Custom, Excise & Service Tax Tribunal
Rockline Entertainments Pvt Ltd vs Commissioner Of Central Tax, Bangalore ... on 24 September, 2025
ST/Cross/20283/2022 in ST/20270/2020,
ST/20408/2020
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 2
Service Tax Cross Application No. 20283 of 2022
in
Service Tax Appeal No. 20270 of 2020
(Arising out of Review Order No. 02/2020-21 dated
05.06.2020 passed by the Principal Chief Commissioner
of Central Tax, Bengaluru.)
Commissioner of Central Tax,
Bengaluru North-West,
2nd Floor, South Wing,
BMTC Bus Stand Complex, Appellant(s)
Shivajinagar,
Bangalore - 560 051.
VERSUS
M/s. Rockline Entertainments
Pvt. Ltd.
#8, Rockline Mall,
Katha No. 320, Respondent(s)
Jalahalli Cross, Chokkasandra, Bengaluru - 560 057.
WITH Service Tax Appeal No. 20408 of 2020 (Arising out of Order-in-Original No. 23/2019-20-COM- BNW dated 27.02.2020 passed by the Commissioner of Central Tax, Central Excise and Service Tax, Goods & Services Tax Commissionerate, Bengaluru.) M/s. Rockline Entertainments Pvt. Ltd.
#8, Rockline Mall,
Katha No. 320,
Jalahalli Cross, Appellant(s)
Chokkasandra,
Bengaluru - 560 057.
VERSUS
Commissioner of Central Tax,
Bengaluru North-West,
2nd Floor, South Wing,
Respondent(s)
BMTC Bus Stand Complex,
Shivajinagar,
Bangalore - 560 051.
Page 1 of 20
ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 APPEARANCE:
Mr. M.S Nagaraja. T, Advocate and Mr. Rajesh Kumar T.R, Chartered Accountant (CA) for the Assessee Mr. M. A. Jithendra, Authorised Representative (AR) for the Revenue CORAM:
HON'BLE MR. P.A. AUGUSTIAN, MEMBER (JUDICIAL) HON'BLE SMT. R. BHAGYA DEVI, MEMBER (TECHNICAL) Final Order Nos. 21537-21538 /2025 DATE OF HEARING: 03.04.2025 DATE OF DECISION: 24.09.2025 PER : P.A. AUGUSTIAN The Appeal No.ST/20408/2020 filed by M/s.Rockline Entertainment Pvt. Ltd. (herein after referred as Appellant), challenging the service tax liability for the period from April 2011 to March 2015 on the amounts received by the Appellant from different sources. The issue in Appeal filed by the Department ST/20270/2020, challenging dropping of the demand of service tax against the income from exhibition of movies under the category of support service of business or commerce and transfer of intellectual property rights in respect of movies produced by the assessee M/s Rockline Entertainment. Against ST/20270/2022 appellant filed Service Tax Cross Application No. 20283 of 2022.
2. Appellant is a private company duly registered under Companies Act and located in Bangalore providing various services and also engaged in running, conducting, operating and managing multiplex theaters which are being run, conducted and operated and managed by an independent legal entity M/s Carnival Cinemas. Alleging non-payment of service tax on following activities, show cause notice dated 17.10.2016 was issued for the period from April 2011 to September 2015.
