9911796707
TMI Blog2013 (9) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... the activity of the assesse would be taxable only when the service had been provided to a customer in India and it would be treated as an export of service under Export of Services Rules, 2005, if it had been received by the person abroad and had been used by that person in relation to his business and payment for the same had been received in convertible foreign exchange. The service of developing the process of synthesis of drug molecules provided by the assesse had to be treated as having been provided to their overseas they cannot be treated as sub-contracts and on that basis having provided the taxable service - Since the service of scientific and technical consultancy covered by Section 65(105)(za) was service in relation to busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of the molecule and its therapeutic value Biological properties is communicated to the offshore clients. The appellant in course of developing the process for chemical synthesis of drug molecules, manufacture drug on laboratory scale which according to them is sent either directly or through M/s. Jubilant Biosys Ltd. to the offshore clients. Further, some quantity of the drug manufactured on laboratory scale is supplied to M/s. Jubilant Biosys Ltd., Bangalore for research regarding its therapeutic value/biological properties. According to the appellant the payment for the services rendered by them i.e. the payment for the services of synthesis of the molecules, from offshore clients is received through M/s. Jubilant Biosys Ltd. The appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above order of the Commissioner, this appeal has been filed along with stay application. 2. Heard both sides in respect of stay application. 3. Shri Devendra Sharma, Consultant, ld. Counsel for the appellant, pleaded that the service tax demand is in respect of the services regarding research on chemical synthesis of the drug molecules provided by the appellant to their overseas clients viz. M/s. Eli Lilly and Co., USA in terms of a tripartite agreement between the appellant, their sister concern Jubilant Ltd., Bangalore with the foreign clients, that as is clear from the agreement-, the agreement of M/s. Eli Lilly Co., USA was with M/s. Jubilant Biosys Ltd. as well as M/s. Chemsys Ltd. (appellant), which are collectively mentioned as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r research and development in respect of drug molecules, that while the appellant were to develop the process of synthesis of the drug molecules, M/s. Jubilant Biosys Ltd. were to conduct research on its biological properties, that for the purpose of receipt of payment for the services, it is only M/s. Jubilant Biosys Ltd., who were to receive total payment and the payment for the services performed by the appellant was being received by them from M/s. Jubliant Biosys Ltd., that just because the payment was being received through M/s. Jubilant Biosys Ltd., it cannot be inferred that the appellant had provided the services to M/s. Jubilant Biosys Ltd. and not to their offshore clients, that the appellant cannot be treated as a sub-contractor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so to Section 73(1) of the Finance Act, 1994 was correctly invoked and penalty under Section 78 ibid has been correctly imposed and, therefore, this is not the case for waiver from the requirement of pre-deposit. 5. We have considered the submissions from both the sides and perused the records. The undisputed facts are that while the appellant company along with M/s. Jubilant Biosys Ltd., Bangalore are subsidiaries of Jubilant Life Sciences Ltd., both the units are 100% EOUs. While the appellant unit conducts research on the synthesis of the drug molecules, the information about which had been supplied to them and manufactures the drug on laboratory scale, the other unit M/s. Jubilant Biosys Ltd., Bangalore, who gets some quantity of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant Chemsys Ltd., and Jubilant Organosys Ltd., JUBILANT ). RECITALS WHEREAS Lilly is engaged in the discovery, development, manufacturing and marketing of pharmaceutical products; and WHEREAS, JUBILANT is engaged in the business of providing biology and chemoinformatics and related services; and WHEREAS, Lilly proposes to retain JUBILANT to provide services to Lilly from time to time for the purpose of assisting Lilly in researching and developing pharmaceutical products. NOW, THEREFORE, it is agreed as follows : . Thus, in terms of this agreement, the service was to be provided jointly to M/s. Eli Lilly and Company, USA by the appellant, Jubilant Chemsys Ltd. along with Jubilant Biosys Ltd., Bangalore and Jubilant Org ..... X X X X Extracts X X X X X X X X Extracts X X X X
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