Back
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
J.B. Pardiwala, Nisha M. Thakore, JJ.
Principal Commissioner, Central Tax and Service Tax - Petitioner
Versus
Cadila Healthcare Limited – Respondent
R/Tax Appeal No. 102, 103, 104, 105, 106, 110, 111, 112, 113, 114 of 2022 With Civil Application (For Stay) No. 1 of 2022
Decided On : 30-03-2022
Finance Act, 1994 – Section-83 – Central Excise Act, 1944 – Section-35G – General Clauses Act, 1897 – Section-3(42) – Partnership Act – Section 13, 32 – Since substantial questions of law formulated by this Court while admitting all captioned tax appeals are same, those were taken up for hearing analogously and are being disposed of by this common judgment and order – Held, Issue that arose for consideration was nature of salary drawn by partner. It was held by High Court that when a partnership agreement recites that one of partners will receive a salary for services rendered by him to partnership business, contract is regarded as a contract of partnership and is not designated as a contract of service – High Court observed that a partnership is an agreement between two or more persons to place their capital, labour and skill, or some or all of them for purpose of carrying on a joint business for their common benefit and dividing its profits in certain proportions – Privilege of profit sharing imposes on each partner obligation to advance interests of partnership business, to apply his time and attention to management of its affairs, and to devote his knowledge, skill and ability to success of enterprise – Disposed of.
JUDGMENT :
J.B. PARDIWALA, J.
1. Since the substantial questions of law formulated by this Court while admitting all the captioned tax appeals are the same, those were taken up for hearing analogously and are being disposed of by this common judgment and order.
2. For the sake of convenience, the Tax Appeal No.102 of 2022 is treated as the lead matter.
3. This tax appeal under Section-83 of the Finance Act, 1994 read with Section-35G of the Central Excise Act, 1944 is at the instance of the revenue and is directed against the final order No. A/11661-11675/2021 dated 27.04.2021 passed by the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad in the Service Tax Appeal No.ST/360/2012.
4. We are called upon to answer the following substantial questions of law.
[B] Whether in the facts and circumstances of the case and law, the Hon’ble Tribunal was correct and justified in holding that M/s. Cadila Healthcare Ltd. being a partner and M/s. Zydus Healthcare being a partnership firm cannot be considered as service provider and service recipient with regard to providing taxable service and receipt of remuneration thereof and whether Hon’ble CESTAT is right in holding partner and partnership firm cannot be distinguishable as distinct legal entity other than their relationship of partner & partnership firm in terms of providing taxable service and receipt of remuneration thereof?
[C] Whether in the facts and circumstances of the case and law, the Hon’ble Tribunal was correct and justified in holding that M/s. Cadila Healthcare Ltd. being a public limited company is not liable for payment of Service Tax on receipt of remuneration towards services provided to its partnership firm M/ s. Zydus Healthcare?
[D] Whether in the facts and circumstances of the case and law, the Hon’ble Tribunal was correct and justified in holding that the services provided by a partner to its partnership firm do not fall under the ambit of services as per Finance Act, 1994 and that the remuneration received from the partnership firm cannot be treated as consideration against the service provided by partner to its partnership firm since remuneration was other than sharing of profit between partners?
5. A bare perusal of the aforesaid questions of law would indicate that they are overlapping. The principal substantial question of law, involved in all the appeals is whether a Partner in the Firm can be said to be rendering services to the Partnership Firm so as to fall within the ambit of services as per the Finance Act, 1994?
6. The facts giving rise to this appeal may be summarized as under :-
6.1 The respondent formed a Partnership Firm named and styled as M/s. Zydus Healthcare.
6.2 The three partners were the respondents Cadila Healthcare Ltd., Cadila Healthcare Staff Welfare Trust and M/s. German Remedies Ltd. respectively.
6.3 The respondents’ share in the profit of the partnership firm is 96% and the balance with respect to the two other partners have 2% of share.
6.4 The said partnership deed dated 01.03.2007 was amended vide the addendum dated 01.04.2007 to the Partnership Deed.
6.5 Since the above clause is important, it is extracted as below:-
A. providing services relating to Pro
The Commissioner of Income Tax cannot revise an assessment order without demonstrating it is both erroneous and prejudicial to revenue; a firm cannot include another firm as a partner under the exist....
Dishonour of cheque – Offence by Partnership Firm – When offence has been proved against a Partnership Firm, firm per se would not be liable, but liability would inevitably extend to partners of firm....
An LLP, as a body corporate and falling within the definition of 'person', can enter into a partnership with an individual, and the differences in liability provisions between the acts do not disqual....
A “body corporate” is covered within the definition of “consulting engineer” under Section 65(31) of the Finance Act, 1994, prior to the amendment in 2005.
Mere reduction in profit-sharing ratio of existing partners upon new partner's admission into firm, without retirement, does not constitute transfer u/s 2(47); amount credited from new contribution n....
Point of law: Arbitration - Arbitral Award - Interference by Court - Scope of powers of Appellate Court under Section 37 of Arbitration Act are more limited than limited powers of the Court hearing t....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
