TaxTMI 
TaxTMI 
2018 (4) TMI 1399
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.... 2,01,56,148/- 41,46,372/- (Section 76) 2,43,02,520/- Total 4,73,71,800/- 2,38,93,871/- 7,12,65,671/- Service Tax Paid for normal period of limitation 1,51,57,422/- Nil 1,51,57,422/- Appeal Filed 3,22,14,378/- 2,38,93,871/- 5,61,08,249/- 2. The brief facts of the case are that M/s Jubilant Chemsys Ltd. are registered with the Service Tax Department for providing services namely Online Information & Data Retrieval Service', Business Auxiliary Service, Scientific & Technical Consultancy Service and Transportation of Goods by Road. They are engaged in the research and development of drug chemicals and export thereof under the hundred percent EOU scheme. The appellant have been granted permission for carrying out manufacturing operations in a bonded warehouse under the Customs Act and also registered under the Central Excise Act as a manufacturer. The present appeal by the assessee have been filed against the order passed by the Commissioner, Customs, Central Excise & Service Tax, Noida, demanding service tax under Section 73 to the Finance Act, 1994 and also imposin....
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.... 7 to the accounts forming part of the balance-sheet, it is mentioned: Quantitative Details: the company is primarily engaged in the medicinal chemistry business, the sale and production of such services cannot be expressed in any generic unit, hence it is not possible to give the quantitative details of sales and certain information as required under paragraph 3, 4C and 4B of part II of schedule VI to the Companies Act. From the above it appeared that the compounds generated during the process of R&D undertaken by the assessee are secondary or only ancillary to the principal activity of the said medicinal chemistry services. The copy of approval/renewal letter issued by Department of Scientific and Industrial Research in the Ministry of Science & Technology, Government of India, states that the appellant company is registered as R&D Centre and is involved in research and development. Further, in their application for setting up EOU submitted to the SEZ, the assessee have not declared any item or capacity for production. Further, in the column VI of the said form, the quantity of production is not shown as the same is not required in case of a service unit. These facts are also evi....
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.... "Final Report(s)") including the following information: (I) end of Compound preparation report, including outlines of the Compounds) syntheses and analytical procedures. (2) synthesis completion dates and lot numbers and (3) a copy of all analytical data of compounds(s) obtained by Company hereunder. ........ ............ 8. Ownership and Licenses: All information received from Jubilant Biosys or obtained as a result of Company's performance hereunder, including but not limited to, core structure, batch records, Results, data, reports, Final Reports, laboratory work sheets. methods, Compound information, process information, improvements and the like shall be the sole property of .Jubilant Biosys....... Until the expiration of Company's obligations of confidentiality and non-use under paragraph 9 thereof, Company covenants to promptly disclose to Jubilant Biosys all discoveries inventions, improvements, innovations and the like made by the Company hereunder or otherwise..... 5. From the above clauses of the agreement, it appeared that the appellant is engaged in carrying out Research & Development Services in relation to the chemical processes. It further appea....
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....rch and development for drug (medicine) discovery and drug development including genomics, proteomics, chemistry, biology, bio-technology, biosciences, bio informatics, structural biology, medicinal, chemistry, etc.., including contract research services related to drug discovery, such as process and/or product development. Further, Para-6 titled 'records' in the Master Agreement, read with Para-8 of the said agreement, titled 'ownership and licenses'; all records of the synthesis/manufacturing of the compounds in the shape of lab notebook, have to be delivered to Biosys on periodic basis. As per Para-8 of the Master Agreement, all the rights, ownership and licenses in respect of the activities undertaken in the appellant premises will be with Biosys Ltd., only. Further on going through the contents of ARE-! dated 26th April, 2007 and 27th January, 2006, wherein certain goods namely Non Haz Lab Chemicals, in powder form and lab chemicals were exported to Austin Chemicals, USA and on being asked to explain the quantity and price of the goods as mentioned in the said ARE-1 and as to whether the price was realized, it was stated that, I have gone through the ARE-1 date....
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....y related services. The taxable services as per the said definition would cover consultation, which could be in the nature of an expert opinion/advice in regard to scientific or technical feasibility or any other scientific or technical aspect of a project process design recommending an apt technology, suggestion for improvement in existing technology process, etc. The appellant has been providing services with regard to improvement of chemical processes by conducting synthesis of various chemicals. The consultancy/advice is being given in the form of records/reports being prepared by the appellant as a result of the synthesis carried out by them and the results achieved become property of the customer that is JBL. Thus, it appears that the services provided by the appellant to JBL are covered under the said service under Section 65(92) of the Finance Act, 1994. 8. The audit objection dated 9th April, 2010, communicated to the appellant, directed the appellant to deposit the proposed amount on the grounds: (i) That the master agreement dated 26th June, 2005 and the work orders issued in accordance with the said master agreement are for manufacture and supply of compounds and ....
