TMI Blog2018 (12) TMI 1187X X X X Extracts X X X X X X X X Extracts X X X X ..... - A/12866/2018 - Dated:- 20-12-2018 - Mr. Ramesh Nair, Member (Judicial) And Mr. Raju, Member (Technical) For the appellant: Shri P.G. Mehta (Advocate) For the respondent: Shri Gobind Jha, Supdt (AR) ORDER Per: Ramesh Nair The brief facts of the case are that the appellant developed microbial strain for the manufacture of lovastatin. The technical know-how for the same was transferred to M/s Lupin Ltd. for the manufacture of active Pharmaceuticals Ingredients. The case of the department is that this transaction is of providing services of scientific or technical consultancy services. Accordingly, demand was confirmed. 2. Shri P.G. Mehta, Ld. Counsel appearing on behalf of the appellant submits that the transaction as per the facts of the present case is one time transfer of technical know-how along with supply of microbial strain for the manufacture of final product namely lovastatin by M/s Lupin Ltd. He submits that since it is a transfer of technical know-how it cannot be classified under scientific or technical consultancy services. The sale of technical know how does not attract Service Tax. He placed reliance on the following judgments: 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s activity LUPIN will deduct 5% of the total sum up to 6.0 gm/lit. CONCORD will return the complete amount to LUPIN. d) In case the titre is more than 8.0 gm/lit, LUPIN will pay additional for every 0.5 gm/lit in excess of ____ gm/lit achieved during the shake flask trials. e) LUPIN will bear the complete cost for the travelling lodging and boarding for the two CONCORD scientists during the demonstration of the technology. f) The CONCORD scientists will be available for reasonable amount of verbal consultation without additional cost of scale up to pilot plant. However, if the CONCORD representative presence is required at Tarapur for this purpose the fees for that will be negotiated separately. On plain reading of the above agreement it is clear that the agreement is for supply of microbial strain and technology thereof and for Demonstration on laboratory (shake flask) scale for the fermentation process to manufacture lovastatin by M/s Lupin Ltd. As per the terms of payment also, it is a one-time payment for supply of strain and technical know-how. In this case it is clear that the agreement between the appellant and Lupin Ltd is for supply of technical k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical documentations. The appellants do not have any right on the technical information sold to M/s. Ranbaxy Ltd. It is not the case that they received any commission for the services rendered in the form of consultation fee. This is a case of transfer of technology without holding any rights and receipt of valuable sale consideration. In such a circumstance, the view taken by this Bench in the rulings rendered by this Bench and other Benches, as cited by the Counsel and noted supra, would apply to the facts of the case. The judgment of BSNL is clearly distinguishable, as the issue therein pertains to levy of Sales Tax in respect of goods which were sold. It is not the situation in the present case. Therefore, we do not find any merit in the impugned order. The impugned order is not legal and proper in the light of the citations noted. Hence, the impugned order is set aside and the appeal is allowed with consequential relief, if any. In the case of Ambalal Sarabhai Enterprises Ltd. (supra), this Tribunal passed following order: Fact: M/s. Ambalal Sarabhai Enterprises Ltd. (ASE in short) entered into an agreement dated 19 October 1999 with Sarabhai Piramal Pharmace ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the supplementary agreement of September, 99 was an effort to reduce expenses involved in the manufacture and as rightly pointed out by the respondents had nothing to do with the sale of technical know-how. The task force was to be set up jointly by the concerned parties, and it cannot be said that the task force which was set up jointly amounted to rendering technical advice and formed part of the sale of the technical know-how. There is no relationship of service provider, and the receiver between the parties to the transaction in the implementation of supplementary agreement. As regards the second agreement, the staff which was employed for the purpose of marketing, accounting management etc. were transferred and we are not able to appreciate how these amounted to rendering the technical advice or assistance. If the contention of the Revenue is accepted, mere transfer of staff in one company to another, would amount to rendering the consulting engineering services. Further, the question also arises as to what the respondents should have done with the staff who are engaged in marketing and other activities, which were no longer required to be undertaken by them, consequent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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