TMI Blog2024 (4) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... ing permitting PGSSP students to attend regular degree courses, are held exempted. Whether research funding was taxable? - HELD THAT:- The focus on nexus between the funds and activity funded is not conclusive to establish that a service was provided. As regards the finding of shared IP, it is noted that the appellant s contention, supported by annexures in its appeals that, though IP was shared as per agreements, in fact it was placed in the public domain by publication by the appellant s scholars, remains unrefuted by Revenue - a single factor is not determinative of service . Considering the facts and circumstances in which the appellant carries out its research activity, and the objectives thereof, it is found that the appellant s objectives and focus are on its academic activity which is carried out through conventional classroom teaching as well as through participation of students in the research projects that form part of academic engagement in this institution. These facts have not been disputed by Revenue - service in terms of section 65B(44) of the Finance Act 1994 was not provided by the appellant to its funders for research projects - the demands of service tax made un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax (this issue is common in both the appeals). 5. In the impugned orders in regard to such consultancy projects it has been held that the legal issue involved is whether services provided by the appellant, in connection with the amounts/fund/grants received from various organisations to carry out research work has any obligation or reciprocity towards the organisations. The claim of the appellant is that no service is rendered by them to the organisations which are giving amounts/funds to them. On going through the terms and conditions of various projects the obligations/reciprocity of the appellant emerge as follows: 5.1 In majority of the cases grants/amounts are for executing a particular project or to undertake a specific research activity. The example of project with Hitachi India Private Ltd., (HIL for short)have been dealt in the impugned order, were in condition at serial No. 3 of the agreement provides subject to the provisions of clause 3.3, the parties acknowledge that the project will be funded and sponsored by HIL. Each party shall be responsible for its own taxes, including all and any goods and service tax payable under this agreement; the party shall provide t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch Board) the overhead expenses are intended to take care of IIIT expenses for providing infra facilities and general administrative support. There is also a condition that not more than Rs.1.5 lakhs should be spent for travel and contingency. Utilisation certificate was required to be produced in almost all cases. It have also been held that in the facts of the instant case undisputedly there are 2 persons who are independent entities namely the funder/grantor and the appellant. The claim of the appellant that there are no 2 persons involved in the activity between the appellant and funder/grantor is erroneous. And thus they fit in the definition of activity by one person for another. Further there is consideration which is in the form of money/grant sanctioned by the funder. 8. Heard the parties and perused the voluminus records with assistance of Learned Counsel for the appellant and the Learned AR for Revenue including the project agreements placed before us and read at length. Heard both the parties at length. 9. As regards taxability of the fees collected from students in the PGSSP, we note that the impugned order in appeal no. ST/30082/2020 has dropped the demand, holding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, mostly governmental, for funding of research projects. The funds are released for specific projects. This is funding for the appellant and not for work done by the appellant for the funder. The appellant further submitted that students are assigned to the project and are awarded credit points towards their evaluation. In the order impugned in appeal no. ST/30082/2020, the finding in the two instances discussed, viz. Hitachi India Private Limited and UURMI Systems, is that Intellectual Property Rights (IPR) was jointly held with the sponsors, and IIIT does not have exclusive rights over the subject of the research and the result of the project (para 38.5 of the order). The appellant argued that this cannot be a basis for holding that the work was a service to the funder. Taking the example of the findings in the impugned order regarding Hitachi, the learned consultant pointed to clauses in the agreement that specifically provided for student participation in the project, both at the appellant s campus as well as at the funder s site. She submitted that projects were a means to provide researchbased education to the students as per the unique methodology of education offered by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CESTAT had set aside penalty under Section 78 observing that the appellant was a governmental organisation run by bureaucrats and scientists, none of whom have any personal interest in evading service tax. In fact, by evading service tax nothing would be gained either by anyone individually or by their organisation. The consultant submitted that the same applied to the appellant herein, which is governed by a body of bureaucrats, scientists and academicians. 14. Considering the rival contentions, we have given our close consideration to the arguments made before us on the research funding. The Revenue has, in its submissions dated 05.02.2024, correctly identified the issue as follows: The crucial aspect which needs to be determined as to whether the given activity of IIIT-H would be a service within the meaning assigned to it under Section 65B(44) of the Finance Act 1994. In terms of the said section service is an activity by one person for another for a consideration. In pursuance of this definition, the Revenue has urged that there are two persons, there is consideration in the form of funds; and there is nexus of the funds to the activity performed. It has argued that the condi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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