TaxTMI 
TaxTMI 
2009 (4) TMI 121
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the penalty payable shall not exceed the service tax payable under section 76 ibid. 2. Heard both the sides and perused the records. 3. The issue involved in the instant case is whether the applicants had provided the services of Scientific or technical consultancy" and "Market Research Agency" and whether they are liable to pay service tax. The case relates to the period 2000-01 to 2003-04. The SCN has been issued on 18-10-2006. The amount of service tax involved is Rs. 507.95 lakhs. 4. The brief facts of the case are that the applicants are the manufacturer of P or P Medicaments. In September 2001, they decided to assign and transfer the trade marks of Antelol, Atelol, Aten, Aten-AM and Aten-IF to MIs. Cadila Health Care Ltd. (in short 'CHCL') in terms of the deed of assignment dated 18-9-2001 perpetually for a consideration of Rs. 70 crores. Pursuant to the assignment of trade marks, CHCL also requested the applicants to provide them the technological know-how to manufacture the medicaments in respect of which the trade mark had been irrevocably transferred to CHCL. Accordingly, the applicants entered into two separate agreements with CHCL, one for transfer of know-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etch of imagination be considered as a scientist or technocrat or a science or technology institution or organization. In support of the same, they relied upon the Tribunal's decision in the case of Mitra Hang (India) Ltd. v. CCE [2008] 15 STT 338 (New Delhi-CESTAT) in which it was held that the manufacturer does not prima facie seem to be covered within the aforesaid categories and hence finding a strong prima facie case, the matter was remanded to the lower authority for going into this issue. (ii) All the five agreements, which the applicants had entered into with CHCL, the Department had sought to tax three of the said agreements under the head of scientific or technical assistance services, one of the agreements was sought to be taxed under the head of Market Research Agency services. Insofar as the fifth agreement was concerned, there was no proposal to levy any service tax on the same as the same was for the manufacture of medicament on behalf of CHCL. (iii) The first agreement, which the Department sought to tax under the head of scientific or technical consultancy services, was the agreement for assignment of trade mark. By this agreement, the applicants had agreed t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....v. CCE 2005 (186) ELT 161 (Trib.-Delhi). (vi) The impugned services would be taxable under the head of intellectual property right (IPR) service, which were brought under the service tax net only with effect from 10-9-2004. The services in question at best be said to be IPR service. However, the services in question, having been rendered prior 10 the levy of tax on the said services, they were not liable to service tax on the said services. Further, the transfer of know-how being perpetual, the same would strictly not be covered within the ambit of IPR services. The Tribunal in the cases of CCE v. Smithkline Beecham Consumer Health Care Ltd. 2007 (209) ELT 96 (Trib.-Chennai) and Zee Telefilms Ltd. 2006 (4) STR 349 has held that when new service head is introduced and the existing service heads are not modified, it would necessarily, mean that the said services were not taxable earlier and that tax on them was introduced only by the subsequent entry. (vii) The 4th agreement entered into with CHCL was for providing certain marketing assistance to them. The said agreement envisaged that they would render product promotion service, market development (product growth achieving service....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y unit at Navi Mumbai called Kopran Research Laboratories Ltd. He stated that a 100 per cent subsidiary is a part and parcel of the main organization. He contended that the demand is not time-barred in view of the Tribunal's Order No. A 14/09/EB/C-II, dated 20-11-2008/20-1-2009 in the case of Spie Capag SA v. CCE Mumbai-I. He relied upon the Tribunal's decision in the case of Tata Tea Ltd. v. CCE 2004 (164) ELT 315 (Trib.-Delhi) to contend that the classification has to be determined as per the entry prevailing at the relevant time and that subsequent introduction of a new item (without modifying the earlier entry) will not imply that the item was not covered under any of the pre-existing heads. He also submitted that the services rendered by the applicants under the market assistance agreement are nothing but the service under the market research agency as these are product promotion services and market development (product growth achievement services) which involve market research. He urged that the applicants should be put to terms as there is a strong prima facie ease in favour of the Department. 7. We have carefully considered the rival submissions and perused the rec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder the advice and technical assistance of the applicants. Had CHCL wanted to start manufacturing the Aten formulations on their own, they would have sought the assistance/service of a scientific or technical consultant, who would have given them the same service which the applicants have done in this ease. The Formulation Supply Agreement was a pre-condition for the other agreements relating to transfer of brand name and transfer of know-how of bulk drugs and formulations. 7.1 As per the definition of "Scientific and Technical Consultancy Service", the advice, consultancy or technical assistance should be rendered by one of the following persons/entities, each being a distinct category, viz : (i) a scientist (ii) a technocrat (iii) science or technology institution (iv) an organization It cannot be the case of the applicants that they are not an organization. Prima facie, view of the Tribunal in the case of Mita Harig (India) Ltd. (supra) observing that manufacturer does not appear to be covered within the category of "organization" and hence remanding the case to the lower authority to consider this aspect cannot be regarded as the firm and final view of the Tribunal in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t research agency as it involved the applicants to conduct market research in relation to their product Men as also for the new dosage forms and strengths of the product proposed to be introduced during the year. 10. On the question of time bar, a point has been raised that the aspect of recovery of Rs. 5 crorcs from CHCL in the year 2001-02, was in the knowledge of the Department and was subject-matter of the SCN dated 16-4-2003 demanding service tax of Rs. 46.03 lakhs under the category consulting engineers'. The said SCN was dropped vide OIO dated 28-12-2006 and hence the extended time period cannot be invoked in the present case. This contention prima facie cannot be accepted as it is now well-settled that once suppression or mis-declaration is established, the time-limit available to the Department for raising the demand is 3 years from the relevant date and the issue of an earlier SCN will not wipe out or obliterate the suppression/mis-declaration. The present SCN invoking the extended period has been issued in October, 2006 whereas the earlier SCN dated 16-4-2003 was dropped on 28-12-2006. Further, the earlier SCN was dropped not on the ground of time bar but on the gro....