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TMI Blog2024 (12) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... shwara Minerals, a partnership firm, of which the appellant also is a partner, but failed to discharge service tax. Consequently, show-cause notice was issued to the appellant on 05.07.2012 for recovery of the service tax amounting to Rs.12,38,99,236/- along with interest and penalty. On adjudication, the demand was confirmed with interest and penalty. Hence, the present appeal. 3.1. At the outset, the learned advocate for the appellant has submitted that the appellant is a partner in the partnership firm M/s. Sree Gavisiddeshwara Minerals under a reconstituted partnership deed dated 25.03.2010. The appellant has entered into an agreement dated 26.03.2010 with all the partners of the firm whereby the appellant is entrusted with the responsibility and work of extracting available ore, operating the mining and exercising of the powers under the mining lease licence bearing No. ML No.2552 and as a consideration for the said activity, the appellant was entitled to appropriate and retain 64% of the extracted/mined ore. He has submitted that the firm M/s. Sree Gavisiddeshwara Minerals was formed with the objective for conducting the business of carrying on mining operations in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is leviable only if the services were provided and carried out for a certain value. If the value of the services provided is NIL, there cannot be an occasion for charging and collecting the service tax. He has submitted that it is a settled principle of law that when service is provided but no consideration or value thereof is charged and received, then there cannot be any reason to levy and collect service tax on the services rendered. No provision in the Finance Act, 1994 under which it is prescribed that even if the service provider has not charged any amount for service rendered, service tax still would be leviable on its deemed value, be it market value or fair value. In support, he has relied on the judgment of the Hon'ble Gujarat High Court in the case of Commissioner Vs. Larsen and Toubro Ltd. [2016(44) STR 391 (Guj.)]. 3.5. It is the contention of the learned advocate that for determination of the value of taxable service and charging service tax, it is necessary to ascertain the gross amount charged for providing "such" taxable services; any other amount which is calculated not for providing such taxable services cannot be a part of the value as that amount is not ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Tribunal in the case of Ores India Pvt. Ltd. Vs. CCE&ST, Bhuvneshwar-II [2007 (7) TMI 138 - CESTAT, KOLKATA]. Further, referring to the clarification issued by the Board bearing No.334/1/2007-TRU dated 28.02.2007, he has submitted that various services like site formation, clearance, excavation, earth moving, drilling wells for production / exploitation of hydrocarbons etc. are relating to mining are individually classified under appropriate taxable service. Services provided in relation to mining of mineral, oil and gas are comprehensively covered under the proposed service tax levy; accordingly, services provided in relation to exploration and exploitation of mineral, oil or gas will be comprehensively brought under the Service Tax net. He has further submitted that the judgment of the Hon'ble Gujarat High Court in the case of Cadilla Healthcare Ltd. (supra) referred to by the learned advocate is on a different set of facts; hence not applicable to the present case. 4.2. Rebutting the argument of the appellant that they had received only 64% of the Iron Ore extracted as a percentage of their share and no value has been received for raising of the mineral, hence the shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viz. Iron Ore and the transportation of the mined and extracted minerals and selling of the same. An agreement was entered on 26.03.2010 between six partners of M/s. Sree Gavisiddeshwara Minerals and M/s. BMM Ispat Ltd. whereby the appellant was entrusted with the responsibility and work of extracting the available ore, operating the mine and exercising of the powers and rights of the lessee under the said Mining Lease by employing its own finances and funds. It is further agreed that by way of consideration for the services agreed to be rendered to the partnership firm, the appellant was entitled to appropriate and retain for itself 64% of the extracted / mined ore and the balance 36% of the extracted ore to be handed over to the other six partners at the percentage to each of them specified under Clause 4 of the said agreement. The Revenue alleged that the 64% of the extracted ore received by the appellant even though the appellant is a partner in the partnership firm M/s. Sree Gavisiddeshwara Minerals, service tax is required to be discharged on the value of the quantity of ore received when sold by the appellant in the market being the consideration towards rendering of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividing its profits in certain proportions. The privilege of profit sharing imposes on each partner the obligation to advance the interests of the partnership business, to apply his time and attention to the management of its affairs, and to devote his knowledge. skill and ability to the success of the enterprise. 23.3 In the above context, the High Court has observed as under : The principle propounded above has received statutory recognition in India for Section 13 of the Partnership Act makes it quite clear that if the contract so provides, a partner may receive compensation for taking part in the conduct of the partnership business. Indeed a stipulation that an active partner shall receive a fixed salary is by no means uncommon in partnership agreements. When a partnership agreement recites that one of the partners will receive a salary for the services rendered by him to the partnership business the contract is regarded as a contract of partnership and is not designated as a contract of service. An agreement to share both profits and losses in addition to a salary points to the existence of a partnership and an agreement to share profits only in addition to a salary indi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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