Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Home Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles News Highlights
Extracts
Home List
← Previous Next →

CCE, Nashik, Hindustan Aeronautics Ltd Versus Hindustan Aeronautics Ltd, CCE, Nashik

2015 (5) TMI 668 - CESTAT MUMBAI

Scientific 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-h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

stitutions 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vice 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e while Appeal No. ST/135/2009 is filed by revenue. 2. The relevant facts that arise for consideration are on the basis of information that Hindustan Aeronautics Ltd. (hereinafter referred to as HAL) had received taxable service from M/s. Rosobornexport of Russia, foreign-based firm who were not having any office in India and hence were liable to pay service tax under reverse charge mechanism as a service recipient. Further enquiry was conducted and it was noticed that during the period October .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssistance from an individual. Appellant assessee contested at the show cause notice on merits as also on the limitation. The adjudicating authority granted an opportunity of personal hearing which was availed. Before the adjudicating authority issued an order, there was a change in the authority. The revenue authorities issued addendum to show cause notice dated 13th October 2008. Appellant contested the said addendum. The adjudicating authority after considering the submissions made during the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

h sides and perused the records. 4. Learner Chartered Accountant appearing on behalf of the appellant assessee takes us through the entire case records. It is his submission that addendum issued by the revenue is incorrect inasmuch as that the said addendum was issued after considering the written submissions made by the appellant assessee. It is his submission that revenue is trying to improve upon that case after considering the defence raised by the assessee. On merits, it is his submission t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ific or technical consultancy services. Learned Counsel would submit that there is no basis to hold that it would fall under the definition of the services "scientific and technical consultancy service" as provided under Section 65 (60) of the finance act 1994. He would submit that said definition would be applicable only in the case of consultation, advice or technical assistance provided by the scientist or a technocrat or science or technology institution. It is his submission that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

technical consultancy services. 5. Learned departmental representative on the other hand, would rely upon the very same agreement. It is his submission that by virtue of the said agreement technical assistance was provided by the foreign-based company to the appellant-assessee for manufacturing of fighter aircraft. It is his submission that the scope of the agreement is very clear inasmuch as that the agreement provides for visit of technical personnel to the appellant's manufacturing facil .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t before the authority to come to a conclusion and hence revenue's appeal be allowed and the demands be confirmed for the entire period. 6. We have considered the submissions made at length by both sides and perused the records. 7.1 We find that the issue involved is regarding the discharge of service tax liability on the reverse charge mechanism for the services rendered by order "Rosonbornexport" in pursuance of an agreement entered for licence technical documentation for product .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ON perusal of the agreement, we find that the said agreement is for transfer of licence technical documentation for the manufacture of fighter aircraft in appellant assessee's facility. As the agreement being confidential and secret, we are not reproducing any of the articles in this order. Suffice to say that on perusal of said agreement we find that the agreement is for transfer of technology for the manufacturing of fighter aircrafts, for the purposes of which experts from the foreign co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uot;Scientific or technical consultancy" means any advice, consultancy or scientific or technical assistance rendered in any manner, either directly or indirectly, by a scientific or a technocrat or any science or technology institution or organisation, [to any person], on one or more disciplines of science or technology;" It can be seen from the above reproduced definition, in order to tax the services, it has to be any advice, consultancy or scientific or technical assistance, to be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pany as a joint-stock company, part of the Russian technologies state Corporation which is responsible for import/export of the full range of defence and Dual use end products, technologies and services. It is also noted that the said "Rosonbornexport" only has the right to supply the world market with a full range of arms and military equipments manufactured by the Russian defence industrial complex and approval; the said foreign company is one of the major operators in the world mark .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cumstances of this case. Revenue has not brought on record any evidence to contradict the submissions of the appellant assessee. In the absence of any contrary evidence we have to hold that "Rosonbornexport" is not a science or technology institution or organisation which gives any advise, consultancy or technical assistance in one or more discipline of science or technology. Our view is fortified by the judgment and order of the Tribunal in the case of Kopran Limited (supra). The rele .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

directly, by a scientist or a technocrat or any science or technology institution or organization, to a client, in one or more disciplines of science or technology." As rightly pointed out by the learned counsel, three ingredients should be established to bring a service within the ambit of "scientific or technical consultancy" and these are - (a) advice, consultancy or scientific or technical assistance should be rendered in any manner to a client; (b) it should be rendered by a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pt technology, suggestion for improvement in existing technology or process, providing consultation on any technical problem or about new technology etc." We have got to examine the facts of this case in this backdrop. 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ervice is classifiable only under one sub-clause of clause (105) of Section 65 of the Act, which is sub-clause (zzr). Each agreement covered the transfer of an intellectual property and, therefore, a combination of the agreements (which was envisaged by JCDR as "package deal") would not make any difference. This rules out the applicability of Andhra Petrochemicals (supra). Moreover, the appellant-company cannot be said to be a science or technology institution or organization. Even med .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ization 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. The submissions made in this context by the learned JCDR seemed to suggest that the doctrine of lifting of corporate veil was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ic or technical consultancy" as defined under Section 65 of the Finance Act, 1994 merits acceptance. This argument also stands fortified by the view taken in Matrix Laboratories case wherein it was held that "scientific or technical consultancy" was not involved in sale of entire technology for a consideration. 7.5 This above view of Tribunal was followed by this Bench in the case of Universal Pharmacy Final Order No. A/204-205/15 dated 23.1.2015, wherein on similar set of facts t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

atrix, we find that the judgement of the Tribunal in the case of Modi-Mundipharma Pvt. Ltd. (supra) squarely covers the issue in favour of the appellants. We re-produce the paragraph 6: "6. We have carefully considered the submissions from both sides. We also perused the agreement and the show cause notice. In the show cause notice it is alleged that the appellant was granted exclusive right to manufacture, use and sell within the territory, the preparation utilizing the know how and scient .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Forum
what is new what is new
  ↓     bird's eye view     ↓  


|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version