https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=460036 https://www.taxtmi.com/caselaws?id=460036 Levy of service tax - royalty paid by the appellant to the Government of India - whether payment of royalty on mining of minerals i.e., petroleum or natural gas to the GoI-MoP G can be considered as service or not, and whether it attracts payment of service tax? - HELD THAT:- This issue has arisen initially on the understanding of the Revenue on the basis of Circular No.179/5/2014-ST dated 24.09.2014, issued clarifying about the levy of service tax, inter alia, on taxable services received by a Joint Venture from its members or third party. It was stated therein that In the context of a JV project, cash calls are capital contributions made by the members of JV to the JV. If cash calls are merely a transaction in money, they are excluded from the definition of service provided in section 65B(44) of the Finance Act,1994. Whether a cash call is merely... a transaction in money [in terms of section 65B(44) of the Finance Act, 1994] and hence not in the nature of consideration for taxable service, would depend on the terms of the Joint Venture Agreement, which may vary from case to case. Payments made out of cash calls pooled by a JV, towards taxable services received from a member or a third party is in the nature of consideration and hence attracts service tax. From the above clarification issued by the Ministry of Finance, CBIC, which equally apply to the service tax in pre-GST regime, it is found that on the basis of this clarification alone the impugned order is not sustainable. This Tribunal in the case of B.G. EXPLORATION PRODUCTION INDIA LTD. VERSUS COMMISSIONER OF CGST CEX., NAVI MUMBAI [ 2021 (10) TMI 306 - CESTAT MUMBAI] has considered a similar arrangement under another PSC between the Government of India and B.G. Exploration and Production India Ltd., ONGC and the appellant. We find that the this Tribunal had after taking note of the policy underlying the execution of the PSCs as also the terms and conditions of the same, concluded that the Government of India with the Appellant, RIL and ONGC had entered into a joint venture agreement, where under each co-venturer had its own set of obligations and the responsibility discharged by each of the co-venturers towards the venture which was not by way of any service rendered to the joint venture, but in their own interest in furtherance of the common objective of the joint venture. Thus it was held by the Tribunal that service tax liability, could not have been fastened upon the Appellant. It is also found that in the appellant s own case in M/S RELIANCE INDUSTRIES LIMITED VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, BELAPUR [ 2023 (4) TMI 921 - CESTAT MUMBAI] in respect of demand of service tax towards certain expenditure incurred by the appellants as operator under the Joint Operating Agreement under the PSC, the issue had been decided in favour of the appellants. Conclusion - The demand of service tax on royalty paid by the appellant to the Government of India do not sustain. There are no merits in the impugned order passed by the learned Commissioner (Appeals) - appeal allowed. Case-Laws Service Tax Mon, 24 Jul 2023 00:00:00 +0530