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TMI Blog2019 (2) TMI 1567X X X X Extracts X X X X X X X X Extracts X X X X ..... m to cross pollination to developing varieties and testing them in agro climatic zones continuously for a period of 7 to 9 years to ascertain their performance in Indian conditions. The activity undertaken by the overseas client is accepting those reports and filing for necessary patents. He also provides guidance to the appellant on conducting the research. Under these circumstances, it is found that the appellant is only rendering scientific and technical consultancy services - there is also no force in the argument of the appellant that they are not a scientific or technical research institution or an organisation. The service is complete only when the reports are also sent to their client as per the agreement in Germany. Until the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them from time to time if there are any pest infestations, diseases etc. These services cannot be termed as scientific or technical consultancy services - demand set aside. The appellant is not liable to pay service tax on both the services rendered by them and the demands, interest as well as the penalties are liable to be set aside - appeal allowed - decided in favor of appellant. - ST/2079/2010, ST/25939/2013, ST/28551/2013, ST/20174/2015 - A/30262-30265/2019 - Dated:- 26-2-2019 - Mr. M.V. Ravindran, Member (Judicial) And Mr. P. Venkata Subba Rao, Member (Technical) Shri Prasad Paranjapa, Advocate for the Appellant Shri B. Guna Ranjan, Superintendent/AR for the Respondent. ORDER Per: P.V. Subba Rao. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing such technical guidance under the head scientific and technical consultancy service . In the impugned orders the demands were confirmed along with interest and penalties were imposed which are subject matter of these appeals. 2. Before we proceed further it would be profitable to discuss, in brief, the process by which modern agriculture has developed. It is based on seed-water-fertilizer technology which relies on developing seeds of new varieties and hybrids which can consume more water and fertilizer and produce larger yields. The entire green revolution which has eliminated famines from the world is based primarily on this technology of which Norman Borlaug is considered the father. Of these three elements the first viz. s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different regions. After doing all this work including assessing the performance of the so developed, the entire information is turned over by the appellant to their overseas client who obtains IPR for the seed. In the second leg of the transaction, the appellant provides the foundation seed of a variety which has already been developed, to farmers and gets them multiplied with a condition that all the seeds are sold to them. In turn the appellant sells the seeds commercially for a profit. 4. In this background, the department s contention is that the service provided by the appellant to their overseas client is scientific and technical consultancy service . Learned counsel for the appellant submits that entire activity carried out by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivities undertaken by the appellant form the heart and soul of the entire plant breeding programme which results in development of new varieties such seeds are the essence of modern agriculture and green revolution. These activities start from testing germplasm to cross pollination to developing varieties and testing them in agro climatic zones continuously for a period of 7 to 9 years to ascertain their performance in Indian conditions. The activity undertaken by the overseas client is accepting those reports and filing for necessary patents. He also provides guidance to the appellant on conducting the research. Under these circumstances, we find that the appellant is only rendering scientific and technical consultancy services. We also fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to the consideration for the service. Therefore, we find in this particular case that the service by the appellant is rendered partly outside India and partly in India although the part rendered outside India is very small. In terms of Rule 3(1) of the Export of Services Rules such services should be treated as export of services. The learned adjudicating authority had held that these cannot be considered as export of service because the overseas client ultimately uses for promotion of his sales of the new varieties developed in India and the services provided by the assessee will be utilized in India. He reasoned that the services rendered by the assessee do not qualify as export of services. We do not agree with this view. The scient ..... X X X X Extracts X X X X X X X X Extracts X X X X
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