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2023 (7) TMI 827 - CESTAT MUMBAILevy of Service Tax - difference in value indicated between the ST-3 returns and the Balance Sheet - 1% indirect cost allocation from the Joint Venture - interest on alleged delay in payment of Service Tax under reverse charge mechanism - amount disclosed as ‘receivables’ in the Balance Sheet. HELD THAT:- The activities undertaken by the appellants needed to be listed out in detail to determine whether they were already covered under the scope of service tax levy or whether they were subsequently covered under the new proposed levy in 2007 Budget, which by expanding the coverage in a comprehensive manner brought these activities under the service tax However, since the learned Commissioner as original adjudicating authority had already decided this by concluding that the issue of taxability is a settled issue and for his confirmation of demand mainly relied on the basis of difference between the amounts indicated in the Balance sheet and ST-3 return, we consider it is sufficient to examine the issue in the narrow compass of whether service tax is leviable on such difference in values between two different documents i.e., Balance sheet and ST-3 Returns. This issue has already been decided by the Co-ordinate Bench of this Tribunal in the case of SYNERGY AUDIO VISUAL WORKSHOP P. LTD. VERSUS COMMR. OF ST, BANGALORE [2008 (1) TMI 188 - CESTAT BANGALORE], holding that levy of service tax on the sole basis of balance sheet/income tax returns, etc. is unsustainable in law - The Co-ordinate Bench of this Tribunal in the case of in the case of M/S. MAHINDRA HOLIDAY AND RESORTS INDIA LTD. VERSUS THE COMMISSIONER OF LTU, CHENNAI [2018 (10) TMI 35 - CESTAT CHENNAI] had held that balance sheet entries per se cannot be considered as income or expenditure for the purpose of considering it as gross value for levy of service tax. Management or Business Consultant’s service - 1% of the total amount received from unincorporated joint venture towards parent company income or affiliate of the operator outside India to support and manage petroleum operations - HELD THAT:- This issue is no more res integra in view of the decision of this Tribunal in the case of appellant themselves in BG EXPLORATION & PRODUCTION INDIA LTD VERSUS COMMISSIONER OF SERVICE TAX (AUDIT-I) MUMBAI [2020 (10) TMI 579 - CESTAT MUMBAI], holding that the performance of obligations by a party to the joint venture is intended to serve itself and, thereby, the joint-venture and the fulfillment of obligations to contribute to the capital of the joint venture is beyond the scope of taxation under Finance Act, 1994, as it does not amount to consideration. The contractual arrangements between various parties to joint venture agreement under production sharing contract in the PannaMukta-Tapti joint venture (PMT JV), were examined in great detail in the case of appellants by the co-ordinate Bench of the Tribunal in B.G. EXPLORATION & PRODUCTION INDIA LTD. VERSUS COMMISSIONER OF CGST & CEX., NAVI MUMBAI [2021 (10) TMI 306 - CESTAT MUMBAI], holding that the performance of a party in the joint venture agreement does not amount to a contractor-contractee or principal-agent relationship between the coventurer and the joint-venture, which is a pre-requisite for a service to be liable to tax under the Finance Act. Penalties - HELD THAT:- As the entire demand raised in the impugned order is based on the records as per ST-3 Returns filed by the appellant and the amounts indicated in the appellant’s balance sheet, this could only lead to an irresistible conclusion that no suppression or intention to evade payment of tax could be levelled against the appellant. This being so, it is found that there was reasonable cause for the failure to discharge tax liabilities which have been rectified by the appellant duly paying the service tax along with interest thereon and hence the imposition of penalties is unjustified. The impugned order is modified to the extent of allowing the appeals filed by the appellants and upholding the confirmation of demand arising out of short payment of service tax for an amount of Rs.8,68,65,143/- along with interest thereon for Rs.4,76,07,998/-, which have also been appropriated to the Government exchequer in the impugned order - Appeal allowed in part.
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