Cash calls and capital contributions between JV partners
In many cases, one joint venture partner makes payments to other JV partner (termed as ‘cash calls’). If such payment is towards capital contribution, it would be ‘mere transaction in money’ and not subject to service tax. However, if such payment is advance towards some service (like granting of right, reservation of production capacity or providing an option on future supplies), service tax will be applicable. Similarly, if one of Joint Venture partner is managing cash calls for which it is receiving consideration from other JV partners, service tax will apply – CBE&C circular No. 179/5/2014-ST dated 24-9-2014.
This principle should apply under GST also.