This circular provides clarification on the GST treatment of services supplied by members of a Joint Venture (JV) to the JV, by the JV to its members, and inter se between JV members, with particular focus on the taxability of “cash calls”.

It clarifies that under GST, an unincorporated joint venture and its members are treated as distinct persons. Accordingly, supplies of goods or services between the JV and its members, or among members themselves, are liable to GST if made for consideration in the course or furtherance of business. The principles governing taxability of such transactions under GST remain the same as those followed under the erstwhile service tax regime.

The circular reiterates that the taxability of cash calls depends entirely on the terms of the joint venture agreement and the nature of the transaction. Where cash calls are merely capital contributions pooled to meet project expenditure, such as purchase of machinery for the JV, they represent transactions in money and do not attract GST. However, where an operating member uses its own resources or machinery to perform activities for the JV and recovers the cost from other members through cash calls, such recovery constitutes consideration for supply of services and is liable to GST.

Overall, the circular emphasises the need for careful examination of JV agreements and factual arrangements to determine GST liability on transactions involving joint ventures.