No Service Tax on revenue sharing agreement between exhibitor & distributor for exhibiting film: SC

Commissioner Of Central Excise And Service Tax Ludhiana Vs AB Motions Pvt. Ltd.

The Hon’ble Supreme Court in Commissioner of Central Excise and Service Tax Ludhiana v. AB Motions Pvt. Ltd. [Civil Appeal Diary No(s). 12044/2020 dated May 17, 2024] has disposed the appeal filed by Revenue challenging earlier order passed in favour of the Respondent by the CESTAT, which had set aside the demand for service tax w.r.t revenue sharing agreement between Exhibitor and Distributor pertaining to showcasing of films/ movies.

Facts:

AB Motions Pvt. Ltd. (“the Respondent”) had entered into revenue sharing agreements with various distributors/sub-distributors towards exhibiting films/movies at the multiplex. However, the Revenue was of the view that the respondent is providing ‘Business Support Services’ as defined under Section 65 (105) (zzzq) of the Finance Act, 1994 by way of Exhibition of the movies in their multiplexes.

The Revenue also contended that the amount earned by the appellant by providing the said service has not been reflected in their statutory returns filed with the department and no service tax had been paid on the same and hence, order in original dated March 8, 2016, was passed wherein demand u/s 73(1) of the Finance Act was confirmed to the tune of Rs. 3,72,02,750/- along with levy of interest and penalty.

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