Case Note & Summary
The petitioner, M/s Vainguinim Valley Resort Unit of Britto Amusements Pvt Ltd, engaged in restaurant, accommodation, Internet cafe, cab operations, health club, beauty parlor, dry cleaning, and outdoor catering, was registered with the Service Tax Department and filed ST-3 returns. The petitioner entered into a joint venture agreement dated 05.04.2002 with Goa Golf Club Pvt. Ltd. (GGCPL) to provide infrastructure and ancillary facilities for GGCPL's casino business at the petitioner's premises. The parties agreed to share gross win/loss in a 55:45 ratio. The revenue scrutinized records and issued a show cause notice dated 23.04.2013 for the period 01.10.2007 to 31.03.2012, alleging that the petitioner provided 'Support Service of Business or Commerce' under Section 65 of the Finance Act, 1994. The petitioner filed replies and after personal hearing, the Commissioner vide order dated 30.12.2014 dropped the entire demand. Subsequently, the joint venture was terminated by a Deed of Cancellation effective 01.04.2013. Despite this, the respondent issued a show cause notice dated 03.02.2016 demanding service tax for the period April 2013 to March 2015. The petitioner challenged this show cause notice and the consequent order dated 27.04.2021 before the High Court, contending that the demand was illegal because no joint venture existed during the relevant period. The petitioner also relied on an appellate tribunal order in Appeal No. ST/86171/2015 dated 05.03.2019, which had accepted that there was no service provider-receiver relationship between the parties. The respondent argued that an amendment to Section 65-B of the Finance Act, 2012 justified the demand, but could not point to any reasons in the impugned order addressing the petitioner's reply. The High Court heard the arguments and noted the deficiencies in the order. The final operative direction is not included in the provided text.
Headnote
A) Service Tax - Natural Justice - Speaking Order - Section 70 of Finance Act, 1994; Section 65-B of Finance Act, 2012 - The petitioner challenged the impugned order dated 27.04.2021 as cryptic and non-speaking, alleging that the Commissioner failed to consider its reply to the show cause notice, particularly the Deed of Cancellation terminating the joint venture from 01.04.2013. The respondent's counsel was unable to point to any reasons or discussion in the impugned order addressing this reply. The court observed that the order may violate principles of natural justice as it lacks reasoning on material contentions. (Paras 6-8) B) Service Tax - Demand of Service Tax - Support Service of Business or Commerce - Section 65 of Finance Act, 1994 - The show cause notice dated 03.02.2016 demanded service tax for the period April 2013 to March 2015. The petitioner contended that the joint venture agreement dated 05.04.2002 was cancelled by Deed of Cancellation effective 01.04.2013, and therefore no service provider-recipient relationship existed during the demand period. The appellate tribunal in Appeal No. ST/86171/2015 dated 05.03.2019 had accepted this position. The court considered whether the demand was without jurisdiction. (Paras 6, 9-10) C) Service Tax - Reliance on Tribunal Order - Finality of Findings - Section 65-B of Finance Act, 2012 - The appellate tribunal's order clearly accepted that there was no service provider-receiver relationship between the parties to the joint venture agreement, and the department admitted this fact. The petitioner relied on this finding to argue that the service tax demand for April 2013 to March 2015 was illegal. The court noted this admission. (Paras 6-7)
Issue of Consideration
Whether the impugned order dated 27.04.2021 is cryptic, non-speaking, and passed without considering the petitioner's reply; whether the show cause notice dated 03.02.2016 for service tax for April 2013 to March 2015 is valid when the joint venture was cancelled effective 01.04.2013; whether the demand is barred by the appellate tribunal's earlier finding of no service provider-receiver relation.
Law Points
- Service tax demand on Support Service of Business or Commerce under Section 65 of Finance Act
- 1994
- requirement of speaking order considering reply to show cause notice
- natural justice
- effect of cancellation of joint venture on service tax liability
- binding nature of tribunal order regarding absence of service provider-receiver relationship
- amendment to Section 65-B of Finance Act
- 2012
