In Re : Udayan Cinema Pvt Ltd
GST
2019 (3) TMI 704 – AUTHORITY FOR ADVANCE RULING – WEST BENGAL – 2019 (23) G. S. T. L. 345 (A. A. R. – GST), [2019] 66 G S.T.R. 63 (AAR)
AUTHORITY FOR ADVANCE RULING – WEST BENGAL – AAR
Dated:- 26-2-2019
Case No. 44 of 2018 Order No. 45/WBAAR/2018-19
GST
Mr Sydney D'Silva, Joint Commissioner, CGST & CX (Member) and Mr Parthasarathi Dey, Senior Joint Commissioner, SGST (Member)
Applicant's representative heard : Rahul Dhanuka, Advocate
Preamble
A person within the ambit of Section 100 (1) of the Central Goods and Services Act, 2017 or West Bengal Goods and Services Act, 2017 (hereinafter collectively called 'the GST Act'), if aggrieved by this Ruling, may appeal against it before the West Bengal Appellate Authority for Advance Ruling, constituted under Section 99 of the West Bengal Goods and Services Act, 2017, within a period of thirty days from the date of communication of this Ruling, or within such further time as menti
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, read with section 20(xviii) of the IGST Act, 2017.
1.3 The Applicant declares that the issues raised in the application are not pending nor decided in any proceedings under any provisions of the GST Act. The officer concerned from the revenue has raised no objection to the admissibility of the Application.
1.4 The Application is, therefore, admitted.
2. Submissions of the Applicant
2.1 The Applicant submits, along with the Application, a written submission, including a description of the activity of a Line Producer and the proposed draft for the contract with CDIVF (hereinafter the Contract). The Contract is for the 'production services'. According to clause 5 of the Contract, CDIVF will facilitate the provisioning of the production services. The Applicant will reimburse CDIVF the cost of procuring these services, based on the bills raised by the service providers, bearing the name of the feature film. CDIVF will hire the local actors in Brazil and will provide insurance coverage
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s the budgeted amount is shared by CDIVF in advance. In case of any deviation from the budgeted amount, CDIVF shall pay the foreign supplier after taking concurrence from the Applicant. Moreover, the invoices raised by the foreign suppliers mention the name of the motion picture.
2.4 Without prejudice to the aforesaid, the Applicant further argues that the service of CDIVF can also be classified as event management service, as described under section 13(5) of the IGST Act, 2017. The shooting of the film in foreign locations, resulting in the emergence of a CD containing the filmed materials, is an 'event' that CDIVF is going to organize and manage.
2.5 At the same time, the Applicant argues that CDIVF will act as pure agent, as defined under rule 33. The Contract specifically provides that the Applicant will reimburse CDIVF at the actual cost of procuring these services, based on the bills the service providers raise in the name of the feature film.
2.6 The Applicant also believes t
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ng the location of the supplier, the recipient receives the service in Brazil and location of the recipient is, therefore, not within the taxable territory, and no tax is payable on RCM in terms of Sl No. 1 of Notification No. 10/2017 – IGST (Rate) dated 28/06/2017.
3. Submissions of the Revenue
3.1 Concerned officer from the Revenue submits that at the time of signing the Contract the so-called principal suppliers of the services or the services are not clearly identified. The Question of facilitating as an intermediary between the principal suppliers and the recipient, therefore, does not arise. CDIVF is, not, therefore, acting as an intermediary.
4. Observation & Findings of the Authority
4.1. The answer to the question about the liability to pay IGST on the reverse charge on the payments to be made to CDIVF depends upon the location of the recipient of the service. The Applicant, a resident of India, will receive the service in Brazil, where it has no fixed establishments or a
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answered first before determining whether the Applicant is liable to pay IGST on the payments to be made to CDIVF in terms of Sl No. 1 of Notification No. 10/2017 – IGST (Rate) dated 28/06/2017, provided the transaction constitutes an inter-State supply within the meaning of section 7(4) of the IGST Act, 2017.
