theater owner provides 'Business Support Service' to the distributor and hence is liable to pay se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l-to-principal basis, the tax is leviable on either of the constituent members based on the nature of the transaction and as per rules of classification of service as embodied under Sec 65A of Finance Act, 1994. ( emphasis supplied ) ' 13. Once again, and with the additional benefit of subsequent developments in the above dispute, the Tribunal had cause to look at another controversy, and with substitution of the distributor by 'association of persons' as recipient, identical to the one now before us in Inox Leisure Ltd v. Commissioner of Service Tax, Mumbai-V [ final order no. A/85216/2022 dated 14th March 2022 in service tax appeal no. 87533 of 2016 ]. It was noted therein that the earlier decision was applicable even in the changed circumstances of 'negative list' and that with '23. The Department filed Civil Appeal No. 1335 of 2020 (The Commissioner of Service Tax vs. Inox Leisure Ltd) before the Supreme Court and by order dated 28.02.2022, the Supreme Court dismissed the Civil Appeal holding that the Tribunal had taken an absolutely correct view, to which the Supreme Court agreed. The order passed by the Supreme Court is reproduced below: "No case is made out to inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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