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.... of Section 65 of the Finance Act, 1994. Therefore, the appellant is liable to pay service tax on the amount charged by them from JBL. So far the invocation of extended period of limitation is concerned it is observed in the SCN that tax is leviable on the amount billed during the period 2007-8 to 2009-10 for the services rendered and the payment received. Therefore, on the basis of information available in the trial balance of the Unit for the period in question, a total tax of Rs. 122.79/- lakhs was demanded. Further, it appeared that the appellant have suppressed these facts from the Department. Although they were registered under the said category of 'Scientific or Technical Consultancy' services, but did not discharge their liability of service tax on the said taxable service. The said transactions with regard to value of taxable service and the service tax payable thereon was never mentioned in the ST-3 returns filed by appellant. These facts came to notice of the Department when audit of their account was conducted in January, 2010. It is further mentioned in the SCN that scrutiny of ST-3 returns shows that there has all along been an attempt by the appellant to conc....
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....ded and Service Tax Payable in Lakh Based on Audited Accounts and Auditor's Certificate Customer Apr 07 To Mar 08 Apr 08 To Mar 09 Apr 09 To Mar 10 Total Eli Lily 153.84 489.45 448.23 1091. (19.01) (60.49) (46.17) 52 (125. 67) Endo 22.59 (2.33) 22.59 (2.33) Orion 71.91 (7.41) 71.91 (7.41) Merck 19.40 (2.0) 19.40 (2.0) Amgen 15.61 (1.93) 66.28 (6.83) 81.89 (8.76) Sub-Total 153.84 (19.01) 505.06 (62.42) 628.41 (68.86) 1327. 31 (146. 17) Forest 14.50 (1.79) 206.15 (21.23) 220.65 (23.02) AstraZene ca 209.73 (21.60) 209.73 (21.60) Sub-Total 14.50 (1.79) 415.88 (42.83) 429.78 (44.62) Grand Total 153.84 (19.01) 519.56 (64.21) 1044.29 (111.69) 1717.69 (194.91) Value of Services Provided and Service Tax Payable in Lakh Based on Audited Accounts a....
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....and balance sheet and notes to the accounts) of the Appellant; (b) The SCN admits that the value of services has been recorded in the six monthly returns and claimed as export of services and exempt from payment of services tax; (c) The SCN admits that the Appellant is claiming refund of the accumulated CENVAT credit under Rule 5 of the CENVAT Rules; (d) The Appellant has claimed refund of the accumulated CENVAT credit for each of the quarter during the period from July, 2007 to September, 2009 and most of the orders including the order for the period January, 2008 to March, 2008 record the following facts: (i) The Appellant has provided services to overseas clients which are covered by Rule 3 of Export of Service Rules, 2005; (ii) The Jurisdictional Range Officer has verified and checked proof of export in respect of output services and verified the receipt of payment in convertible foreign exchange in respect of exports effected by the Appellant. (iii) That no sale has been effected by the Appellant in Domestic Tariff Area. The Learned Counsel further submits that four of the refund claims for the period are for amounts in excess of Rs. 5 lakhs and accordingly h....
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....ahabad- HC) 16. As regards order on payment of interest on the amount of service tax paid by the Appellant for the normal period of limitation on five agreements, the Learned Counsel submitted that the issue is covered by the Tribunal in the case of Oil and Natural Gas Corporation Limited Vs CCE Surat-2015 (38) S.T.R. 867 (Tri-Ahem). The Learned Counsel prays that in view of the submissions made the Appeal may be allowed. 17. Mr. P. K. Singh Learned A.R. for the Department submits that the issue involved in the present Appeal is substantially the same as has been decided in Final Order No. ST/A/70562-70564/2017-CU(DB) dated 02/05/2017. However, he relies upon the impugned order including the applicability of proviso to Section 73(1) of the Finance Act, 1994, imposition of penalty under Section 76 and demand of interest on the duty paid by the Appellant. 18. Having considered the rival contentions, we find that the issue on merits is covered by the Final Order No. ST/A/70562-70564/2017-CU(DB) dated 02/05/2017. The Commissioner in the impugned order has held that under all the agreements the services have been ultimately exported by Jubilant Biosys Limited. The Commissioner ....
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....012 JBL, has not made any payment to appellant JCL for any research work carried out on account of JBL for which any [PR, if any, have been generated and have become property of JBL. We also take notice of the fact that all the research work done by the appellant JCL forms part of the property of the client located outside India. Thus, we hold that the appellant have satisfied both the conditions for export of service, namely, rending of service from India and receipt of the service by the client outside India and receipt of consideration in convertible foreign currency in India. Accordingly, we allow appeals by the appellant - assessee (No. ST/546/2012 & ST/5175/2014) with consequent benefits and set aside the impugned order." 20. As regards applicability of proviso to Section 73(1) of the Finance Act, 1994, we find that the fact of disclosure of the value of disputed services in the ST-3 returns is admitted in the Show Cause Notice. Further, SCN also records that the Appellant during the relevant period was claiming refund of the accumulated CENVAT credit. The refund orders passed by the Assistant/Deputy Commissioner record the fact that entire export turnover and receipt of t....