Delayed payment of R&D Cess does not by itself defeat service tax exemption and refund on technology import.

Notification No. 18/2002-ST linked exemption from service tax on import of technology to payment of Research and Development Cess under section 3 of the Research and Development Cess Act, 1986. Where the statutory cess was in fact paid and the cess-administering authority had not objected to the mode or timing of payment, delayed payment of the cess did not, by itself, defeat entitlement to the exemption. On that basis, the corresponding refund claim was admissible.

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Issues: Whether refund of service tax was admissible where the assessee had paid Research and Development Cess, though after payment of consideration for import of technology, so as to claim exemption under Notification No. 18/2002-ST dated 16-12-2002.

Analysis: The exemption under Notification No. 18/2002-ST linked the service tax liability to the cess paid on transfer of technology under Section 3 of the Research and Development Cess Act, 1986. The essential fact was that the cess had been paid, and there was no indication that the authority administering the cess had objected to the mode or timing of payment. The delayed payment of cess was treated as insufficient to deny the benefit of the exemption once the statutory cess had in fact been paid.

Conclusion: The assessee was entitled to the exemption and the corresponding refund claim was admissible.

Ratio Decidendi: Where the statutory cess contemplated by the exemption notification has been paid, mere delay in payment of that cess does not by itself defeat entitlement to the exemption and refund.

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