Cess deductibility - service tax

[pravinchandra salian]

The invoice raised by the foreign companay is in the name of the head office and the taxable service rendered at the manufacturing unit. The payment to the service provider is made by the Head office. The service tax paid by the manufacturing unit. Is is proper. The service is under the catoegory of consulting engneers's where the foreign technical person is deputed for repair of machinery. There is no approval from the govt to depute the technician.Are we liable to pay R&D cess. If yes, can we deduct the amount of cess from the service tax payable (as transfer of technology).

[Surender Gupta]

Specific approval from the central government is not required for collaboration agreement it is in accordance with Industrial policy of Government of India. Therefore, you need to check the applicability of R&D cess on this particular activity. As per the provisions of service tax, if you pay R&D cess, the same is liable to be deducted from the service tax as exemption under notification no. 18/2008 under consulting engineering services.

[pravinchandra salian]

Thanks Mr. Dinesh Gupta Please clear the subject matter as under: 1) Whether the service tax paid by the manufacturing unit is within the purview of law. 2) There is no colloboration aggreement . It is an one time visit for repair of machine. Can it be termed as Transfer of technology. If R&D Cess paid inadvertently can refund can be claimed.

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AI Summary

R&D cess deductibility: examine nature of consulting engineering services to determine deduction from service tax liability.
The issue concerns whether R&D cess paid in respect of consulting engineering services provided by a foreign technical person deployed for machinery repair can be deducted from service tax. The facts: services billed to the foreign head office, paid by the head office, and service tax discharged by the manufacturing unit. Contributors state central government approval is unnecessary for collaboration under industrial policy and advise examining whether the activity is a one time repair or constitutes transfer of technology. If R&D cess is paid and the activity falls under consulting engineering services, the cess may be deductible from service tax under the relevant exemption notification.