2024 (1) TMI 140 - AT - Service Tax

Distinct persons or not - partners and partnerships firm - Whether a partner can be considered as service provider for the service rendered to its partnership firm as the partners of partnership firm are individually called as a partners? - HELD THAT - It is found that the issue involved in the present case and the issue in the judgment of PRINCIPAL COMMISSIONER, CENTRAL TAX AND SERVICE TAX VERSUS CADILA HEALTHCARE LIMITED 2022 (5) TMI 800 - GUJARAT HIGH COURT prima facie appears to be identical. However, the submission of the learned AR agreed upon that before applying the ratio of any judgment, it needs to be seen whether the facts of both the cases are identical or otherwise. Since the Adjudicating Authorities have not seen judgment of Cadila Healthcare, in the interest of justice, the matter needs to go back for reconsideration in the light of the judgments in the case of Cadila Healthcare. Appeals are allowed by way of remand to the adjudicating authority for passing a fresh order.

Summary

Issues involved: Determination of whether a partner can be considered a service provider for services rendered to a partnership firm, and whether partners and partnership firms can be treated as distinct entities for the purpose of Service Tax.

Issue 1: Partnership Firm and Service Tax Liability
The primary issue in the appeals was whether a partner can be regarded as a service provider to a partnership firm, given that partners are individually referred to as partners, while collectively they form the firm. The question arose as to whether partners and partnership firms are distinct entities for the purpose of Service Tax liability. Some appeals related to the demand of Service Tax confirmed by the Adjudicating Authority, while others focused on the refund of Service Tax and interest already paid on the same issue.

Issue 2: Precedents and Legal Arguments
The appellant's counsel cited precedents, specifically referring to judgments in cases such as Cadila Healthcare Vs. CCE and Gujarat Principle Commissioner of Central Excise Vs. Cadila Healthcare. It was argued that the issue at hand had already been settled in favor of the appellant based on these judgments, and therefore, the appeals should be allowed.

Issue 3: Reconsideration and Remand
The Additional Commissioner representing the revenue reiterated the findings of the impugned order and emphasized the need to assess the applicability of the cited judgments based on the specific facts of each case. It was proposed that the matter be remanded to the Adjudicating Authority for a reconsideration in light of the facts of the present case and the judgments related to Cadila Healthcare.

Judgment and Decision
After considering the submissions from both sides and reviewing the records, the Tribunal acknowledged the similarity between the issue in the present case and the judgments cited by the appellant. However, it was agreed that the applicability of the precedent judgments depended on the alignment of facts in both cases. Consequently, the Tribunal decided to set aside the impugned orders and remand the appeals to the Adjudicating Authority for a fresh decision, taking into account the judgments related to Cadila Healthcare. The appeals were allowed for further consideration and a new order to be passed by the Adjudicating Authority.