TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1160
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....s well as new technology from Indian and foreign companies, New Exploration Licensing Policy [NELP] was announced in the year 1999 for the auction of the area/block for the survey and exploration of crude oil/gas. The contracts for exploring crude oil and natural gas are awarded by the Government by means of a tender through auction. 2.3 Accordingly, Ministry of Petroleum and Natural Gas, Government of India under NELP proposed auction of the area/block for the survey and exploration of crude oil and natural gas. 2.4 There are two types of bidders i.e. Category-I- Companies bid independently for the whole or partial area out of the proposed area for auction. Category-2- various entities, in the form of a consortium i.e. Unincorporated Joint Ventures [UJV] and bid for the auction. Issue in the present case pertains only to bidders falling under Category-2. 2.5 The appellant has placed bids through Joint Venture Agreement entered with different parties, Hindustan Oil Exploration Co. Ltd. [HOEC] and HPCL Mittal Energy Ltd. [HMEL]. The appellant was appointed as 'Operator' in terms of Clause 7 of Production Sharing Contract [PSC] dated December 22, 2008 and thereby undertook v....
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.... exploration of crude oil and natural gas is no more res integra and has been decided in favour of the appellant in various decisions. 4. Shri Vivek Kumar Jain learned Authorised Representative very fairly agrees that the issue stands covered by this Tribunal in favour of the appellant. 5. Since both the sides agree that the issue is covered, we would like to refer to the decision of this Tribunal in the case of Marmugao Port Trust Vs. CC & ST, Goa [2017 (48)STR 69 (Tri.-Mum.)], where the Bench considered the concept of Public-Private Partnership, which was held to be in the nature of Joint Venture where two parties got together to carry out a specific economic venture on a revenue sharing model. The Bench noticed that such arrangements are common nowadays, not only in the port sector but also in various other sectors such as road construction, airport construction, oil and gas exploration where the Government has exclusive privilege of conducting businesses. In all such models, the public entity brings in the resource over which it has the exclusive right, whether land, water front or the right to exploit the said land and water front, and the private entities brings in the ....
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....ld be a contractual one, the objective should be to undertake a common enterprise for profit. Joint control over strategic financial and operative decisions was held to be the key feature of a joint venture. The other obvious feature of a joint venture would be that the parties participate in such a venture not as independent contractors but as entrepreneurs desirous to earn profits, the extent whereof may be contingent upon the success of the venture, rather than any fixed fees or consideration for any specific services. 17. The question that arises for consideration is whether the activity undertaken by a co-venture (partner) for the furtherance of the joint venture (partnership) can be said to be a service rendered by such co-venturer (partner) to the Joint Venture (Partnership). In our view, the answer to this question has to be in the negative inasmuch as whatever the partner does for the furtherance of the business of the partnership, he does so only for advancing his own interest as he has a stake in the success of the venture. There is neither an intention to render a service to the other partners nor is there any consideration fixed as a quid pro quo for any parti....
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....ereof, the conclusion arrived at was that the activities undertaken by a partnership/co-venturers for the mutual benefit of partnership /joint venture cannot be regarded as a service rendered by one person to another for consideration and, therefore, cannot be taxed. 8. The aforesaid decision in Marmugao Port Trust has been considered consistently and followed by the Tribunal in the case of B.G. Exploration & Production India Ltd. on three occasions as under:- (I) B.G. Exploration & Production India Ltd. Vs. CST (Audit-I), Mumbai [2021 (49) GSTL 143 (Tri.-Mumbai)] (II) B.G. Exploration & Production India Ltd. Vs. Commissioner of CGST & Central Excise, Navi Mumbai [2022 (63)GSTL 351 (Tri.-Mumbai)] (III) B.G. Exploration & Production India Ltd. Vs. Commissioner of CGST & Central Excise, Navi Mumbai [2022 (64)GSTL 578 (Tri.-Mumbai)] 9. The aforesaid decisions have followed the Circular No.179/5/2014 -ST dated September 24, 2014, whereby CBEC clarified that in the context of Joint Venture Projects, cash calls are capital contributions and hence not liable to service tax. In these decisions, the Bench considered that the Government of India along with th....
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....eing a joint venture are clearly met. In this backdrop, it is clearly impermissible to hold that the contribution made by a co-venturer (partner) in the course or furtherance of the joint-venture is a service rendered to the joint venture for a consideration. It is not in dispute that in a partnership or a joint venture, whatever a partner does for the furtherance of the business, he does so also for advancing his own interest, as he has a stake in the venture. All the resources contributed by the partners enter into a common pool required for running of the enterprise. There is no contractor-contractee or principal-agent relationship between the co-venturer and the joint-venture, which is a pre-requisite for a service to be liable to tax under the Finance Act." 30. The arrangement in question can also be viewed from another perspective i.e. the Appellant had entered into employment contracts on behalf of the unincorporated joint venture as the latter was incapable of entering into contracts in its own name. All activities of the unincorporated joint venture are conducted in the name of its constituent members. Unless such an activity is undertaken by a constituent member ....