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2024 (1) TMI 456 - AT - Service TaxValuation of services - Joint venture - inclusion of "cost petroleum" and "profit petroleum" as per the Production sharing contract - inclusion of cash calls in the assessable value or not - consideration for rendering ‘survey and exploration service’ and ‘mining services to government’ or not - Time limitation - suppression of facts or not - HELD THAT:- The very same issue was considered by the Tribunal in the case of B.G. EXPLORATION & PRODUCTION INDIA LTD. VERSUS COMMISSIONER OF CGST & CEX., NAVI MUMBAI [2021 (10) TMI 306 - CESTAT MUMBAI]. The Tribunal thoroughly examined the nature of the ‘Product Sharing Contract’ and whether the distribution of profit, petroleum and cost petroleum, as well as cash calls are consideration for service provided by assesse to Government. The Tribunal held that the manner in which the contract provides for distribution of ‘profit petroleum’ and ‘cost petroleum’ is a business model for ensconcing within itself the alienation of risk by the Government of India, which necessarily mandates a working arrangement for the disaggregation of cost petroleum as compensation for the mutually exclusive risks undertaken by the contractor. The Tribunal held that there is no service provider and service recipient relationship in the joint venture and the amounts in the nature of profit petroleum/cost petroleum/ cash calls are not consideration for services. The issues that arise in the present case as to whether cost petroleum/profit petroleum are to be treated as consideration for rendering ‘mining services’ by assesse to government was examined in the case of B.G. EXPLORATION & PRODUCTION INDIA LTD. VERSUS COMMISSIONER OF CGST & CX., NAVI MUMBAI [2022 (1) TMI 207 - CESTAT MUMBAI]. Besides the earlier decisions, the Tribunal also referred to the Board Circular dt.12.02.2018 to hold that the demand of service tax is not sustainable. Thus, the issue on merits has to be answered in favour of assessee and against the department. The appellant succeeds on merits. Time Limitation - suppression of facts or not - HELD THAT:- The assessee was under bonafide belief that being a joint venture in which even the government is a participant, there is no element of rendition of service or payment of consideration falling within the scope of Finance Act, 1994. Further, the department has not been able to establish any positive act of suppression of facts on the part of assessee with intent to evade payment of service tax. For these reasons, the assessee succeeds on the issue of limitation also. The impugned order is set aside - The assessee appeal is allowed.
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