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a) Service Tax of Rs. 1,06,95,600/- on the consideration received towards Business Support Service provided by way of exhibition of cinematographic films in the cinema theatres/cinema halls owned by the Appellant on revenue sharing arrangement with the Distributors / sub-distributors / area distributors during the period from May 2011 to March 2014;
b) Service Tax of Rs. 3,77,95,160/- on the consideration received towards assignment of various non-theatrical rights of the cinematographic film "Lingaa" under declared service, - "temporary transfer or permitting the use or enjoyment of any intellectual property right" service during the period from November 2014 to March 2015;
c) Service Tax of Rs. 1,21,00,205/- on the consideration received towards assignment of various rights such as Satellite TV Broadcast Rights and Hindi Dubbing rights of the cinematographic film "Power" under the declared service, - "temporary transfer or permitting the use or enjoyment of any intellectual property right" service and on the consideration received on brand promotion during the period from April 2014 to March 2015;
d) Service Tax of Rs. 57,45,803/- on the amounts received from M/s Lalitha Jewellery and M/S Vishal Fashions, accounted under the head "Lingaa Production - Income" during the period from November 2014 to March 2015 under Section 73(1) of the Finance Act, 1994
e) Service Tax of Rs. 8,27,885/- on promotion of 'brand' of goods, services, events, business entity, etc. provided to M/s Shreyas Media Entertainments Page 3 of 20 ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 Private Limited during the period from April 2014 to March 2015;
f) Service Tax of Rs.15,45,324/- on the consideration received towards renting, CAM Charges, HVAC charges, DG Consumption charges, during the period from June, 2012 to September, 2015 under proviso to Section 73(1) of the Finance Act, 1994;
g) Service Tax of Rs.9,81,867/- on the consideration / income received from flexing charges, advertising activities, by way of rentals for parking areas, food court, cafeteria, etc. during the period from April, 2011 to March, 2015 under proviso to Section 73(1) of the Finance Act, 1994.
3. Thereafter Adjudication Authority confirmed the demand of Rs. 91,00,879/- including Rs. 57,45,803/- on the amounts received from M/s Lalithaa Jewellery and M/S Vishal Fashions for the period - November 2014 to March 2015, Rs. 8,27,885/- on the amounts received from M/s. Shreya Media Entertainments Private Ltd and M/s Vishal Fashions for the period - April 2014 to March 2015, Rs. 15,45,324/- on the consideration received towards renting, CAM Charges, HVAC Charges, DG Consumption Charges for the period - June 2012 to September and Rs. 9,81,867/- on the consideration/income from Flexing Charges, Advertising Activities, Rentals for Parking area, Food Court, Cafeteria, etc. for the period - April 2011 to March 2015 and also imposed penalty under various provision of law. Adjudication authority however dropped the demand against income from exhibition of movies and transfer of intellectual property rights in respect of movies Linga power and Sudhu Kavu Movies, aggrieved by said orders, present appeals are filed.
4. When the appeals came up for hearing, the Learned Counsel for the Appellant draw our attention to the finding in the impugned order against each activity and also brought our Page 4 of 20 ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 attention to the agreement entered by the Appellant with M/s JC Media Entertainment and M/s Lalitha Jewelry Mart on 05 th July, 2014. As per the said agreement, Appellant undertake to execute the in-film branding and promotional activity herein as per the Annexure for the film Linga and accept the logo designed from M/s Lalitha Jewelry and incorporate the same in the film. M/s Lalitha Jewelry agreed to give necessary jewels which is required for the shoot purpose only for three to five days without any hiring charges. M/s Lalitha Jewelry take responsibility of the make and design of the jewelers shown in them in the movie. As per the said agreement, the duration of the movie in-film branding, total seen shall be less than 150 seconds. In addition to providing security and services, M/s Lalitha Jewelry agreed to pay an amount of Rs. 4,75,00,333/- for execution of in-film branding and providing time slot for the movie for advertising in their brand as explained and submits that the Appellant has not undertaken advertisement of either the Jeweller or the jewellery. A time slot has been provided in the movie by way of In-film branding to M/s Lalitha Jewellers for advertisement of jewellery and the brand. The service was that of "sale of space or time for advertisement" in the production of cinematographic film "Lingaa" for a consideration.
5. The Learned Counsel draw our attention to Section 65 (105) (zzzm) of the Finance Act, 1994 defines "taxable service" of "sale of space or time for advertisement" and the same is extracted below:
"(zzzm) to any person, by any other person, in relation to sale of space or time for advertisement, in any manner; but does not include sale of space for advertisement in print media and sale of time slots by a broadcasting agency or organisation".
Explanation 1. --For the purposes of this sub-clause, "sale of space or time for advertisement" includes, --
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(i) providing space or time, as the case may be, for display, advertising, showcasing of any product or service in video programmes, television programmes or motion pictures or music albums, or on billboards, public places, buildings, conveyances, cell phones, automated teller machines, internet;
(ii) selling of time slots on radio or television by a person, other than a broadcasting agency or organisation; and
(iii) aerial advertising.
