Service Tax Can't Be Levied On Transfer Or Assignment Of Copyright Of Film Produced Under Copyright Service: CESTAT

The Bangalore Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that service tax can't be levied on transfer or assignment of copyright of film produced under copyright service. P.A. Augustian (Judicial Member) and R. Bhagya Devi (Technical Member) were addressing the issue of whether service tax can be levied on exhibition of films under the category of Business Auxiliary Service (BAS) or demand can be confirmed against transfer or assignment of copyright of the film produced by assessee under Copyright Service. In this case, the assessee/appellant is engaged in the business of cinematographic film production, film distribution, etc. assessee is also engaged in transfer or assignment of copyright of the film produced by them to various television channels, music companies…etc. Alleging that the activity carried out by the assessee is taxable under the category of copyright or business auxiliary service and for the failure of the assessee to pay appropriate service tax, proceedings were initiated and a show cause notice. Thereafter, Adjudication authority confirmed the demand of duty vide impugned order. The assessee has challenged the order passed by Adjudication authority before the Tribunal. The assessee submitted that the assessee further submitted that the SCN has not invoked any specific clause in the definition of "Business Auxiliary Service" in terms of Section 65 (19) (zzb) of the Finance Act, 1994 under which Cinematographic Film Distribution activity of the assessee is liable to Service Tax. Thus, in the absence of any specific clause in the show cause notice, demand of service tax under business auxiliary service is prima facie unsustainable. The revenue submitted that the act of temporary transfer of permitting the use or enjoyment of copyright of cinematographic film and sound recording services are taxable under Copyright services in terms of Section 65(105)(zzzt) of Finance Act, 1994 from 01.07.2010 r/w Section 18 of Copyright Act, 1957. The Tribunal stated that as regarding the demand under the category of business auxiliary service. Said issue is also squarely covered by the Circular No. 109/3/2009-ST dated 23.03.2009 where it is clarified that screening of a movie is not a taxable service except where the distributor leases out the theatre and the theatre owner get a fixed rent. “In such case, the service provided by the theatre owner would be categorized 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. There is no allegation that assessee had entered into any agreement to leases out the theatre and the theatre owner get a fixed rent,” added the bench. In view of the above, the Tribunal allowed the appeal. Case Title: M/s Play House Motion Pictures Private Limited v. The Commissioner of Central Excise, Customs and Service Tax Case Number: Service Tax Appeal No. 20876 of 2016 Counsel for Appellant/ Assessee: M.S. Nagaraja Counsel for Respondent/ Department: Rajesh Shastry Click Here To Download Order/Judgement

Service Tax Can't Be Levied On Transfer Or Assignment Of Copyright Of Film Produced Under Copyright Service: CESTAT

Mehak Dhiman

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