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TMI Blog2024 (6) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... cited above are absolutely identical, therefore, the ratio of the above decision is applicable in the present case. The demand of service tax in the present case is not sustainable - the impugned order is set aside - Appeal allowed. - HON'BLE MEMBER ( JUDICIAL ) , MR. RAMESH NAIR And HON'BLE MEMBER ( TECHNICAL ) , MR. C L MAHAR Shri Jigar Shah Ms. Raksha Bhandari , Advocate for the Appellant Shri Rajesh Nathan , Assistant Commissioner ( AR ) for the Respondent ORDER RAMESH NAIR The issue involved in the present appeal is that whether the service tax is leviable on the product registration fee paid by the appellants to the foreign regulatory authorities for sale of product by them to foreign markets. 1.2 The brief facts of the case are that the appellant M/s. Zydus Life Science Ltd ( Formerly known as Cadila Healthcare Ltd) are engaged in the manufacture of pharmaceuticals products for the purpose of domestic sales as well as for exports and are having their manufacturing units in the state of Gujarat. Additionally the appellants are also engaged in the business of research and development and marketing of various branded and generic pharmaceuticals products. For the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining necessary approvals for the sale of products exported by the appellant in the markets of France. In accordance with the terms of agreements, the MAs of the products are registered in the name of appellants and the appropriate fees is paid by the Zydus France SAS to ANSM. For the cost incurred by Zydus France SAS, the Zydus France SAS is later reimbursed by the appellants on actual basis. 1.4 In other countries like Canada, Dubai and some European Countries the appellants directly make payments of such product registration fees to the relevant regulatory authority in the said countries for obtaining approval therefrom. The registration were made under the name of the distribution companies and not in the name of the appellant. Accordingly during the Financial Year 2014- 2015 the appellant made payments amounting to Rs. 20,69,48,010/- in the foreign currencies for payment of product registration fees to foreign government of the countries of export viz. USA, France, Dubai, Europe, Canada, Tanzania, Uganda, Sudan, Ethiopia etc. 1.5 A show cause notice dated 11.10.2019 came to be issued to the appellants vide which the department propose to recover service tax amounting to Rs.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ahlcon Parentals India Ltd - 2017 (3) GSTL 195 (T) M/s. IPCA Laboratories 2019 (21) GSTL 502 (T) 2.2 He further submits that the service tax was demanded on the fees paid to the regulatory authorities of foreign government. The foreign government do not fall under the definition person under Section 65 B (37) and therefore the amount reimbursed to them by the appellant is not liable to service tax under Section 66 B of the Finance Act, 1994. He submits that though the person included government but under Section 65 B (26A), the meaning of definition does not cover foreign government. For this reason also the fees paid to the foreign government regulatory authority is not liable to service tax. 2.3 Without prejudice to the above, he further submits that if at all the activity is considered as service , the service was provided outside India which is out of taxable territory, therefore, the same is not chargeable to service tax. He further submits that the service recipient is not located in India in terms of Rule 3 of Place of Provision of Service Rules, 2012 and therefore the amount paid as product registration fees is not liable to service tax under Section 68 (2) of the Finance A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant s record on 24.03.2015, it was found that the appellant had shown in its balance sheet that it paid an amount of Rs. 2,96,77,707/- to the United States Food Drugs Administration as fees to obtain approval to export its products. It appeared to the audit that the amount so paid falls under the category of Technical Inspection and Certification Agency Service under section 65 (105) (zzi) of the Finance Act [Act], 1994 and the service recipient was liable to pay service tax on such charges under reverse charge mechanism in view of section 66C of the Act. Accordingly, a show cause notice [SCN] dated 08.07.2015 was issued to the appellant demanding the service tax of Rs. 4,55,734/- from the appellant under the proviso to section 73 (1) of the Act along with interest under section 75. Penalty was proposed to be imposed upon the appellant under section 78. 3. The appellant resisted the proposals in the SCN, which were, however, confirmed by the Assistant Commissioner in his order-in-original dated 09.08.2016 and, on appeal, have been upheld by the Commissioner (Appeals) in the impugned order except to the extent of reduction of penalty. 4. Learned counsel submitted that the dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 89/7/2006-ST dated 18.12.2006. 7. We have gone through the records of the case and considered the submissions made by both sides. 8. The short question to be answered is if the payments made by the appellant to USFDA as fees for obtaining approval are exigible to service tax under reverse charge mechanism at the hands of the appellant. On identical matter in the case of Vidhi Dyestuff Mfg. Ltd. versus Raigad, a bench of this Tribunal held as follows :- 4. On consideration of the submissions made by both the sides we find that the issue is no more res integra as the facts are not disputed. The facts in the case are that the appellant had sought certification of their products by Food and Drug Administration, USA for the products manufactured by them. The Food and Drug Administration of USA certifies the quality of the products which enables the appellant to sell the products in USA, where it is statutorily required that the such products needs to be certified by US FDA. It is the case of the appellant that the certification is nothing but a statutory requirement and the amounts paid by them to US FDA are nothing but fees. 5. With regard to the contentions raised by them learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny particular individual for any consideration. Therefore, such an activity performed by a sovereign/public authority under the provisions of law does not constitute provision of taxable service to a person and, therefore, no service tax is leviable on such activities. 3. However, if such authority performs a service, which is not in the nature of statutory activity and the same is undertaken for a consideration not in the nature of statutory fee/levy, then in such cases, service tax would be leviable, if the activity undertaken falls within the ambit of a taxable service. 4. Trade and field formations may be advised accordingly . 10. As is evident from paragraph 3 of the Circular even according to the Board, if an authority performs a service, which is in the nature of statutory activity and a fees is levied for the purpose it does not fall within the ambit of a taxable service, but if a service is performed by the authority, which is not in the nature of statutory activity it will be exigible to service tax. There cannot be any two opinions that USFDA is a statutory authority mandated by the US laws to regulate the import of pharmaceuticals into the country. It is the counterpart ..... X X X X Extracts X X X X X X X X Extracts X X X X
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