A CERTIFICATE - Central Board of Film Certification issued Notice for Service Tax – Board puts off Fire
Ingenuity knows no bounds especially with the wild imagination in the fertile minds of the Taxmen.
The Secretary, Ministry of Information and Broadcasting has brought to the notice of the CBEC that a Show Cause Notice has been issued demanding Service Tax from Central Board of Film Certification under the category of ‘Technical Testing and Analysis Service' and/or ‘Technical Inspection and Certification Service' on account of services provided by Central Board of Film Certification by way of certification of films.
Fortunately, the CBEC is, of late, in an anti-litigation mode. Several clarifications given recently are perfectly logical, legal and which would avoid unnecessary litigation.
Coming back to the CBFC , the CBEC has noted:-
1. This certification by Central Board of Film is done to ensure that film is suitable for exhibition and not against interest of sovereignty and integrity of India, the security of the State, friendly relation with foreign States, public order, decency or morality or involves defamation or contempt of court etc.
2. It is a mandatory requirement under the provisions of Cinematographic Act, 1952.
3. The Act provides that any person, who exhibits a film other than a film which has been certified by the Board as suitable for unrestricted public exhibition or for public exhibition restricted to adults, he shall be punishable with imprisonment for a term which may extend to three years, or with fine which may extend to one lakh rupees, or with both, and in the case of a continuing offence with a further fine which may extend to twenty thousand rupees for each day during which the offence continues.
Therefore Board clarifies that certification by Central Board of Film Certification is a statutory requirement. CBEC vide Circular No.96 /7/2007-ST dated 23.08.2007 has clarified that any activity assigned to and performed by a sovereign/public authority under the provisions of any law, do not constitute taxable services. Any amount/fee collected in such cases is not to be treated as consideration for the purpose of levy of service tax.
In the instant case, CBFC issues certificates as required under the provisions of law i.e. Cinematographic Act, 1952, and thus does not constitute taxable service.
But, should such important issues be left to the whims and fancies of the field formations? Here, since it is CBFC , they could get the clarification immediately. What about the common assessee? Obviously he has to go through all the hurdles of reply, appeal and pay the litigation costs. Has the Board issued any directions, especially to the so called intelligence agencies to consult and take concurrence of the Board before taking such steps? Recently a regional office of an intelligence agency felt that screening of movies in theatres is rendering renting of immovable property service and started issuing notices. When such important issues which have all India ramifications are involved, shouldn't there be uniformity in approach across the length and breadth of the Country?