TaxTMI 
TaxTMI 
2024 (12) TMI 1141
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....ined various clauses of the agreement and considered that this is not a Joint Venture agreement and it is rather an agreement where the appellants are providing services to M/s GG. 2. On adjudication, the Adjudicating Authority examined the allegation in the light of the agreement between the appellant and M/s GG and held that the so called Joint Venture is not a partnership firm. The reasons for not considering the said agreement as an agreement of partnership, in the given factual matrix, has been summarized at Para 15.1 to 15.7 of the OIO, which is reproduced below for ease of reference:- "(15.1) In this regard, I would like to discuss Section 4 of the Indian Partnership Act, 1932 which reads as follows; 4. Definition of 'Partnership', 'Partner', 'Firm' and 'Firm-Name'. 'Partnership' is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually, 'partners' and collectively a 'firm', and the name under which their business is carried on is called the 'firm-name'. As per the definition of 'pa....
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....he characteristics of a service agreement. (15.6) From the above observations, it can be seen that, M/s SLP is providing service to Golden Granites and is being paid consideration for that service in the form of share of output of the quarry. The Codicil to the agreement dated 17.10.2001 to effect that income tax returns have to be filed separately, does not alter the nature of relationship between the noticee and M/s GG of being a service provider and service receiver. (15.7) Further, the assessee also contends that their arrangement is similar to the one that was mentioned in para 2.3 of Board's circular no. 109/3/2009-ST dated 23.02.2009. Dealing with the question whether screening of films in the theaters by the film distributors is a taxable service while such screening itself is not a defined service, the clarification attempted to see whether the various arrangements between the theaters and the distributors should fall within the existing defined services. Therefore, the analogy is completely misplaced. In this case, there is no doubt that the various activities are taxable and defined as services. However, it appears that the arrangement in the impugned a....
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....conclusion that the said agreement is not in the nature of partnership agreement and that relation between the appellant and M/s GG is in the nature of service provider and service recipient for which the consideration is being received in the form of a share in the sale proceeds. He further contends that the reliance placed by them on the Board's Circular No.109/3/2009-ST dt.23.02.2009 has been ignored by the Adjudicating Authority at Para 15.7 of the OIO, whereas, the same clarification is appropriately applicable in their case also. As per the Advocate, the above Circular had considered various agreements between the theatre owners and distributors to clarify that there would not be any Service Tax liability as they are two contracting parties acting on principal to principal basis and one does not provide service to another. Further, he has submitted that the Adjudicating Authority has not properly understood the provisions under Income Tax law to come to the conclusion that the payment of Service Tax independently by both the appellant and M/s GG would not negate there being a partnership firm. According to the proviso to Section 28(v) of the Income Tax Act read with Section 1....
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....understand whether the Adjudicating Authority has rightly confirmed the demand or otherwise. A. Whether the agreement dt.17.10.2001 along with the codicil can be considered as agreement of partnership or otherwise. B. Whether the nature of service being provided by the appellant to M/s GG was classifiable under 'Business Support Service' or is rightly classified as 'Mining Service' under Section 65(105)(zzzh) of the Finance Act, 1994 w.e.f. 01.07.2007. C. Whether, in the facts of the case, the provisions for invoking extended period if justified or otherwise. (A) Whether the agreement dt.17.10.2001 along with the codicil can be considered as agreement of partnership or otherwise : - 10. On this issue, the agreement dt.17.10.2001 has been termed as 'Raising Contract cum Sale Agreement' entered between M/s GG, RL Puram and SLP Contractors, Proprietor Smt. Sidda Lakshmi Padamavathi. The agreement, inter alia, provides for both the parties to undertake prospecting operations during the tenure of the prospecting license held by M/s GG and also to undertake quarrying operations in the quarry lease hold area. While the present appellant was required to pay....
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....ds and accounts were to be maintained by the raising contractor but will be in the custody of M/s GG. It is also noticed that as per clause 3, there is a penal clause imposed on the raising contractor in case they fail to implement terms and conditions of the agreement or infringes any condition or defaults in properly working the prospecting license area or quarry lease area. Therefore, a general perusal of the terms and conditions of the agreement would indicate that it is not an agreement between the two partners rather it is exactly what it has been referred to as in the agreement i.e., 'raising contract cum sale agreement'. It is a fact that both the parties to this contract have certain expertise and certain resources at their disposal but the utilization thereof and the remuneration for the said services has been clearly worked out in a fashion which would show that the raising contractor are not partners of M/s GG rather they are providing services of specified nature and in turn getting paid in terms of share in the sales proceeds. 12. Learned CA for the appellant has vehemently argued that there is a codicil dt.28.01.2002 to this agreement, whereby, the parties to the ....
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....t they are only sharing mineral blocks as a consideration for the services but not the profits. Whereas, as per Section 13(b) of the Partnership Act, 1932, the partners are entitled to share equally in the profits earned, and shall contribute equally to the losses sustained by the firm. It was also pointed out that the relation between the two parties appears to be not of partnership as one party exercises complete and absolute control over the other and the TDS under Income Tax Act, 1961, is also being deducted out of the share of sale proceeds paid by M/s GG to the appellant. 14. Therefore, we find much force in the contention of the department that this is an agreement between service provider and service recipient and not a partnership agreement, if all the clauses are evaluated holistically. A codicil to the agreement made at a later date, that too unregistered, terming the whole agreement as an agreement of partnership will not be tenable in the light of the fact that the terms and conditions of the agreement dt.17.10.2001 were not changed, except for Income Tax related provisions, since on holistic evaluation of all terms and conditions, it is apparent that it is not an a....
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....tegory of 'Mining service' and not under 'Business Support service' in the given factual matrix. (C) Whether, in the facts of the case, the provisions for invoking extended period if justified or otherwise:- 16. The Appellants have relied on various case laws in support that since they had brought to the knowledge of department their details about agreement and particulars of month-wise share of sales between the appellant and M/s GG, there was no suppression on their part and extended period would not be applicable. They have relied on the judgment in the case of Dolphine Detective Agency Vs CCE, Belgaum [2006 (4) STR 25 (Tri- Bang)] in support that when all the relevant facts were in the knowledge of the authority, suppression cannot be alleged. 17. We have perused the correspondences dt.29.09.2009 and 30.11.2009 from the appellant to the Department furnishing certain information and response dt.18.11.2009 from the Department seeking certain details from them regarding sales. The issue of limitation has been dealt with by the Original Authority in Para 16 of the OIO, wherein, the Commissioner has examined the facts of the case as well as the reliance placed by the appell....