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TMI Blog2016 (5) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that:- the applicant, Choice Foundation and “partnering person”, are all 3 separate persons under Section 65 B (37) of the Finance Act, 1994. Therefore, service of providing of renting of immoveable property by applicant to “partnering person” will not be “self service”. The consideration for renting said property would be received as per the “Revenue Share” clause in the said Agreement. Therefore, renting of immoveable property would be liable to Service Tax. a) Service Tax is applicable on the revenue share relating to the applicant to the extent it is relatable to rendering of taxable service. - b) Service Tax is applicable on the revenue share relating to Choice Foundation to the extent it is relatable to rendering of taxable service. - c) Service Tax is not leviable on the fees collected from the students to the extent it is covered under the Negative List in terms of Section 66D (l) of the Finance Act, 1994. - d ) Service Tax is payable by a person providing taxable service in terms of Section 68(1) of the Finance Act, 1994. Therefore, in this case, Service Tax will not be payable by the students, as they are not providing any service. - Ruling No. AAR/ST/ 14 /2016, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oundation; that construction of building by the applicant and its maintenance are in the nature of self service, thus not liable to Service Tax. 3. Applicant has raised following questions before this Authority; Whether Service Tax is applicable on the revenue share relating to the Applicant? Whether Service Tax is applicable on the revenue share relating to Choice Foundation? Whether Service Tax is applicable on the fees collected from the students? If answer to any of the above questions is yes, then whether the applicable Service Tax can be recovered from the student? 4. Revenue inter-alia submits that the proposed Partnering Agreement between the applicant and M/s Choice Foundation is that the applicant shall, on an exclusive basis, undertake construction and infrastructure development of the scheduled property in accordance with the architectural design and specifications provided by Choice Foundation within 30 days from the effective date and ensure the upkeep and maintenance of the infrastructure so developed for the Educational Institution during the term of the agreement; that the inference also from the partnering agreement is that M/s Choice Foundat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S has undertaken to be responsible for the entire infrastructural requirement of the educational institution including developing the SCHEDULED PROPERTY in accordance with the design and specifications provided by CHOICE FOUNDATION and coordinating all activities thereto and also to undertake all infrastructural development and maintenance required arising there from during the term of this Agreement. V. CHOICE FOUNDATION has undertaken to be responsible for the entire academic aspect and related requirements of the educational institution and be involved in the day to day administration and academic activities related to the operation of the educational institution during the term of this Agreement. 3. ROLE OF BOTH PARTIES: 3.1 CHOICE ESTATES shall be responsible for the provision and maintenance of all infrastructural requirements of the Educational Institution from time to time. CHOICE ESTATES shall, on an exclusive basis undertake, the construction and infrastructure development of the Scheduled Property in accordance with the architectural design and specifications provided by CHOICE FOUNDATION within 30 days from the effective date and ensure the upkeep and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Authorised signatories of both the Parties. 6. From the preamble, paragraphs 3, 4 and 5 of the proposed Agreement, applicant inter-alia submits that both the parties are coming together to jointly provide services to the students, who are receiver of services; that there exists a service providerservice receiver relationship between the applicant and students as also Choice Foundation and students; that there is no service provider-service receiver relationship between the applicant and Choice Foundation; that provision of service and taking revenue share is different and distinct from engaging a sub contractor or service provider to provide service, which enable provision of service. Applicant further submits that they are rendering educational services and taking a revenue share which cannot be equated to a service provider; that mutuality of interest is absent in case of service provider; that service provider on the other hand is only concerned with fee payable to him by the service receiver. 7. It is observed that applicant submits that they i.e. Choice Estates Constructions Ltd and Choice Foundation are coming together to jointly provide services to the students. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is being represented that in certain situation the distributor and the theatre owner conduct business together and hence no service tax is leviable. Arrangement amongst two or more entities can either be on principal to principal basis or on partnership/ joint/collaboration basis. In the former, the constituent members are independent of each other and do not share any risk/revenue/profit/loss/liability of the other while in the latter the constituent members join hands for mutuality of interest and share common risk/profit together. 7. Unincorporated joint venture, not operating on principal to principal basis, will exist only if the arrangement entered into between the two independent members is also recognized as a person. It may be noted that the word person has not been defined in the Finance Act. 1994. As per Section 3(42) of General Clauses Act, 1897 person shall include any company or association or body of individuals, whether incorporated or not . In this regard attention is invited to explanation to Section 65 of the Finance Act, 1994 wherein the taxable service includes any taxable service provided or to be provided by any incorporated association or body ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Share clause in the said Agreement does not state that the drawal from revenue shall be only in respect of imparting education to students. In fact, the same would be for meeting respective expenses by both parties. In other words, revenue received with respect to expenditure incurred includes expenditure incurred on services etc. provided individually by the applicant and Choice Foundation to the Educational Institution, to be partnered by the applicant and Choice Foundation i.e. separate legal entity, is nothing but consideration. However, value of service will have to be determined in terms of Section 67 ibid read with rules made there-under. 13. Applicant further submits that the proposed Agreement is in the nature of a consortium and there can be no Service Tax levy on the revenue share between consortium members. In this connection, applicant relied upon the judgment in CCE, Vadodara vs. Ishikawajima-Harima 2009(13) STR 650 (Tri-Ahmd.), affirmed by the Apex Court 2015(39) STR 913(SC). It is noticed that Tribunal judgment in case of Ishikawajima-Harima was with respect to turnkey project, wherein it was held that part of the turnkey project cannot be bifurcated and subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property c) Construction of Civil Structure would entail services of architect, engineer etc. Construction of Civil Structure 18. Revenue submits that Notification No. 6/2015-ST dated 01.03.2015 has amended S. No. 12 of Notification No. 25/2012-ST withdrawing earlier exemption on services provided to Govt., a Local Authority or a Govt. Authority by way of construction etc. of structure meant predominantly for use as an educational, clinical or an art or cultural establishment. It is to be observed that this Notification is with respect of services provided to the Govt., a Local Authority or a Govt. Authority. In the case before us, services are not being provided to Govt., Local Authority or Govt. Authority. Therefore, said Notification No. 06/2015-ST dated 01.03.2015 is not applicable to the present case. Applicant submits that both land and building are owned by the applicant; that Section 66 E(b) of the Finance Act, 1994 would apply only where the building is intended for sale and where at least some consideration is received prior to issuance of Completion Certificate. In this connection, Section 66E (b) is reproduced, as under; SECTION 66 E. Declared services The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Civil Structure would entail Services of Architect, Engineer etc. 21. Revenue submits that construction of Civil Structure etc would entail services of architect, engineer etc., which would be liable to Service Tax. Applicant in their written submissions has stated that they are engaging contractors, architects etc. for construction of building, which is a separate and distinct service and would be liable to Service Tax. As architects, engineers etc., would be providing service to the applicant, in construction of building for consideration, the same would be liable to Service Tax. Further, service of maintenance and other infrastructural services rendered by the applicant (person) to partnering person (another person) would be liable to Service Tax unless same is exempted or in the Negative List. 22. After closure of matter for ruling by this Authority on 01.04.2016, applicant in written submissions dated 12.04.2016 has raised new issue regarding students getting bundled education service comprising of both academics and infrastructure. This issue has not been considered by the Authority, as it is raised only after closure of the matter. 23. In view of above, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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