9911796707
TMI Blog2025 (4) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... and Development Centre of M/s. Fosroc International Ltd., UK (FIL) and is developing the formulations to suit the Indian market and all the expenditure of 'Fosroc Technology Center' (FTC) is met by M/s. Fosroc International, Ltd; Fosroc Technology Center (FTC) basically gives suggestions and make improvement to existing products, perform technical testing and other procedures, undertakes projects agreed from time to time with M/s. Fosroc International, UK and localizes the products dealt by M/s. Fosroc India to suit the Indian requirement. 'Fosroc Technology Center' is functioning under the guidance and support of M/s. Fosroc, India Pvt., Ltd., for all its activities, the expenditure is met by M/s. Fosroc India Pvt., Ltd, and is adjusted by way of Debit Notes issued to M/s. Fosroc International Ltd., UK (FIL). Therefore, the expenditure incurred by M/s. Fosroc International Ltd., in respect of 'Fosroc Technology Center' is a charge paid towards transfer of technology. Alleging that the appellant and the Research and Development Center (FTC) are separate legal entities and the expenditure incurred by the appellant in respect of FTC is a charge paid towards t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t research and development for its own products to cater to domestic needs and also provides certain services to M/s. Fosroc International Limited; Fosroc Technology Centre has been recognized as an in-house R&D unit by Department of Scientific and Industrial Research in the Ministry of Science and Technology; Fosroc Technology Centre is treated as a separate cost centre in the books of accounts of the appellant and the accounts of 'Fosroc Technology Centre' are merged with the accounts of the appellant and the consolidated transactions are reflected in the accounts of the appellant; cost centre only implies that all the income and expenses relating to 'Fosroc Technology Centre' is separately recorded for internal analysis; this does not imply that the 'Fosroc Technology Centre' is a separate unit; separate financial statements are not prepared for 'Fosroc Technology Centre' as such; all the employees of 'Fosroc Technology Centre' are employees of the appellant, i.e., M/s. Fosroc, India Pvt., Ltd., only; the salary, contribution to PF and other benefits to employees working in 'Fosroc Technology Centre' is paid by the appellant only; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R&D activities for their own unit then how can FIL have ownership over IPR. Further, the assessee i.e., Fosroc India would be debited only that portion of the expenditure of FTC, which is based on their budgeted revenue over the total budgeted revenue of the Fosroc group and the remaining cost would be borne by FIL". Regarding the above finding, Learned Chartered Accountant (CA) submits that the above finding is factually incorrect and there is no evidence to substantiate the above finding. 'Fosroc Technology Centre' is an in-house R&D unit of the appellant as approved by Ministry of Science and Technology, Government of India, Department of Scientific and Industrial Research and the certificate is validated from time to time. Fact being so, there is no reasonable justification to allege that the in-house scientific and industrial research unit functioning as separate division of the appellant is having separate legal entity. The Learned Chartered Accountant (CA) also draws attention to the MOU executed by the appellant with overseas entity, where it is categorically stated that "whereas, India has set up a technology centre known as 'Fosroc Technology Centre' (FTC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation, travel etc. The lower authority in the SCN has demanded that appellant have not complied with the provisions of Notification 36/2004-ST dated 31/12/04 read with Section 66A of the Finance Act 1994, & these payments being made were not reflected in the ST-3 returns & hence the appellant are liable to pay Service Tax on these amounts under reverse charge. I find that FTC is a R&D unit of Fosroc India & is recognized by Department of Scientific & Industrial Research Technology, New Delhi. Hence, the amount mentioned by lower authority in the impugned order will not attract Service Tax, as there are no services rendered under reverse charge. The observations by lower authority are incorrect. Appeals are allowed." 8. Further, Learned Chartered Accountant (CA) submits that since the department has not filed an appeal challenging the said order it is presumed that department has accepted the same, fact being so the demand confirmed by the adjudication authority for the period covered by the present appeals are also unsustainable. 9. Learned Chartered Accountant (CA) also draws attention to the certificate produced by the appellant from the Chartered Accountant (CA), after verif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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