Screening Of Films Can't Be Categorised Under Business Support Service: CESTAT Quashes Service Tax Demand PVS Multiplex India

The Allahabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), while quashing the service tax demand against the PVS Multiplex India, held that screening of films cannot be categorised under business support service.

The bench of P.K. Choudhary (Judicial Member) and Sanjiv Srivastava (Technical Member) has relied on the decision of Allahabad Bench of CESTAT in the case of Inox Leisure Ltd., in which it was held that by definition, 'Business Support Service' is a generic service of providing 'support to the business or commerce of the service receiver'. In other words, the principal activity is to be undertaken by the client, while assistance or support is provided by the taxable service provider. 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'.

The appellant/assessee is having 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 tribunal, while allowing the appeal, 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. In such a case, 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.

Counsel For Appellant: Vineet Dubey

Counsel For Respondent: A.K. Choudhary

Case Title: M/s PVS Multiplex India Pvt. Ltd. Versus Commissioner, Customs, Central Excise & Service Tax, Meerut

Case No.: Service Tax Appeal No.70092 of 2019

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