Explanation 2. --For the purposes of this sub-clause, ''print media'' means, --
(i) ''newspaper'' as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867;
(ii) ''book'' as defined in sub-section (1) of section 1 of the Press and Registration of Books Act, 1867, but does not include business directories, yellow pages and trade catalogues which are primarily meant for commercial purposes.
6. Thus, the sale of space or time for advertisement includes advertising, showcasing of any product or service in video programmes, television programmes, motion pictures, or music albums. As per impugned order, though the Commissioner has recorded submission, but not recorded his findings with regard to the nature of service and taxability. Learned Counsel further submits that Section 66 D of the Finance Act, 1994 contains the negative list of services. The description of the service in terms of Clause (g) up to 30.9.2014 and from 1.10.2014 are extracted below:
Up to 01.10.2014 "Selling of space or time slots for advertisements other than advertisements broadcast by radio or television". From 01.10.2014 (amended vide Finance Act, 2014 and Notification No 18/2014 dated 25.08.2014) Page 6 of 20 ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 "Selling of space or time for advertisements in print media".
7. It is submitted that in terms of Section 66 B of the Finance Act, 1994 with effect from 01.7.2012, the levy of Service Tax @ 14% on the value of all services, other than those specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. Thus the MOU dated 05.07.2014 was for agreeing to provide the service prior to the date of levy of tax from 01.10.2014 and therefore the transaction of sale of space or time for advertisement in cinema/motion pictures was not liable to service tax, Learned Counsel further submits that the issue is whether levy of tax can be made at the time of entering the MOU or agreement and when consideration received subsequently cannot be subject to tax. The Appellant relied on the following judgments: CCE, Noida Vs. M/s. Matsushita TV & Audio India Ltd., - 2006 (1) S.T.R 162 (Tri. - Del.) and CST, Delhi Vs. Consulting Engineer Services (I) Pvt. Ltd., - 2013 (30) STR 561 (Tri. - Delhi). Since the Appellant received the consideration of Rs.3,18,50,000/- prior to 01.10.2014, considering the Rule 3(b) of Point of Taxation Rules, 2011, where provided that (b) "in a case, where the person providing the service, receives a payment before the time specified in clause (a), the time, when he receives such payment, to the extent of such payment". As regarding service tax for the balance amount of Rs. 1,23,00,000/- received after 01.10.2024, Ld. counsel for the Appellant submits that Hon High Court of Kerala in the case of Manjilas Food Tech (P) Ltd. Vs Union of India in WP (C) No 3526 of 2015 by Order dated 02.7.2024 [2024 KLT online 2145] has examined the constitutional validity of amendment of Clause (g) under Section 66 D of the Finance Act, 1994 with effect from 01.10.2014. The Hon'ble High Court of Kerala has concluded as under:
"In the matter of advertisements, it must be held that every aspect of tax on advertisements other than taxes Page 7 of 20 ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 on advertisements placed in newspapers or those broadcast on radio and television was covered by Entry 55 of List II and therefore no law made with reference to Entry 97 of List I could authorize the levy of any tax on advertisements other than advertisements published in newspapers and advertisements broadcast by radio or television.
In the light of the above findings, this Writ Petition is allowed. It is declared that the amendments to Clause
(g) of Section 66 D by the Finance Act, 2014 with effect from 01.10.2014 is beyond the Legislative Competence of the Union Parliament and is unconstitutional, as it authorises the imposition of Service Tax on all advertisements, thus covering advertisements upon which a tax could have been levied only under a law made by the State Legislature under Entry 55 of List II".
8. Therefore, with the amendment of Clause (g) under Section 66D being held as unconstitutional and ultra vires the negative list under Clause (g) under Section 66 D has been restored as under:
(g)Selling of space or time slots for advertisements other than advertisements broadcast by radio or television".
Therefore, the Sale of Space or Time Slots for advertisements in cinematograph films continued to be in the Negative List and is not liable to Service Tax. Therefore, the demand of Service Tax in the impugned order is contrary to law and hence deserves to be set aside.
