Screening of Films does not fall Under BSS: CESTAT quashes Service Tax Demand on PVS Multiplex India [Read Order]

In the matter of PVS Multiplex India, the Allahabad Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held that the screening of films cannot be categorised under business support service and quashed the demand.

M/s PVS Multiplex India Pvt. Ltd, the appellant/assessee has service tax registration for providing "renting of immovable property service," falling under Section 65(105)(zzzz) of the Finance Act, 1994. The assessee was engaged in providing services of screening of films, etc., in his multiplex, on a revenue-sharing basis, to the distributors of the films. He was not paying service tax on the services provided in connection with the screening of the films.

The department had issued a show cause notice (SCN) demanding service tax in respect of the screening of films under the category of business support service. The demand was confirmed by the Commissioner. The assessee contended that the appellant had not provided any support services to the film distributor, and as such, there was no relevance to the pre-negative service era.

The two member bench of P.K. Choudhary (Judicial Member) and Sanjiv Srivastava (Technical Member) observed that the theatre owner screens or exhibits a movie that has been provided by the distributor. Such an exhibition is not a support or assistance activity but is an activity of its own accord. That being the case, such an activity cannot fall under 'Business Support Service'.

While allowing the appeal, the appellate Tribunal held that the screening of a movie is not a taxable service except where the distributor leases out the theatre and the theatre owner gets a fixed rent.

The CESTAT found that the service provided by the theatre owner would be classified as 'Renting of immovable property for furtherance of business or commerce' and the theatre owner would be liable to pay tax on the rent received from the distributor.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates