Screening of Films in Multiplex on Revenue Sharing basis would not attract Service Tax: CESTAT [Read Order]

A division bench of the Ahmedabad CESTAT recently held that Service Tax is not payable for screening of films in multiplex on a revenue sharing basis.

The issue before the bench was that whether the appellant, M/s PVS Multiplex Pvt Ltd is liable to pay service tax on the screening of films in their multiplex and also whether they are liable to pay service tax under the head renting of immovable property?

The appellant-Company has been screening films in their multiplex on Revenue Sharing basis. In terms of the arrangement between the film distributor and the theatre owner, after temporary transfer of copyrights, the movies were exhibited by the appellant, it argued. PVS Multiplex also argued that service tax, if any, was payable by the distributor of the film.

Before the Tribunal, the Company argued that they operated their cinema theatre in collaboration with the film distributor, namely M/s Mukta Movie Film Distributors, Mumbai on principal to principal basis and therefore, no service tax is payable on that.

The bench held that since there was no dispute over the fact that the appellant had been screening films in its multiplex on a revenue sharing basis, it was not liable to pay service tax for payments to distributors. The bench noticed that the appellant have disclosed the gross amount received from sale of tickets or exhibition of films in their profit and loss account on the credit side and have shown the amounts paid to the distributors on the debit side under the head film software expenses.

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