8. As regarding the service tax demand of Rs.2,88,863/- for the consideration received from M/s Vishal Fashions, the Learned Counsel draw our attention to the agreement dated 09.08.2014 and submits that the Appellant had sold the license rights to M/s Vishal Fashions to create a catalogue inspiring from the Page 8 of 20 ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 collection of sarees. Further as per Section 66E of the Finance Act, 1994, declared services Clause (c) reads as "c. Temporary transfer or permitting the use or enjoyment of any intellectual property" is taxable from 01.07.2012. However, since the transaction carried out by the Appellant with M/s Vishal Fashions is of a permanent transfer of copyright by the producers of film to M/s Vishal Fashions to create a catalogue of sarees it is a transfer of copyright in perpetuity and not taxable service. Therefore, transaction is not liable to service tax.
9. As regarding the demand of service tax of Rs. 8,27,885/- from M/s.Shreyas Media and Entertainment Pvt Ltd and M/s Vishal Fashions, it is alleged that the Appellant had carried out the activity of promotion of brand of goods, services, events...etc to M/s Shreyas Media and Entertainment Pvt Ltd and M/s Vishal Fashions and brought it under the category of Power Production Income. The Learned Counsel draw our attention to the agreement of assignment of exclusive rights dated 24.07.2014 and submits that the Appellant had produced and was owner of the proprietary rights in the film including the copyright in the film titled "Power" and has approached the assessee to assign, transfer and handover all his perpetual worldwide rights therein to the assignee for commercial exploitation. As per the agreement, the term of this agreement shall be for a continuous period of perpetuity from the effective date. As per Section 66E of the Finance Act, 1994, assignment or sale of Music Rights in the film for a consideration being transfer of rights in perpetuity or sale of copyright is not a taxable service.
10. As regarding demand of Service Tax of Rs. 15,45,324/- on the consideration received renting, CAM Charges, HVAC charges, DG Consumption charges, during the period from June, 2012 to September, 2015 under proviso to Section 73(1) of the Finance Act, 1994; Ld counsel drew our attention to Reimbursement Charges collected from YUM Restaurant, Hvac Charges from Woodland and Reconciliation Statement and explained the Page 9 of 20 ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 difference or variation between the SCN and the Financial Statements and submits that it is well settled law that the amounts shown in the Balance Sheets or IT Returns cannot form the sole basis for demand of Service Tax. The difference between the Financial Statement and the SCN was to the extent of Rs. 1,25,02,625 which includes the Electricity Charges of Rs.1,07,75,178 collected as reimbursements. The Ld counsel also drew our attention to CA Certificate dated 25.08.2020 showing that Rs. 1,07,75,178 was the reimbursement of electricity charges and the Ledger Account and Invoices. However, adjudication authority has not considered the above submissions and not recorded any findings. Ld counsel also submits that the issue regarding reimbursement of expenses incurred is settled as per the judgement of the Hon Supreme Court in the case of Union of India vs Intercontinental Consultants and Technocrats Pvt. Ltd - 2018 (10) GSTL 401 (SC).
11. Ld. counsel further submitted that the "electricity" is "goods" and supply of electricity to the tenants is thus "sale of goods" and not supply of service. Therefore, there cannot be any levy of Service Tax on reimbursement of the cost of electricity by the tenants. The Appellants rely on the following judgements:
a) ICC Reality (India) Pvt. Ltd vs CCE, Pune-III, 2013 (32) STR 427 (T-Mum)
b) Kiran Gems Pvt. Ltd vs CCE & ST, Surat-I GSTL 62 (T-Ahm)
c) Logix Soft Tel Pvt. Ltd vs CCE, Noida-I (2019) GSTL 545 (T-All) In view of the above, the demand of Service Tax of Rs.
15,45,324/- on the different activities as held in the impugned order are unsustainable.
