Revenue Sharing Agreement Service Tax

Can the applicant benefit from the tax exemption for activities relating to the value of the E3 cost centre, i.e. the examination and commissioning, the integrated examination and commissioning, the train tests to be carried out for L-T under that contract? Cestat stated that if a joint venture provided a service to the company against a given consideration, it would attract a service tax. if. B for example, a building owned by an co-manager was leased for a payment given to the joint venture, it was a taxable service. On the other hand, if the same building was made available to the joint venture for a portion of the profits, it was not a service. The issuance of the aforementioned circular should therefore complicate the situation with respect to the imposition of revenue allocation agreements in general, since the Chamber has specified that the circular would apply mutatis mutandis to similar schemes in all service sectors. This 2011 circular is controversial and raises questions to which there appear to be no answers. As an illustration, the parties to a revenue allocation agreement can undoubtedly act in principle. In other words, the agreement by which the parties join for founding commercial reasons and for the distribution of the profits of economic activity can undoubtedly be legally qualified as an agreement between the contracting entities. Therefore, the simplified acceptance in the circular that such agreements should not be maintained in principle on the basis of principle is wrong. Even if this agreement provides for the entry of a joint venture without a legal personality in the form of a legal entity, it is nevertheless possible to argue that the joint venture does not provide services to any of the contracting parties to the joint venture. Therefore, the simplified assumption that, in such circumstances, it is automatically assumed that a service is provided, is incorrect. Indeed, one wonders what appropriate taxable service the joint venture is supposed to provide to the contracting parties.

To be exact, it can be argued that, in reality, business support and support services are not provided by the joint venture. Moreover, it can be argued that, in such a case, the joint venture is in its same way a capital which is an independent entity, which, according to the logic of the circular and its activities, is not a service to the contracting parties, but is exercised in its same way by the joint venture. This is precisely the conclusion reached by the 2009 circular to justify that the definition of business support service would not apply to planned revenue-sharing agreements. If the sharing of income (not interest) is taxable by Gst or considered a monetary transaction or whether it is a non-gst activity. Revenue allocation was the subject of the February 23, 2009 CBEC 109/3/2009-ST circular, which dealt with these agreements in film distribution. In the circular, the CBEC informed its officials that when a theatre owner received a film from a distributor and predicted it, the two parties sharing the proceeds of the screening, this did not bring a service tax, since the parties did not provide a service: cbec.gov.in/htdocs-servicetax/st-circulars/st-circulars-2009/st-circ-109-2k9 The circular also visualizes the agreements between the distributor and the owner of the theatre in principle: and specifies that the tax on services also applies to such agreements, either as a service provided by the lender to the owner of the theatre, for the temporary transfer of copyright to the owner of the theatre, and states that the service tax also applies to such agreements. , either as a service provided by the lender to the owner of the theatre, for the temporary transfer of copyright to the theatre owner, and states that the service tax also applies to such agreements, or as a service that: