TMI Blog2011 (4) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... ntific or technical consultancy to its clients Regarding cum-tax benefit - it is argued that prior to 18-4-2006 when sub-section (2) of section 67 was enacted, there was no provision for exclusion of service tax in computing the taxable value in cases where the gross amount charged was inclusive of service tax payable - Held that: - issue is settled in favor of assessee in CCE&C v. Advantage Media Consultant [2008 (3) TMI 59 - CESTAT KOLKATA] - as upheld by Apex Court - Decided in the favour of the assessee by way of remand - ST/21 & 48/2009 - 292 & 293/2011 - Dated:- 18-4-2011 - M.V. RAVINDRAN, P. KARTHIKEYAN, JJ. Moheb Alim for the Appellant. D.P. Nagendra Kumar for the Respondent. ORDER P. Karthikeyan, Technical Member. Application No. ST/ROA/58/2010 - This miscellaneous application is filed by the revenue for restoration of appeal No. ST/48/2009, which was dismissed by the Tribunal for want of clearance from the Committee on Disputes (COD). Revenue has since obtained and produced the clearance from the COD to pursue the appeal before this Tribunal. In view of the above, we allow the miscellaneous application and take up the appeal for disposa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative conclusion that NGRI undertook sponsored projects for various departments of Government, public sector and private sector units and provided technical advice to them. 3.2 As per the show-cause notice, NGRI undertook several R D projects classifiable under sponsored projects, collaborative projects, grant-in-aid projects and composite projects. Sponsored projects culminated in generation of intellectual property. Sponsored projects undertaken by NGRI prima facie involved scientific and technical consultancy. The show-cause notice lists outs the following sponsored projects carried out by the assessee as constituting 'scientific or technical consultancy':- (a) M/s. National Centre for Antarctic Ocean Research, Head Land Sadan, Vascoda-Gama, Goa (NCAOR) entered into a MOU with NGRI and entrusted the assessee with tasks related to post processing, interpretation and documentation on the seismic reflection, refraction, gravity and magnetic data acquired during the surveys in the Bay of Bengal and Western Andaman regions. This was part of marine geophysical data acquisition programme carried out by NGRI as a partner of multi- institutional Indian Legal Continent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ater issues. The research report would be owned by the consortium members including EPTRI. (g) M/s. Water Power Consultancy Services (India) Ltd. engaged NGRI for conducting geothermal studies and magneto telluric studies. (h) NGRI conducted specialized field studies and submitted report to M/s. National Power Thermal Corporation as per the order placed by the client. (i) M/s. Atomic Minerals Directorate for Exploration and Research (AMD) placed work order on NGRI following which the assessee carried out heliborne surveys over parts of Vindhyan basin along Aron-Narwar-Nathi tract, Shivpuri and Gwalior Districts and collected EM, magnetic and Gamma ray spectrometric data for AMD. The assessee processed and interpreted the data collected during the surveys and prepared a technical report along with maps. The data collected was utilized in uranium exploration programme of AMD. (j) M/s. Gas Transportation Infrastructure Ltd. entrusted NGRI with filed and desktop seismic study regarding the types of faults or lineaments that cross the following routes of the pipelines: (i) Kakinada to Hyderabad and Hyderabad to Uran (ii) Mumbai to Ahmedabad and Karjat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal consultancy. 3.6 CBEC had clarified the scope of the entry Scientific or Technical Consultancy services vide Circular No. B.II/1/2000-TRU, dated 9-7-2001. It was also clarified that research institutions like CSIR are also covered under the levy in respect of taxable services rendered by them. It was proposed that service tax was recoverable on the amounts collected by the assessee from its clients as consideration for the services rendered. 3.7 Vide the impugned order, the Commissioner rendered the following finding:- 17. I find from the nature of services provided to different clients as narrated in preceding para that NGRI is conducting surface survey, gathering information, geological, geophysical and geochemical services. But the moot point is that NGRI is providing something more in the nature of consultancy. How do we understand consultancy? The answer would lie in determining whether NGRI is giving expert opinion/advice or not. I find from the nature of services provided that in almost all cases after doing survey and map making NGRI is also giving expert opinion and advice suitable to the nature of the work entrusted. NGRI's contention is that they have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the above clarification. As this service was brought under the tax net with effect from 16-6-2005, the demand raised for the period prior to 16-6-2005 was not sustainable. The Commissioner had invoked larger period for the reason that the assessee had not filed returns and had invoked section 73(1)(a) as it existed before 10-9-2004. As the show-cause notice was issued on 7-11-2006, the demand confirmed applying the erstwhile section 73(i)(a) was not sustainable. The assessee was under the bona fide belief that it had not carried out any activity exigible to service tax under the Act. Therefore, no returns were filed. The assessee was a Central Public Sector Unit and did not benefit from evading tax. It could have paid tax and passed on the same to its clients. Therefore, the assessee had no motive to evade service tax. Larger period of limitation was wrongly invoked by Commissioner. The demand and penalties were not sustainable also on this ground. 5. The ld. Jt. CDR took us through the various contracts/work orders summarized and listed in the show-cause notice and submitted that NGRI did not just gather data and also had interpreted the same for putting the said intellect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h formations by different methods such as seismographic, gravimetric, magneto-metric methods or other sub-surface surveying methods. It covers surface surveying, services of gathering information on the shape, position or boundaries of a portion of earth's surface by methods such as transit, photogrammetric, or hydrographic, for the purpose of preparing maps. 7. We find that in order to constitute scientific or technical consultancy, NGRI should have rendered advice to its clients on the basis of data collected by it. From the records, we find that the assessee gathered data such as the profile of sub-surface earth and the scientific interpretation useful to the assessee. Records do not show if the assessee also gave any expert opinion based on the data gathered by it. The Commissioner has entered a finding in the impugned order that from the nature of service provided, he concluded that assessee gave expert opinion useful for its clients. He rejected the contention of NGRI that they had only interpreted the data and did not engage in any consultancy. The Commissioner thought that this argument was incorrect. We are not in a position to decide if the Commissioner's above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as inclusive of service tax due to be paid by the ultimate customer of the services unless service tax is also paid by the customer separately. So considered, when no tax is collected separately, the gross amount has to be adopted to quantify the tax liability treating it as value of taxable service plus service tax payable. We find that this principle has been legislated in the following terms with effect from 18-4-2006 in Section 67(2) of the Finance Act, 1994 as amended : 67(2). Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as with the addition of tax payable, is equal to the gross amount charged. 4. This principle has all along been relevant and had to be applied. ..... .... 10. After hearing both sides, we find that the dispute stands settled in favour of the assessee by the above decision of the Tribunal maintained by the Apex Court. The impugned order is set aside and the dispute remanded for fresh adjudication. If the assessee is found liable to pay service tax as proposed in the show-cause notice, the tax due sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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