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TMI Blog2019 (11) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... en the Central Warehousing Corporation and the Government of Madhya Pradesh each holding 50% of the shares. MPWLC is an autonomous body engaged in scientific storage of agricultural and associate produce in the state and they provide warehousing facility to their customers and charge certain amounts for this facility. 2. The Appellant and MPWLC entered into a joint venture agreement for providing many warehouses in different parts of Madhya Pradesh where the Appellant had storage facilities and the income generated from the customers is shared 35% to MPWLC and 65% to the Appellant. A Show Cause Notice dated 22.10.2015 was issued to the Appellant by the Department alleging that the amounts received by them in the aforesaid joint venture is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on lease or license for construction of building or temporary structure at a later stage to be used for furtherance of business or commerce." [Section 65 (90a) 4. It is alleged in the Show Cause Notice that the Appellant had rented out their warehouses to MPWLC and received a consideration for the same and such consideration is chargeable to service Tax. Accordingly, a demand of service tax amounting to Rs. 1,63,82,196/- covering the period January, 2014 to March, 2015 was sought to be recovered under Section 73 of the Finance Act, 1994. It was also proposed to recover interest under Section 75 of the Finance Act, 1994. Penalties were proposed to be imposed under Section 76 and 77 of the Finance Act, 1994 for contravention of provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll within the taxable service of renting of immovable property. In fact, MPWLC is an autonomous organisation created by the state Government and CWC in order to provide warehousing facilities for agriculture produce of the farmers; (iv) If at all service tax is payable the calculation is erroneous because the amounts received should be taken as inclusive of service tax; (v) No interest is payable by them because no service tax is payable at all at the first place. Similarly, since there are no violation of the law and hence no penalty is imposable. Further, even if it is held that the tax is payable, Section 80 of the Finance Act, 1994 provides that no penalty shall be imposed on the assessee for any failure due to reasonable causes. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remaining activities. The income which has received from the customers was shared in the ratio of 65% to the Appellant and 35% to MPWLC. The agreement itself shows that there was no service provider - service recipient relationship between them but there was a relationship of equal partners on principal to principal basis in a joint venture and income sharing. The Finance Act, 1994 does not provide for taxing the income of one partner in a joint venture deeming it to be rendition of service to the other. On this ground alone, this appeal may be allowed. 8. He further argues that renting of immovable property is taxable under Section 65(105)(zzzz) only when such renting is for use in the course of or furtherance of business or commerce. MP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for charging service tax on " any service provided or to be provided to any person, by any other person by renting of immovable property or any other service in relation to such renting for use in the course of or for furtherance of business or commerce". For a tax to be levied under this heading, there must be a service provider and a service recipient and the service which is provided must be renting of immovable property and such renting must be for use in the course of furtherance of business or commerce. A plain reading of the arrangement between the Appellant and MPWLC as narrated in the Show Cause Notice as well as in the impugned order clearly shows that it was a joint venture with an income sharing arrangement. In such a relationsh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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