2026-VIL-137-CESTAT-DEL-ST
  1. Home
  2. 2026-VIL-137-CESTAT-DEL-ST

SERVICE TAX CESTAT Cases

Service Tax – Demand of service tax on 'cash calls' received from members of Unincorporated Joint Venture (UJV) for exploration of crude oil and natural gas - The appellant has placed bids through Joint Venture Agreements entered with different parties for exploration of crude oil and natural gas blocks. As per the Production Sharing Contract (PSC) and Joint Operating Agreement (JOA), the appellant was appointed as the 'Operator' and incurred various expenses towards exploration activities, which were claimed from the other members of the UJV through 'cash calls'. The Department issued a show cause notice to the appellant demanding service tax on these 'cash calls' on the ground that the services provided by the appellant as 'Operator' to the UJV are taxable - Whether the 'cash calls' received by the appellant from the members of the UJV are liable to service tax – HELD - The issue of leviability of service tax on 'cash calls' received by the appellant from the members of the UJV is no longer res integra and has been decided in favor of the appellant in various decisions - The activities undertaken by a partnership/co-venturers for the mutual benefit of the partnership/joint venture cannot be regarded as a service rendered by one person to another for consideration and, therefore, cannot be taxed. The Tribunal in the case of B.G. Exploration & Production India Ltd. it was held that in a joint venture arrangement, whatever a partner does for the furtherance of the business, he does so for advancing his own interest as he has a stake in the venture, and there is no contractor-contractee or principal-agent relationship between the co-venturer and the joint venture, which is a pre-requisite for a service to be liable to tax under the Finance Act - The exploration and development costs incurred by the appellant are nothing but investments in anticipation of future production from the oil field, which is contingent upon the successful discovery of oil and/or gas deposits. Therefore, the 'cash calls' received by the appellant from the members of the UJV cannot be subjected to service tax - The 'cash calls' received by the appellant from the members of the UJV are not liable to service tax. The impugned order is set aside and the appeal is allowed
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Weekly Tax Recap

By Kasi Viswanathan V

Weekly Summary

VIL Video

GST Jan '26 Burning issues:
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?