12. As regarding Demand of Service Tax on Flexing Charges, Advertising Charges, etc amounting to Rs. 9,81,867/, Ld counsel Page 10 of 20 ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 drew our attention to following chart as shown in the Table 6 of the SCN -:
Revenue Sl Activity (as 2011-12 2012-13 2013-14 2014-15 No per SCN) 1 Flexing 2,05,307 30,690 charges 2 Advertising 1,32,607 72,000 activity 3 Food court 5,00,000 1,32,000 Kiosk 4 Cafeteria 5700685 4950000 Royalty 5 Parking 7,51,468 13,21,934 charges 6 Misc. 29,700 5,06,066 Income Total 7,81,168 83,66,599 51,84,690 12,71,583
13. Ld. counsel further submits that adjudication authority has recorded his finding without examining the taxability of the activities. Instead, it is presumed that the amounts collected as above are liable to tax and the same has been confirmed in the impugned order. In this regard, Ld. counsel further submits that Appellant was engaged in renting of immovable property, production of motion pictures, etc. and not engaged in the service of Advertising Agency services. The nature of activity is "Sale of space or time for advertisement". The activity was NOT liable to tax till 01.10.2014 in terms of clause (g) of Section 66 of the Finance Act, 1994, as brought out above. Therefore, the demand of Service Tax in this regard is required to be set aside. As regarding income from Food Court/Cafeteria Royalty, Ld. counsel submits that the receipts are in the nature of sharing of income from Food Court and Cafeteria. The CBEC vide Circular No. 109/09 dated 23.02.2009 has clarified that income sharing is not a taxable activity and therefore, no Service Tax is leviable. Para 2.2 of the Circular is reproduced below:
"2.2 Another type of arrangement is where the contract between the theatre owner and the distributor is on revenue sharing basis i.e. a fixed and pre-determined portion i.e. percentage of revenue earned from selling the tickets goes to the theatre owner and the balance goes to the distributor. In this case, the two contracting parties Page 11 of 20 ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 act on principal-to-principal basis and one does not provide service to another. Hence, in such an arrangement the activities are not covered under service tax".
14. Learned counsel further relies on the decision of the Hon'ble Tribunal in the case of Ruchi Infrastructure Ltd Vs CCE & ST, Indore, 2020 (37) GSTL 236 (Tri - Del). The relevant part of the judgment is extracted below:
[13. .................. A plain reading of the arrangement between the appellant and MPWLC as narrated in the show cause notice as well as in the impugned order clearly shows that it was a joint venture with an income sharing arrangement. In such a relationship, there is neither a service provider nor a service recipient but only partners in business. For this reason alone, we find that no service tax can be levied on renting of immovable property in the present case. We also find no evidence that there was any renting of the warehouses by the appellant to MPWLC was for use in the course of or furtherance of business or commerce. Thus, we find there is no renting, no service provider and no service recipient in their arrangement and hence, is not covered by the charging section.]
15. In view of the above, the demand of tax on sharing of income is not sustainable.
16. As regarding service tax demand on Parking Charges, Ld. counsel submits that the demand of Service Tax on Parking Charges is for the period 2011-12 and 2012-13. The parking was provided to general public for a nominal parking charge levied. The same was exempt from the levy of Service Tax till 01.04.2013 under Notification No. 25/2012-ST dated 20.06.2012 (Sl.No. 24). As regarding service tax demand on Miscellaneous income of Rs 18,07,349/-. Ld. counsel submits that it was towards writing off the balance payable and not towards providing any service and no service tax is payable on said amount.
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17. As regarding demand confirmed by invoking extended period of limitation, Ld. counsel submits that the Appellant is not indulged in willful mis-statement or suppression of facts or intention to evade payment of Service Tax. The demand of Service Tax in the SCN dated 17.10.2016 is issued for the period from April 2011 to March 2015 and it is based on the Audit of the Records of the Appellant Admittedly obtained Service Tax Registration dated 21.6.2012, paying Service Tax and submitting ST 3 Returns. The transactions on which the Service Tax was/is being demanded are recorded in the Books of Accounts. But Adjudication authority has invoked the larger period of limitation to confirm the demand of Service Tax of Rs. 91,00,879/- on the ground that there was failure on the part of the service provider to disclose wholly and truly all the material facts, the value of taxable service has escaped assessment of service tax as the service provider has failed to pay service tax and file ST 3 returns. The willful mis-statement and suppression of facts alone are essential to invoke the extended time limit and it is not necessary to show intent to evade payment of Service Tax. In this regard, Ld. Counsel submits that once it is admitted that the Appellants have been maintaining the books of accounts, recording the transactions in the books and paid service tax on taxable services, present proceedings alleging suppression of facts is unsustainable. The Appellants are of the bonafide belief that there was no liability to pay Service Tax on consideration received under joint ventures and revenue sharing arrangements, permanent assignment of rights to the assignee, sale of Space or Time for advertisement, reimbursement of electricity charges, etc as brought out above. Therefore, demand of service tax by invoking extended period of limitation is unsustainable in the absence willful mis-statement, suppression of facts or contravention of the provisions of the Finance Act, 1994 with intention to evade payment of Service Tax the larger period of limitation is not invokable. Ld. counsel relied on the decision of Page 13 of 20 ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 the Hon'ble High court of Allahabad in the case of CCT Vs Zee Media Corporation Ltd - 2019 (18) GSTL 32 (ALL) = 2019-TIOL-593-HC-ALL-CX.
