Tribunal decision that activity done by each member of Joint Venture is not ‘service’ to other member :
In Mundra Port and Special Economic Zone Ltd. v. CCE (2011) 33 STT 364 = 1533 (CESTAT), assessee had constructed rail line between port and railhead under private-public sector collaboration on revenue sharing basis. It was held that this is not ‘Business Support Service’. – – In the same case, the assessee, who was licensee of Government of Gujarat for development of port had appointed sublicensee to maintain container terminal, for which the sub-licensee was paying royalty and profit sharing. It was held that this is also not business support service.
Though the decision is in respect of ‘Business Support Service’, the principle should apply to all revenue sharing arrangements.
In Nyco SA v. CST (2009) 20 STT 113 (CESTAT), a joint venture company was formed to share expertise and know-how of both the parties. Fruits of joint venture were shared by both the parties. It was held that sharing of knowledge cannot be termed as providing consulting engineering service as expertise acquired is used for own benefit along with others.
In CCE v. Sundaram Finance (2007) 9 STT 100 (CESTAT), it was observed that work done by a joint venture partner is in the nature of ‘in-house services’ rendered by him as partner of the JV company.
In Gujarat State Fertilisers v. CCE (2017) 59 GST 240 = 76357 (SC), it has been held that receipt of share in a joint venture agreement cannot be termed as provision of service.