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2014 (8) TMI 102 - HC - Service TaxConstitutional validity - renting of immovable property - use of premises - licence fee is split into two components—one being fixed and the other based on revenue sharing - section 65(90a) read with section 65(105)(zzzz) of the Finance Act, 1994 - validity of the Notification No.24/2007 dated 22.05.2007 and Circular No. 98/1/2008/ST dated 04.01.2008 - Held that:- merely because the licence fee is split into two components-one being fixed and the other based on revenue sharing, cannot by itself lead to a conclusion that the licence fee is not a consideration for use of premises. In a given circumstance, it is quite possible that lease rentals or fees for use of space may be based on the revenue that may be generated from use of the premises, in the course of business. This would not alter the nature of transaction or the nature of interest in the immovable property that is created in favour of the lessee/licencee. - Decided against the assessee. The question whether an arrangement is in nature of a joint venture where two or more parties come together with their separate contribution towards a common venture, would depend on various factors including the extent of participation of the co-venturers in the joint venture. We do not propose to examine the extent of participation of DIAL in the operation of the duty free shops in the present petition, as the same is a question of fact and the writ petition is bereft of any pleading in this regard. - Decided against the assessee. The contention that the licence granted by DIAL to the petitioner cannot contain any element of service on account of it being a statutory obligation delegated by the AAI to DIAL is not acceptable. - Decided against the assessee. Whether DIAL is liable to pay the cost for obtaining the bank guarantee furnished by the petitioner - Held that:- DIAL was fully aware of the implications of the stay order granted by this Court and had consented to an arrangement as recorded in the award dated 30.03.2011. In the given circumstances, it was not open for DIAL to seek that the petitioner deposit the entire amount of service tax as the same was contrary to the consent award dated 30.03.2011. Despite having a consent award in its favour, DIAL had insisted on the petitioner securing them by a bank guarantee. In the circumstances, it is only fair that DIAL be asked to bear the cost for the bank guarantee furnished by the petitioner.
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