The Hon’ble Supreme Court vide its order dated 28.02.2022 in the matter of Commissioner of Service Tax Vs. Inox Leisure Ltd. in Civil Appeal No. 1335 of 2022, upholds order of CESTAT, Hyderabad dropping demand on the consideration received from the revenue sharing arrangement between the distributor and exhibitor in respect of screening of films and dismissed the appeal filed by the department.

CESTAT’s Order: –

• It can be seen from the agreement between the distributor (SPE Films) and exhibitor (Inox leisure), the distributor had granted the exhibitor, who owns a chain of multiplex theaters, non exclusive license to exploit the theatrical rights of motion picture and each party was entitled to conduct it business in its absolute and sole discretion without interference of each other.
• The Hob’ble CESTAT referring to the judgments of :- Moti Talkies – 2021 (45) GSTL 168 (Tri – Del.), The Asian Art Printers, Shri Vinay Kumar, Golcha Properties – 2021 (45) G.S.T.L. 141 (Tri. – Del.), Satyam Cineplex, noticed that as per the clauses of the agreement the appellant/exhibitor (Inox Leisure Ltd.) has to pay the revenue share to the distributor and it’s not the distributor who is paying the consideration to the exhibitor, hence no service was provided by the exhibitor in view of the already settled law in the referred judgments.
• The Hon’ble CESTAT further relying on the decision of PVS Multiplex India Pvt. Ltd. – 2018 (10) G.S.T.L. 496 (Tri. – All.), Mormugao Port Trust – 2017 (48) S.T.R. 69 (Tri. – Mumbai) and the Circular dated 02.2009 issued by CBEC, held that the screening of movies on revenue sharing basis is not a taxable service, hence not exigible to service tax under Business Support Service..To read more subscribe today: www.taxo.online