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TMI Blog2024 (8) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... he foreign companies. The appellant utilised the services related to patent applications which are as follows: (i) securing copies of pertinent reference found in search; (ii) study and analysis of pertinent references; (iii) providing written report covering the following matters; (a) Field of Search, (b) Pertinent Prior Art, (c) Legal Requirements for patentability, (d) discussion of references found its search and e) firm's recommendation; (iv) compiling all disclosure documents necessary to evaluate the invention; (v) analyzing the disclosure materials in light of the relevant disclosures of the prior art, (vi) drafting the field of invention, background of the invention (with Prior Art Discussion), general summary discussion of the invention, brief description of the drawings and abstract section of the patent application; (vii) compiling all disclosure documents necessary to evaluate the invention; (viii) analyzing the disclosure materials in Tight of the relevant disclosures; (ix) analyzing the differences between the invention and the prior art in light of the patent laws; (x) drafting a set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalties under Section 76, 77 and 78 after confirming the demand of service tax along with interest. Aggrieved by the above order the appellant is in appeal before us. 4. The Learned Counsel submits that the impugned Order has confirmed Service Tax based on the finding that the Appellant had made payment of 'patent charges' and 'professional charges' to various professional law firms for availment of consultancy regarding filing of patent application. It is submitted that the patent fees and professional charges paid to various professional law firms are for availment of consultancy with regard to filing of patent application. The professional law firms provide the following services to Biocon for obtaining the patents: * Compiling all disclosure documents necessary to evaluate the invention; * Analyzing the disclosure materials in light of the relevant disclosures; * Analyzing the differences between the invention and the prior art in light of the patent laws; * Drafting a set of independent and dependent claims, claiming the invention in view of the disclosure materials; * Directing as necessary the draftsman as to the proper illustration of the preferred embodiments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the services rendered by them to the Appellant gets covered under the ambit of Legal consultancy services which was brought under the taxable net only with effect from September 1, 2009 and hence no service tax would be applicable for the period May 2006 to August 2009. Further, the Appellant have already discharged service tax on such services post September 1, 2009. 4.2 The learned counsel further submits that the legal consultancy services received by the Appellant from various foreign companies for filing of patent application would not be liable to service tax under "Business Support Services" as these services are not merely for administrative management as held by the Commissioner in the impugned order, but for rendering consultancy in the field of law. It is also stated that the scope of administrative and operative management was included in the ambit of Business Support Services only with effect from May 1, 2011 and thus there would be no service tax applicable for the disputed period even if the contention of the Learned Authority is accepted. 4.3 It is submitted that patent applications are technolegal documents that contain scientific/technical disclosures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ental Consultants and Technocrats Pvt. Ltd.2018 (10) G.S.T.L. 401 (S.C.). 4.7 The Learned Counsel submits that it was under the bonafide belief that there was no service tax liability in the instant transaction and even if the service tax was paid, the same would be available as CENVAT credit and hence the entire demand would be revenue neutral. Further, there was no intention on part of the Appellant to evade payment of taxes. 4.8 The Appellant submits that the Learned Authority ought not to have confirmed the levy of service tax having regard to the law of limitation. In the absence of any wilful misstatement/ suppression, fraud or collusion on the part of the Appellant, invocation of extended period of limitation and confirmation of levy of tax on the basis thereof is incorrect and hence, the disputed demand is barred by limitation. The Adjudicating Authorities also have not proved any conduct of the Appellant that would show mala fide intentions to evade payment of tax. Further it has been held in M/s. Anand Nishikawa Co. Ltd. v. Commissioner of Central Excise, Meerut 2005-TIOL-118-SC-CX that "It is settled law that mere failure to declare does not amount to wilful suppressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services are all related to patent applications and for this service, the appellant has paid 'patent fees' and 'professional charges' for receiving the services from the foreign companies. The Commissioner has confirmed the demands under 'Business Support Services' as defined in Section 65(104C) read with Clause (zzzq) of Section 65(105) of the Finance Act, 1994. The definition of 'Business Support Service' with effect from 1.5.2006 as per Section 65(104c) reads as: "support services of business or commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation. - For the purpose of this clause, the expression "infrastructural support services" includes providing office along with office utilities, lounge, reception wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that all the services that have been received by the appellant are related to patent applications and this is done to ensure maximum protection of their research and development wing and to adhere to global intellectual property standards is not in dispute. Therefore, the amended definition of BSS which is not applicable to the period of dispute cannot be made applicable retrospectively. 7.2 The CBEC clarification vide letter No. 334/4/2006TRU, dated 28-2-2006 in respect of "Business Support Services" reads as follows: - "3.13 Business Support Services: Business entities outsource a number of services for use in business or commerce. These services include transaction processing, routine administration or accountancy, customer relationship management and tele-marketing. There are also business entities which provide infrastructural support such as providing instant offices along with secretarial assistance known as "Business Centre Services". It is proposed to tax all such outsourced services. If these services are provided on behalf of a person, they are already taxed under Business Auxiliary Service. Definition of support services of business or commerce gives indicative list ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int that the impugned services clearly fall under the ambit of legal services. 8. The next issue relates to Service Tax liability in terms of Notification No.36/2004-ST dated 31.12.2004 issued under Section 68(2) of the Finance Act, 1994, read with Rule 2(l)(d)(iv) of the Service Tax Rules, 1994 and in terms of Section 66A of the Finance Act, 1994. Since based on our discussions above we hold that the appellant is not liable to service tax during the disputed period under BSS, whether they are liable to pay Service Tax under reverse charge mechanism or not is only academic as there is no denial of the fact that they are liable for payment of Service Tax under Reverse charge mechanism. 9. The third issue relates to invocation of extended period of demand and penalties for contraventions of various Sections of Finance Act, 1994. The appellant herein has been rendering various services such as 'Scientific or Technical Consultancy' Service, Technical Testing and Analysis' Service, 'Renting of Immovable Property' Service, 'Business Auxiliary Service' etc; on which service tax is discharged regularly. Appellant has also been filing ST-3 Returns regularly and there is nothin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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