TMI Blog2016 (4) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of goods or services, which are inputs for the client as 'business auxiliary service'. The claim of appellant that this has reference to a third party is not acceptable as, in the present instance, the client is M/s Doctors' Organic Chemicals Ltd. Hence, the taxability of amounts charged form the client is not in doubt. Therefore, the impugned order is upheld only to the extent of ₹ 9,19,094/- for rendering 'business auxiliary service' with interest thereon. The demand of tax for rendering 'scientific or technical consultancy service' does not survive. Penalties are set aside - Appeal disposed of - Appeal No. ST/311/2012 - Final Order No. A/86620/2016-WZB/STB - Dated:- 23-9-2015 - M. V. Ravindran, Member (J) And C J Mathew, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5(92) of Finance Act, 1994 and that the agreement that has been cited to sustain the demand is for transfer of technical knowhow. It is also claimed that, in relation to services rendered to M/s Doctors' Organic Chemical Ltd which merged with the appellant in accordance with the rehabilitation scheme under the Sick Industrial Companies (Special Provisions) Act,1985, the tax liability after 1 st April 2007 cannot arise as it would be tantamount to taxing service rendered to itself. 5. Learned Counsel for appellant placed reliance on the definitions of the two services to claim exclusion and cited the decisions of the Tribunal in Commissioner of Central Excise, Nasik v Hindustan Aeronautics Ltd. - 2015-TIOL-895-CESTAT-MUM, Universal Ph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find that the demand under 'scientific and technical service' is not sustainable hence set aside.' 9. Following the finding of the Tribnal in re Just Textiles Ltd and Modi-Mundipharma Pvt Ltd. v. Commissioner of Central Excise Meerut = 2009-TIOL-968-CESTAT-DEL, it was held in re Universal Pharmacy that the appellant, being a commercial enterprise, is not a scientific or technical organisation or institution. In disposing off the appeal in re Hindsutan Aeronautics Ltd, the Tribunal placed reliance on the decision in re Kopran Ltd [2011 (23) STR 627 (Tri-Mum)] to hold that 7.4 The 2 nd part of the definition indicates that advice, consultancy or scientific or technical assistance has to be rendered by any science or tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in not assigning due importance to section 65(92) of Finance Act, 1994. 12. One of the imperatives of taxation of services was the increasing resort to outsourcing as a business strategy to derive advantages of competencies and organizational slimming. Implicit in the tax is the exercise of option to have the activity rendered by another entity instead of effecting it internally. 13. We are, here, not concerned with the incidence borne by the ultimate consumer but the utilization of service-providers by manufacturers for achieving optimality. The technical manifestation of scientific research is most visible as capital goods and production processes. It is not improbable that, in the early stages of industry, the entire gamut of act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t within the ambit of section 65(92) of Finance Act, 1994. 16. The appellant has been procuring material for M/s. Doctors' Organic Chemicals Ltd under an agreement and the period for which that activity was undertaken predates the incorporating within the structure of the appellant. Section 65(19) of Finance Act, 1994 incorporates procurement of goods or services, which are inputs for the client as 'business auxiliary service'. The claim of appellant that this has reference to a third party is not acceptable as, in the present instance, the client is M/s Doctors' Organic Chemicals Ltd. Hence, the taxability of amounts charged form the client is not in doubt. 17. In view of the above, the impugned order is upheld only t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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