18. As regarding Appeal No. ST/20408/2020, Ld AR submits that the Appellant assigned non-theatrical rights (e.g., satellite TV rights, dubbing rights) under agreements labeled "perpetual transfer." However, critical rights (merchandising, remakes) were retained, rendering the transfers temporary and considering the ratio of the decision in the matter of AGS Entertainment Vs. UOI (supra), Adjudication Authority rightly held that the appellant is liable to pay service tax on those activities.
19. As regarding Appeal No. ST/20270/2020 filed by the Department, Ld. Authorized Representative (AR) submits that M/s. Rockline Entertainments, as the theatre owner and also as the exhibitor on behalf of the new entity by virtue of revenue sharing agreement is in the nature of assistance in conduct, operation and management of multiplex theatres etc for exhibition of cinematographic films, by holding that the services in question are on principal to principal' basis and do not fall under the purview of Support Service of Business or Commerce, and (ii) assigning various rights to various distributors by holding them as 'permanent /perpetual and not temporary' merely on the ground that the agreements are using the term 'perpetual transfer', without considering the exclusions in assignment agreement and also by not applying the ratio of the judicial pronouncement of the Hon'ble High Court of Madras in the case of AGS Entertainment Private Limited Vs Union of India (2013)32 STR 219), Adjudication Authority dropped the demand. In this regard, Ld.
20. As regarding Non-payment of ST on Business Support Services amounting to Rs.1,06,95,600/-, AR submits that the distributor or sub-distributor of area distributor have entered into agreement with M/s Rockline Entertainments Pvt Ltd (in Page 14 of 20 ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 the capacity of theatre owner/exhibitor), with an understanding to share revenue in a pre-determined fixed ratio. Ld. AR also draw our attention to the agreement and submits that the terms of the agreements appeared to be not on principal-to- principal basis, but mutuality of interest and share common risk/profit together. Thus, where distributor or sub-distributor of area distributor enters into an agreement with the theatre owner or exhibitor with the understanding to share revenue/profits/loss and it is not on PRINCIPAL TO PRINCIPAL BASIS, since a new entity emerges, distinct from its constituents. In the instant case, the service provided by the distributor or sub-distributor of are distributor to the new entity which has legally acquired the character of a 'PERSON', would be temporary transfer of the rights of the film' which was taxable service prior 01.07.2012, being classifiable under the category of temporary transfer or permitting the use of enjoyment of copy right' as defined in erstwhile Section 65 (105) (zzzzt) of the Finance Act, 1994. Post 01.07.2012 the said service is listed as 'declared service Section 66E(c) of the Finance Act, 1994. Similarly the services provided by M/s.Rockline Entertainments Pvt Ltd, the theatre owner to the new entity which has legally acquired the character of a PERSON would be in the nature of assistance in conduct, operation and management of multiple theatres etc for exhibition of cinematographic films under the category of business support' service as defined in erstwhile Section 65(105) (zzzq) read with Section 65(104c) the Finance Act, 1994 (prior to 01.07.2012) and under 'service' as defined in Sectio 65B(44) read with Section 65B(49) of the Finance Act, 1994 (w.e.f. 01.07.2012). Ld.AR further submits that with effect from 01.04.2015, by inserting an entry no.46 to Notification No.25/2012-ST dated 20.06.2012 vide Notification No.06/2015-ST dated 01.03.201 exemption is provided, which reads as under:
"46. Service provided by way of exhibition of movie by an exhibitor to the distributor or association of persons consisting of the exhibitor as one of its members";Page 15 of 20
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21. In view of the above exemption, the services provided by M/s. Rockline tertainments Pvt Ltd, Bengaluru as the theatre owner (also the exhibitor on behalf of the w entity by virtue of revenue sharing arrangement) to the new entity which has legally acquired the character of a 'PERSON' (or a 'association of persons) and is exempt from service tax w.e.f. 01.04.2015. Considering the same, the demand of service tax under the category of Business Support Service (BAS) upto 01.04.2005 is sustainable.
