2015 (10) TMI 1303 - AT - Service Tax

Activity of supplying data of drug master file on receipt of consideration from certain customers Appellant contends that service is for exclusive use of the buyer; restricted to transfer it to any other person Further contended that definition of Scientific or Technical Consultancy Services does not cover the Appellant Revenue contests that definition of Scientific or Technical Consultancy Services talks about advice or technical assistance provided to a client and the Appellant is covered in the same. Held That - Appellant is a manufacturer and does not fit into the category of scientific or technology institution or organisation - Impugned order is unsustainable and is set aside Decision made in the case of Ruchi Infotech Ltd. 2015 (7) TMI 97 - CESTAT NEW DELHI and Steelcast Ltd. 2008 (12) TMI 92 - CESTAT AHMEDABAD followed Decided in favour of the Appellant.

Summary

Issues:
1. Whether the supply of drug master file/technical package attracts service tax liability under "Scientific or Technical Consultancy Services."

Analysis:
The appeal challenged an Order-in-Appeal passed by the Commissioner of Central Excise, Pune. The appellant, a manufacturer of bulk drugs, created a "drug master file and technical package" for the bulk drugs they produced, providing copies to purchasers. Lower authorities alleged the appellant supplied data/information from these files for consideration, categorizing it as "Scientific or Technical Consultancy Services," imposing demands and penalties. The appellant contended that the supply was exclusive to buyers, not for transfer, and argued against being classified as a scientific or technology institution. Reference was made to precedents where manufacturers were not considered under this category. The Departmental Representative supported the lower authorities' findings, emphasizing technical assistance provided indirectly through the files.

Upon reviewing submissions and records, the Tribunal analyzed whether supplying the files to buyers incurred service tax liability under "Scientific or Technical Consultancy Services." The definition under Section 65(92) of the Finance Act, 1994, required services to be rendered by scientists, technocrats, or science/technology institutions to a client in science/technology disciplines. The Tribunal found the appellant, a manufacturer, did not fit this category, citing precedents like Ruchi Infotech Ltd. and Steelcast Ltd. where similar situations were examined. The judgments highlighted that technical assistance by manufacturers did not fall under scientific or technical consultancy services, as they were not scientists or technocrats but manufacturers providing expertise related to their products.

In the case of Steelcast Ltd., services provided by a manufacturer were deemed administrative, management, or legal/professional, falling under management consultant services rather than scientific or technical consultancy. The Tribunal clarified that management consultancy could be provided by any person, unlike scientific or technical consultancy requiring scientists or technocrats. As the appellant was a manufacturer of bulk drugs and not a scientist or technocrat, the impugned order was deemed unsustainable. Consequently, the Tribunal set aside the order, allowing the appeal with any consequential relief.