2019 (3) TMI 1678 - AT - Service Tax

Classification of services - support services of business or commerce or not - services provided by the respondent to M/s. Brittos Amusements Pvt. Ltd. (BAPL) pursuant to the joint venture agreement with M/s. Goa Golf Club Pvt. Ltd. - Negative List services - period in dispute was from October 2007 to March 2013 - HELD THAT - Upon analysis and scrutiny of the joint venture agreement the adjudicating authority by relying on the Board circular No.109/03/2009 dated 23.02.2009 has held that there is no relationship of service provider or service receiver between the parties to joint venture agreement and there is no consideration received by either side for rendering the service. He has further held that the agreement specifically provides that the profit/loss arising out of the business should be shared by both sides - Thus it transpires that there is no involvement of two persons to execute the terms of the agreement; one is to be considered as service provider and the other to be service receiver. The department has not challenged the SCN issued for the entire period i.e. prior to introduction of the negative list and thereafter. Thus it emerges that the department is not contesting specifically the findings of the learned Commissioner that there is no relationship existing between the service provider and the service receiver and that no consideration has been received for providing any taxable service - thus service tax liability cannot be fastened on the respondent. There are no merits in the appeal filed by Revenue - appeal dismissed - decided against Revenue.

Summary

Issues:
Revenue's appeal against the impugned order dated 30.12.2014 passed by the Commissioner of Customs, Central Excise & Service Tax, Panaji, Goa regarding the taxation of services provided under a joint venture agreement.

Analysis:
The Revenue contended that services provided under the joint venture agreement should be taxable under the category of 'support services of business or commerce' as per Section 65(104c) of the Finance Act, 1994. The period in dispute was from October 2007 to March 2013. The adjudicating authority, based on a Board circular, determined that there was no relationship of service provider or receiver between the parties to the joint venture agreement. The agreement specified profit/loss sharing between both sides without any consideration for services rendered. The department did not challenge the show cause notice for the entire period. Consequently, the tribunal upheld the adjudicating authority's decision that no service tax liability could be imposed on the respondent.

The tribunal found no merit in the Revenue's appeal and dismissed it. The cross objection filed by the respondent was also disposed of.