2017 (6) TMI 859 - AT - Service Tax

Business Auxiliary Services - Joint venture - sharing of consideration - Held that - the appellants are not at all liable to pay service tax because as per the agreement between the appellant and their co-venturer GIT, the service has already been taxed and the service tax has already been paid by the co-venturer and it would amount to taxing the same transaction more than once under the different categories which is not the spirit of law - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against Order-in-Original upholding demand on Business Auxiliary Services - Interpretation of Joint Venture agreement - Applicability of Notifications exempting service tax - Whether appellant liable to pay service tax.

Analysis:
The appeal was filed against the Order-in-Original confirming the demand on the appellant under the category of Business Auxiliary Services. The appellant, a society engaged in the production and marketing of rubber, entered into a Joint Venture agreement with another entity for forward contract services related to agricultural produce. The Department issued a show-cause notice, leading to the confirmation of the demand by the adjudicating authority and subsequent dismissal of the appeal by the Commissioner (A), upholding the Order-in-Original. The appellant argued that the impugned order ignored judicial precedents and Departmental Notifications. The appellant contended that the relationship with the co-venturer was a joint venture, not that of a commission agent, and cited relevant clauses of the agreement to support this claim. Additionally, the appellant relied on Notifications exempting service tax for activities related to agriculture and forward contracts. The appellant argued that taxing the same transaction multiple times under different categories would be against the spirit of the law.

Upon considering the submissions and examining the relevant Notifications, the Tribunal found that the appellant was not liable to pay service tax. The Tribunal noted that the service in question had already been taxed and paid by the co-venturer, and taxing the same transaction again under a different category would be contrary to the law. The Tribunal also referred to specific Notifications, including No.14/2004, No.13/2003, and No.3/2014, which exempted the appellant from paying service tax for the activities in question. Relying on these Notifications and the agreement between the appellant and the co-venturer, the Tribunal concluded that the impugned order was not sustainable in law. Consequently, the Tribunal allowed the appeal of the appellant and set aside the Order-in-Original, providing for any consequential relief deemed necessary.