2023 (12) TMI 479 - AT - Service Tax

Nature of transaction - service or not - payment of fees paid to USFDA for approval of their medicaments - levy of service tax or not - applicability of reverse charge basis under Section 66A or not - whether the remand ordered by the commissioner (Appeals) is correct or otherwise? HELD THAT - It is found that the activity is a service or otherwise that depends on the issue that whether the USFDA should be treated as Government in terms of Negative List under Section 65B(37). Therefore, the activity is service or otherwise is a consequential to the decision, whether the Service provider to the government or other then the Government. Therefore, the appellant cannot be agreed upon that the decision of the activity as service attained finality as per original order, which was not challenged by the department before the Commissioner (Appeals). Accordingly, there are no infirmity in the impugned order in appeal whereby the matter was remanded to the commissioner (Appeals). The appellant is at liberty to raise any of the issue in their defense before the Adjudicating authority. Therefore, the remand is not prejudicial to the interest of the appellant. The impugned order is upheld and the appeal filed by the appellant is dismissed.

Summary

Issues: Whether fees paid to USFDA for approval of medicaments can be treated as a service under Finance Act, 1994 and liable to Service Tax on reverse charge basis.

Summary:
The appeal challenged an order remanding the matter to the Adjudicating Authority to examine the issue of whether fees paid to USFDA constitute a service for Service Tax liability. The appellant argued that the fees were statutory and not for any service, thus no Service Tax was due. The revenue contended that the taxability of the activity was in question, and the remand was justified. The Tribunal found that the key issue was whether the fees constituted a service, dependent on whether USFDA should be considered a government entity under the 'Negative List'. The Tribunal disagreed with the appellant's claim that the issue was settled in the original order, as the nature of the activity as a service or not was crucial. The remand was deemed appropriate to allow the appellant to present their case before the Adjudicating Authority. Consequently, the impugned order was upheld, and the appeal was dismissed.