Joint venture profit-sharing arrangement rejected as commission-based service, leading to waiver of pre-deposit and stay of recovery.

A joint business arrangement with profit and loss sharing in a 75:25 ratio was held, on a prima facie view, not to resemble promotion or marketing on a commission basis. That finding gave the appellant a strong case for interim relief in the classification dispute over taxable service. The tribunal therefore waived the pre-deposit requirement and stayed recovery until disposal of the appeal.

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Issues: Whether the appellant was liable to pre-deposit the demanded amount in a dispute concerning classification of the business arrangement as taxable service, and whether interim waiver and stay were warranted.

Analysis: The agreement showed that the appellant and its co-venturer were carrying on a joint business activity with sharing of profits and losses in the ratio of 75:25. On that prima facie view, the arrangement did not appear to be one of promotion or marketing on commission basis. The appellant was therefore found to have a strong case on merits for interim relief.

Conclusion: The requirement of pre-deposit was waived and recovery was stayed till disposal of the appeal.

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