22. Learned Counsel appearing for the respondent here in submits that the Income from Exhibition of Movies under the category of "Business Support Services" is covered by a number of Judgments of the Hon Tribunal including in the case of Inox Leisure Ltd Vs CST, Hyderabad - 2022 (60) GSTL 326 (Tri - Hyd) which stands approved by the Hon Supreme Court as reported in the case of CST Vs Inox Leisure Ltd - 2022 (61) GSTL 342 (SC) and also by the CBEC Circular No 109/3/2009 ST dated 23.2.2009. It is submitted that the issue before the Hon High Court of Madras was whether the disputed transactions constitute "deemed sale of goods" in terms of Article 366 (29A)
(d) attracting levy of VAT and further, whether the Parliament was vested with power to levy Service Tax on "temporary transfer or permitting the use or enjoyment of copyright"
covered under Entry 54 of List II and Hon'ble High Court held that Section 65(105)(zzzzt) seeks to tax viz., "temporary transfer or permitting the use or enjoyment" of copyright which is a service provided by the producer/distributor/exhibitor. Service Tax is a levy not on the "transfer of right to use the goods" as described under Article 366(29A) sub-clause (d); but on the temporary transfer or "permitting the use or enjoyment"
of the copyright as defined under the Copyright Act, 1957. In the case of Sales Tax Act, there would be "transfer of right to use the goods". Whereas under the Service Tax Act what is levied is temporary transfer/enjoyment of the goods. The pith and Page 16 of 20 ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 substance of both enactments are totally different. "Temporary transfer" or "permitting the use or enjoyment of the copyright" is not within the State's exclusive power under Entry 54 of List II. Therefore, there is no merit in the contention that the taxable event provided under Section 65(105)(zzzzt) is covered by Article 366 (29A).
23. Learned Counsel also draw our attention to the agreement entered by the appellant and submits that Respondent in the Agreements with M/S Eros International Media Ltd, M/S TENNEX Impex and A & P Group in respect of three movies has made irrevocable assignment of copyright in perpetuity or for the life time of the Copyright in Cinematograph films, which is for a period of 60 years in terms of Section 26 of the Copyrights Act, 1957. Therefore, the transaction of assignment of copyright in Cinematograph films in perpetuity or for the lifetime of the Copyright is not a service and not liable to service tax. The Commissioner has recorded legally correct finding in Para 19.5 to 19.0 of the impugned order as applicable to facts of the case as evident from the assignment Agreements on record. Ld. Counsel also draw our attention to Section 65(105)(zzr) of the Act, the Department clarified as follows :
"A permanent transfer of intellectual property right does not amount to rendering of service. On such transfer, the person selling these rights no longer remains a 'holder of intellectual property right' so as to come under the purview of taxable service. Thus, there would not be any service tax on permanent transfer of IPRs." (Circular No. 80/10/2004-S.T., dated 17-9-2004 para 9.2)"
24. Further Ld. Counsel also draw our attention to Section 18 of the Copyrights Act, 1957 provides for assignment of copyright. Sub-section (2) of Section 18 reads as under:
"(2) Where the assignee of a copyright becomes entitled to any right comprised in the copyright, the assignee as regards the rights so assigned, and the assignor as regards the rights not assigned, shall be treated for the purposes Page 17 of 20 ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 of this Act as the owner of copyright and the provisions of this Act shall have effect accordingly."
25. The Respondent submits that Section 19 of the Copyrights Act, 1957 prescribed the Mode of assignment. Sub-section (2) reads as under:
"(2) The assignment of copyright in any work shall identify such work, and shall specify the rights assigned and the duration and territorial extent of such assignment."
