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2015 (5) TMI 668 - AT - Service TaxScientific and technical consultancy services - Reverse charge mechanism - nature of intellectual property services (IPR) rendered by foreign firms - Held that:- The terms of the relevant agreements indicate that these agreements were intended primarily to cover the following transactions, viz., transfer of brand names/trade marks to Cadila against payment of ₹ 70 crores, transfer of know-how for manufacture of bulk drug against payment of ₹ 20 crores and transfer of technical know-how to make tablets (formulations) against payment of ₹ 5 crores. None of these transactions can be conceptually reduced to mere advice, consultancy or scientific/technical assistance. - This rules out the applicability of Andhra Petrochemicals. Moreover, the appellant-company cannot be said to be a science or technology institution or organization. Even medical colleges, hospitals or diagnostic/pathological laboratories have not been recognized by the department as science or technology institutions or organizations vide M.F. (D.R.) Letter dated 9-7-2001 ibid. In the show-cause notice itself, the appellant-company was held out to be manufacturer of excisable goods only. It was not even alleged that it was a science or technology institution or organization. Even assuming that M/s. Kopran Research Laboratories Ltd. are a science or technology organization wholly owned by the appellant-company and that their R&D activities are financially supported by the appellant-company, we are not inclined to deem the latter to be a science or technology institution or organization. The two companies are distinct legal entities and, therefore, the functional character of one cannot be claimed by, nor infused into, the other. Revenue has not alleged and established that the appellant-company provided advice, consultancy or scientific or technical assistance to Cadila in any specific discipline of science or technology. In the result, the argument of the counsel that the service rendered by the appellant-company to Cadila under the relevant agreements cannot constitute "scientific or technical consultancy" as defined under Section 65 of the Finance Act, 1994 merits acceptance. - Further, in yet another case R.M. Dhariwal (HUF) vs. CCE Pune III - [2014 (1) TMI 409 - CESTAT MUMBAI] has laid down the same ratio that transfer of trade name and formulae transferred for a consideration cannot be services which would fall under "Scientific or Technical Consultancy Service". - Decided against Revenue.
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