Chennai: The Madras High Court has restrained Tamil Nadu Cinema Theatre Owners Federation (TNCTOF) and Tamil Nadu Film Exhibitors' Association (TNFEA) from deducting Service Tax from the distributors share of income by following a recent circular of the Central Board of Excise and Customs.
 
Granting the interim injunction on a petition filed by city-based Mediaone Global Entertainment Limited, Justice M Jaichandren ordered notice to authorities concerned and Tamil Nadu Cinema Theater Owners Federation and Tamil Nadu Film Exhibitor's Association.
 
The firm, carrying on business by producing and distributing films, said it was aggrieved by the circular of the Under Secretary, (Tax Research Unit), Central Board of Excise and Customs, New Delhi, with respect to levy of Service Tax on distributors/sub-distributors of films and exhibitors of movies.

The petitioner claimed that the official without jurisdiction had completely bypassed earlier circulars of the Chief Commissioner of Central Excise, Chennai, and a circular of February 2009.

The February circular categorically held that the screening of a movie was not a taxable service, the petitioner said adding the Under Secretary had not adverted to it and had proceeded to give an erroneous interpretation placing reliance on the provisions of the Finance Acts of 2010 and 2011.

The arrangement between the distributor and an exhibitor was a profit sharing device carried by two or more persons, who bore the risks equally through a contractual agreement, the petitioner said.

Tags: Chennai, deduction o service tax, share of income, south, TNCTOF, TNFEA

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