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Golcha Properties Pvt. Ltd. (Golcha Cinema) Vs Principal Commissioner of Service Tax (CESTAT Delhi)

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Court :
New Delhi High Court

Brief :
The Appellant, an owner of a cinema hall called ‘Golcha Cinema’ and engaged in the business of exhibiting films in this theatre, has assailed the order dated January 25, 2016 passed by the Principal Commissioner of Service Tax, Delhi1 that confirms the demand of service tax under “renting of immovable property” service with penalty and interest proposed in the two show cause notices dated April 17, 2014 and April 22, 2015 for the Principal Commissioner the reason that the Appellant is providing service to the film Distributors by way of renting its theatre for screening the films.

Citation :
SERVICE TAX Appeal No. 51811 of 2016

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI

PRINCIPAL BENCH – COURT NO. 1

SERVICE TAX Appeal No. 51811 of 2016

(Arising out of Order–in-Original No. DLI-SVTAX-001-COM-021-15-16 dated 25.01.2016 passed by Principal Commissioner of Service Tax-New Delhi)

M/s. Golcha Properties Pvt. Ltd. ...Appellant
(Golcha Cinema)
3630, Netaji Subhash Marg,
Darya Ganj,
New Delhi- 110002

Versus

Principal Commissioner of Service Tax, ....Respondent
Delhi-I
17-B, IAEA House, IP Estate,
MG Marg, New Delhi-110002

APPEARANCE:

Mr. B.L.Narasimhan and Ms. Shagun Arora, Advocates for the Appellant
Mr. Vivek Pandey, Authorised Representative for the Respondent

CORAM : HON’BLE MR.JUSTICE DILIP GUPTA, PRESIDENT

HON’BLE MR. C.L. MAHAR, MEMBER (TECHNICAL)

Date of Hearing: September 2, 2020
Date of Decision: November 2, 2020

FINAL ORDER No.: 51572 / 2020

JUSTICE DILIP GUPTA

The Appellant, an owner of a cinema hall called ‘Golcha Cinema’ and engaged in the business of exhibiting films in this theatre, has assailed the order dated January 25, 2016 passed by the Principal Commissioner of Service Tax, Delhi1 that confirms the demand of service tax under “renting of immovable property” service with penalty and interest proposed in the two show cause notices dated April 17, 2014 and April 22, 2015 for the reason that the Appellant is providing service to the film Distributors by way of renting its theatre for screening the films.

2. The Appellant had entered into agreements with films Distributors under which the theatrical exhibition rights for exhibition of the films were transferred to the Appellant, either for a specified number of shows and period or in perpetuity. It is in exercise of such rights obtained from the Distributors that the Appellant exhibited movies in its theatre. In lieu of obtaining such rights, the Appellant agreed to share a specified percentage of Net Box Office Collection with the Distributors, subject to the conditions specified in the agreements. In one such agreement dated August 29, 2012 entered into between M/s. A.A. Films and the Appellant, the Appellant agreed to share 50%/40% of the Net Box Office Collection, with M/s. A.A. Films subject to a maximum theatre share of Rs.2,80,000/-.

3. The Department, however believed that the Appellant was providing various elements of inter connected services to the Distributors, such as renting/ letting/ leasing of theatre for exhibition of films; manpower to manage the theatre operations, provision of projector and other related equipment to screen the films; arranging of power supply and providing arrangements to collect the box office collections. According to the Department, the essential character of the bundle of services provided by the Appellant was in the nature of “renting of immovable property” service which would be taxable under section 65(105) (zzzz) of the Finance Act 19942 for the period up to June 30, 2012 and under section 66E(a) of the Finance Act read with section 66F(3)(b) of the Finance Act for the period from July 1, 2012 to March 31, 2014. The view of the Department was that copy rights of movies/ films were not transferred/ sold by the film Distributors, either temporarily or otherwise, and so the Appellant was only letting out its premises for exhibition of films to the Distributors.

To know more in details find the attachment file

 

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on 20 November 2020
Published in Service Tax
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