Joint Venture means a business agreement between 2 or more parties
who retain their individual opportunity
CBEC has issued a circular clarifiying service tax implications on joint ventures (As per Circular No. 179/5/2014 ST dated 24.09.2014 of CBEC)
Questions Addressed in Circular
Suppose A and B combines to form joint venture AB
Suppose this Joint venture AB provides services to A for consideration? Whether such services liable for Servce Tax?
View answer
Yes,because both Join Venture and members of joint venture are treated as distinct persons and it is a service provided by one person to another, for consideration
Suppose A makes payment to joint venture AB as 'Cash call' (Capital Contribution)? Whether it is taxable?
View answer
No
If cash calls are merely a transaction in money, they are excluded from the definition of service
However, we have to examine the joint venture agreement to determine whether a ‘cash call’ is ‘merely a transaction in money’ or in the nature of consideration for taxable service,