26. Section 26 of the Copyrights Act, 1957 provides that in the case of a cinematograph Film, copyright shall subsist until 60 years from the beginning of the calendar year next following the year in which the film is published.
27. Heard both sides. As regarding department appeal no. ST/20270/2020, on Non-payment of ST on Business Support Services amounting to Rs.1,06,95,600/-, we find that as per the Agreements with M/S Eros International Media Ltd, M/S TENNEX Impex and A & P Group in respect of three movies has made irrevocable assignment of copyright in perpetuity or for the life time of the Copyright in Cinematograph films, which is for a period of 60 years in terms of Section 26 of the Copyrights Act, 1957. Therefore, the transaction of assignment of copyright in Cinematograph films in perpetuity or for the lifetime of the Copyright is not a service and not liable to service tax accordingly, impugned order dropping the demand is sustainable.
28. As regarding Appeal No. ST/20408/2020, we find that Service Tax of Rs. 3,77,95,160/- on the consideration received towards assignment of various non-theatrical rights of the cinematographic film "Lingaa" under declared service, Service Tax demand of Rs. 1,21,00,205/- on the consideration received towards assignment of various rights such as Satellite TV Broadcast Rights and Hindi Dubbing rights of the cinematographic film "Power" under the declared service, and as Page 18 of 20 ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 regarding Service Tax demand of Rs. 8,27,885/- on promotion of 'brand' of goods, services, events, business entity, etc provided to M/s Shreyas Media Entertainments Private Limited during the period from April 2014 to March 2015, we find that transaction of assignment of copyright for the lifetime of the Copyright is not a service "and not liable to service tax.
29. As regarding Service Tax demand of Rs. 57,45,803/- on the amounts received from M/s Lalitha Jewellery and M/S Vishal Fashions, during the period from November 2014 to March 2015 under Section 73(1) of the Finance Act, 1994, we find that the demand is under Sale of Space or time for advertisement under Section 65 (105)(zzzm) of the Finance Act, 1994, as per Section 66D, it was under negative list up to 01.10.2014 and the amount of Rs. 3,18,50,000 received up to 01.10.2014 is not subject to service tax. As regarding a service tax demand against balance of amount of Rs. 1,23,00,000/- after 01.10.2014, though it is taxable as per amended provision of law, as per the judgment of the Hon'ble High Court of Kerala in the matter of Manjilas Food Tech (P) Ltd. (supra), the amendment brough under Notification No. 18/2014 dated 25.08.2014 is held as ultra virus and following the same, said demand is also unsustainable.
30. As regarding Service Tax demand of Rs.15,45,324/- on the consideration received towards renting, CAM Charges, HVAC charges, DG Consumption charges, during the period from June, 2012 to September, 2015 under proviso to Section 73(1) of the Finance Act, 1994 and demand of Rs.9,81,867/- on the consideration / income received from flexing charges, advertising activities, by way of rentals for parking areas, food court, cafeteria, etc. during the period from April, 2011 to March, 2015, we find that adjudication authority has not given any finding regarding the submission made by the appellant and considering the reconsideration statement, evidence regarding reimbursement charges supported by CA Certificate. Since there Page 19 of 20 ST/Cross/20283/2022 in ST/20270/2020, ST/20408/2020 is no finding in this regard, the issue has to be remanded for de novo adjudication to consider the submission and to issue a speaking order. Before confirming the demand, the adjudication authority shall consider the taxability of each activity and give a finding whether it is against any reimbursable expenses to exclude by following the ratio of the judgment in the matter of Inter-Continental Consultants (supra). Further adjudication authority is directed to follow the ratio of the judgment of the Hon'ble High Court of Kerala in the matter of Manjilas Food Tech (P) Ltd. (supra) while considering the demand against flexing charges and advertising agency activity. Adjudication authority is also directed to consider the Notification No. 25/2012-ST dated 20.06.2012 (Sl.No. 24) while considering the demand against parking charges.
31. Accordingly, Appeal No ST/20408/2020 is partially allowed and ST/20270/2020 is dismissed. Service Tax Cross Application No. 20283 of 2022 filed by the appellant is disposed off accordingly.
(Order Pronounced in open court on 24.09.2025) (P.A. AUGUSTIAN) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL) Sasi Page 20 of 20