2015 (7) TMI 312 - AT - Service Tax

Waiver of pre deposit - Scientific and Technical Consultancy Service - Held that - The foreign entities provide the test results to the appellant and this cannot be considered as prima facie covered by the definition of the service provider and further the activity undertaken also cannot be considered as consultancy or advice. Therefore, the appellant has made a prima facie for complete waiver in respect of this demand. Whether the appellants have provided technical testing or analysis service to Ranbaxi - Held that - Since the issue involved is complicated, it required details to be considered. While appellant is required to be put to terms, it is not necessary to require them to deposit the entire amount - Partial stay granted.

Summary

Issues involved:
1. Demand of service tax under Scientific and Technical Consultancy Service
2. Demand of service tax under Technical Testing and Analysis Service
3. Demand for service tax under Business Support Service

Analysis:

1. Demand of service tax under Scientific and Technical Consultancy Service:
The issue revolves around the interpretation of Scientific and Technical Consultancy Service under Section 65(105)(za) and Section 65(92) of the Finance Act, 1994. The appellant argued that the service provided did not meet the essential criteria for taxation as it did not involve advice or consultancy by qualified scientific or technical entities. Reference was made to a Tribunal decision in a similar case. The Tribunal analyzed the definition of scientific and technical consultancy, emphasizing the need for expert advice or assistance in scientific or technical aspects. Ultimately, it was concluded that the foreign entities providing test results to the appellant did not fall under the definition of service providers, and the activity did not constitute consultancy or advice, leading to a prima facie case for waiver of the demand.

2. Demand of service tax under Technical Testing and Analysis Service:
The second issue pertains to whether the appellant provided technical testing or analysis service to another party. The argument focused on the nature of the activities undertaken by the appellant, as outlined in the agreements. The Commissioner considered the activities related to the development and testing of products, including formulation, process development, and validation, among others. It was observed that the appellant's activities aligned with technical testing and analysis service, especially in creating exhibit batches for specific drugs, which were proprietary to the other party. The conclusion was that the appellant's actions constituted technical testing and analysis, supporting the Revenue's stance.

3. Demand for service tax under Business Support Service:
The judgment briefly mentions a small amount involved in Business Support Service, indicating that detailed discussion was not deemed necessary at that stage. The issue was not elaborated upon due to the complexity of the main issues discussed regarding Scientific and Technical Consultancy Service and Technical Testing and Analysis Service.

In the final directive, the Tribunal ordered the appellant to deposit a specified amount related to Technical Analysis Service within a given timeline, emphasizing compliance without waiting for the formal order receipt. The requirement for pre-deposit of the remaining dues was waived, and a stay was granted during the appeal's pendency, subject to the payment of the specified amount in accordance with the order.