2016 (7) TMI 1032 - AT - Service Tax

Scientific and Technical Consultancy Charges - assistance provided to Joint Venture partner including procurement/ purchase of moulds, machineries, drawings, designs etc. - Held that - the service rendered by the respondent in this case does not fall within the purview of taxable service of Scientific and Technical Consultancy. - Demand set aside - Decided in favor of assesse.

Summary

Issues:
- Whether the charges received by the appellant for providing assistance in a joint venture are taxable under "Scientific and Technical Consultancy Charges"?

Analysis:
The appeal was filed against Order-in-Appeal No. OIA-KRS-291-292-VAPI-2008 dated 30.09.2008. The appellant, engaged in manufacturing excisable goods, entered into a joint venture agreement with another company for setting up a Plastic Unit in Assam. The appellant provided various assistance as per the agreement, for which they were paid a sum of &8377; 12,50,000. A demand notice was issued considering these charges taxable under "Scientific and Technical Consultancy Charges," leading to the confirmation of the demand and imposition of penalty upon adjudication. The appellant contended that the assistance provided did not fall under this category as they were not a Scientific or Technical organization. They relied on a Tribunal decision in a similar case to support their argument.

The Revenue, represented by the Authorized Representative, supported the findings of the Commissioner (Appeals) but could not provide any contrary judgment to the Tribunal decision referenced by the appellant. The Tribunal examined the facts and noted that the appellant, being a manufacturer of plastic articles, received charges during the joint venture project, which were considered as "Scientific and Technical services." However, based on a precedent from the Mumbai Bench of the Tribunal, it was established that the appellant, not being a science or technology institution or organization, did not fall under the taxable service of Scientific and Technical Consultancy. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief if any, as per the law.

This judgment clarifies the scope of taxable services under "Scientific and Technical Consultancy Charges" and emphasizes the necessity for the service provider to meet specific criteria to fall under this category. The decision provides a clear interpretation of the law in similar cases and ensures consistency in the application of tax regulations related to consultancy services.