4.3 SAC 999900 refers to services provided by embassies and representations from other countries, services provided by international organizations such as the United Nations and its specialized agencies or regional bodies, etc., the Organization of American States, the European Union, the African Union, the League of Arab States, the Organization for Economic Cooperation and Development, the World Customs Organization, the Organization of Petroleum Exporting Countries and other international bodies or extraterritorial units (refer to Explanatory Notes on Classification of Services; cbic.gov.in). Service of CDIVF does not fit this description, and, therefore, cannot be classifie
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C 998596), as described in section 13(5) of the IGST Act, refers to “admission to, or organization of a cultural, artistic, sporting, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and services ancillary to such admission or organization”. Clearly, any event whatsoever does not fit the bill. It has to be an event of a nature specified above. The emergence of a CD containing footage for a motion picture is not a cultural, artistic, or entertainment or a similar event. It is merely a stage in the process of producing the feature film. Screening of the completed motion picture or, for that matter, of the footage contained in the CD, however, can fit the description of events included in section 13(5) of the IGST Act. CDIVF is not being contracted for organizing such a screening event for the Applicant. CDVIF is not, therefore, supplying services for organizing events included in section 13(5) of the IGST Act or the events described un
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has the Tribunal examined whether these commercial services are intermediary in nature. This judgment does not, therefore, throw much light on the question of classifying the service of a Line Producer and, therefore, not applicable in the present case.
4.7 It is evident from the above discussion that the Contract, the Applicant's argument based on the Contract, or the judgment in the case of Yash Raj Film (supra) does not throw sufficient light on the role CDIVF plays as a Line Producer in the production of the film in offshore locations. He is alternately described as an intermediary service provider or an event manager. It is, therefore, pertinent to examine the role of the Line Producer, as understood in common parlance in the film industry.
4.8 A Line Producer is a key member of the production team for a motion picture. Typically, a Line Producer manages the budget of a motion picture. Alternatively, or in addition, they may manage the day to day physical aspects of the film pr
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this schedule, the Line Producer can accurately estimate the cost of each day's shooting and produce a provisional budget estimating the total amount of funding required.
4.9 During pre-production, Line Producers, working closely with the director, production manager, first assistant director, art director and other heads of department, prepare the production schedule and budget and set the shoot date. Line Producers oversee all other preproduction activities, including hiring the production team, setting up the production office, location scouting, ensuring compliance with regulations and codes of practice, sourcing equipment and suppliers, selecting the crew, engaging supporting artists and contributors, and monitoring the progress of the art department and other production departments. Line Producers are ultimately responsible for overseeing all activities, and for ensuring that the production is completed on time and within budget. [Source: Media match – USA Media Industry mag
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al part of the activity for the production of the feature film.
4.11 The Applicant himself submits that CDIVF is going to organize and manage the shooting in Brazil that will result in the emergence of a CD containing the audio-visual content, and retains as security all production rights and talent buy-outs for such production in Brazil till receiving the final payment from the recipient. Clearly, CDVIF cannot retain production rights and talent buy-outs, even as security, unless it is engaged in the production and realization of a motion picture, explicitly or implicitly protected by copyright, without a contract for outright sale. It is, therefore, provisioning motion picture production service classifiable under SAC 999612. It is, therefore, not an intermediary service.
4.12 The service being supplied is not, therefore, classifiable as the one specified in subsections (3) to (13) of section 13 of the IGST Act, 2017. The transaction between CDIVF and the Applicant is, therefore, i
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ds any title to the goods or services or both so procured or supplied as a pure agent of the recipient of supply;
(c) does not use for his own interest such goods or services so procured; and
(d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account.
The Contract does not specify CDIVF as the Applicant's pure agent. It merely refers to bills for some of the services procured will bear the name of the feature film and will be paid on an actual cost basis. The crucial test is whether these services are a charge on the Applicant or CDIVF. If CDIVF is liable to pay the suppliers of these services no matter what the Applicant does, it will be treated as a charge on CDIVF. As CDIVF holds the production rights, even though as security, all procurements of goods and services will be a charge on him unless specifically excluded. That the bills for such services bears the name of the feature film
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