TaxTMI 
TaxTMI 
2023 (5) TMI 300
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....involved in the orders-in-original and Order-in-Appeal S. No. Order-in-Original No. & Date Appeal No. & Date Period of refund Amount of Refund sanctioned by original authority Amount of Refund Rejected by original authority Amount of Refund Rejected by Commr. (Appeals) (1) (2) (3) (4) (5) (6) (7) 1 Refund/EVM/35/20 15 dt. 21.4.2015 ST/87557/ 2016 July, 2012 - Sept.2012 25,61,312 29,141 25,61,312 2 Refund/EVM/36/20 15 dt. 21.4.2015 ST/87561/ 2016 Oct. 2012 - Dec.2012 40,29,208 9,959 40,29,208 3 Refund/EVM/37/20 15 dt. 21.4.2015 ST/87558/ 2016 Jan.2013 - March, 2013 42,56,100 27,406 42,56,100 4 Refund/EVM/38/20 15 dt. 21.4.2015 ST/87559/ 2016 April,2013 - June, 2013 58,11,376 19,813 58,11,376 5 Refund/EVM/39/20 15 dt. 21.4.2015 ST/87560/ 2016 Jan.2013 - March, 2013 30,96,123 98,318 30,96,123 The said Commissioner (Appeals) as the First Appellate authority had rejected all the above five orders-in-original passed by the Assistant Commissioner, by allowing all the five appeals filed by the department and disposing them off by concluding that the services provided by the appellants to M/s W....
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....2015 seeking the explanation of the appellant on how they have fulfilled the conditions set out at Rule 6A(1)(f) of Service Tax Rules, 1994. 3.3. After going through the case records, written and oral submissions made by the appellants, Original adjudicating authority found that the appellants had fulfilled all the conditions specified in Rule 5 of the CENVAT Credit Rules, 2004, as well as Rule 6A(1)(f) of Service Tax Rules, 1994 and on that basis sanctioned the refund for the amounts as indicated in column (5) of Table-1 and rejecting certain amount of claims which are related to certain ineligible input services for the reasons recorded therein for the total amount as indicated in column (6) of said Table-1. Subsequently, in exercise of the powers conferred under Section 84 of the Finance Act, 1994, the Commissioner of Service Tax-V had found that these orders passed by the Original adjudicating authority were not correct, proper and legal on certain grounds and thus filed appeals before the Commissioner (Appeals) on such grounds. After providing personal hearing to the appellants and on going through the product development agreement dated 02.02.2008 and 10.08.2012 entered into....
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....) on behalf of the foreign service recipient (vi) services provided by the appellants do not result in creation of IPR to the foreign service recipient (vii) without prejudice to the above, even if IPR is created, the same is created outside India and therefore the basis of confirmation of the demand is not proper (viii) without prejudice to the above, services cannot be treated as provided within India on the ground that the IPR have been created in India as actual place of performance of service is not relevant in the instant case (ix) findings of the Commissioner (Appeals) that appellants are working on behalf of the foreign service recipient is incorrect. On the basis of above submissions, the appellant contended that the services provided by them are export of services and therefore service tax is not applicable, and they are eligible for refund of CENVAT credit in respect of inputs and inputs services used in providing the output services which are ultimately exported. 4.1. Shri Vinod Awtani, learned Chartered Accountant appearing for the appellants submits that the rejection of refund claims filed under Rule 5 of the CENVAT Credit Rules, 2004, on the ground that the service....
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....the order in original, and therefore the impugned order is legally not sustainable. In support of the above, the Appellant relied on the following judgements: (i) Carrier Aircon Ltd 2005 (184) ELT 113 (SC) (ii) Commercial Body Builders 2002 (147) ELT 1236 (Tri. - Delhi) (iii) A.P. Industrial components 2002 (148) ELT and 246 (Tri. - Chennai) 4.3. The learned Chartered Accountant for the appellants submits that the appellants are engaged in research and development of genetic drug for the Foreign Service recipient. The appellants undertakes the activities to research the original drugs, develops a generic drug, study and analysis at each stage of manufacture, its shelf life, administer the dosage of the drug to document the reaction in comparison to original drug, documents the findings for filing the necessary documents to the FDA of respective country. The appellant hands over the said research work to the foreign service recipient and charges them for the said work by raising the debit note. The Foreign Service recipients become the owners of the said research work, and files the Abbreviated New Drug Application (ANDA) before the respective FDA authorities in abroad. The a....
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....opment of direct synthesis and then scale up/manufacture of sample drugs by doing stability study of drugs, bio equivalent study. On completion of the study of new or modified product patent was to be filed by the respondent on behalf of their contractor to regulatory authority in USA for abbreviated new drug application (ANDA) approval. Therefore, the respondent had carried out the R&D activity on behalf of the contractor who had permanent establishment located outside India......The contention of appellant department is that the output services provided by the respondent will fall under Rule 8 of Place of Provision of Services Rules, 2012. I find that as the said rule is applicable in place of provision of services where the location of the provider of service as well as that of the recipient of service is in the taxable territory, and the services provided are provided outside the taxable territory is not the case here. Therefore I do not agree with the appellant Department claim that the respondent had created the intellectual property right in India and that both the respondent and contactor were located in India therefore Rule 8 of Place of Provision of Services Rules, 2012 i....
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....or more persons. It is thus necessary that the arrangement requires a minimum of three parties, two of them transacting in the supply of goods or services or securities (main supply) and one arranging or facilitating the said main supply. Therefore, an activity between only two parties cannot be considered as an intermediary service. An intermediary essentially arranges or facilitates the main supply between two or more persons and does not provide the main supply himself. The intermediary does not include the person who supplies such goods or services or both on his own account. Therefore, there is no doubt that in cases wherein the person supplies the main supply either fully or partly, on principal to principal basis, the said supply cannot come within the ambit of "intermediary". Sub-contracting for a service is also not an intermediary service. The supplier of main service may decide to outsource the supply of main service, either fully or partly, to one or more sub-contractors. Such sub-contractor provides the main supply, either fully or a part thereof and does not merely arrange or facilitate the main supply between the principal supplier and his customers and therefore cle....
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....bid. The Original authority has concluded that the bar under clause (f) of Rule 6(A)(1) of Service Tax Rules, 1994 would not apply in this case, as output services provided by the appellant to Watson Laboratories Inc., USA and Arrow No.7 Limited, Malta, UK are located outside India and is covered under 'export of services' as per Rule 6A ibid. The Commissioner (Appeals) had also concluded that the appellants and foreign service recipients are independent legal entities, and not merely establishments of a distinct person, and consequently the bar under clause (f) of Rule 6A(1) would not apply in this case. Hence, we find that there is no basis for rejecting the refund claims by the Commissioner (Appeals) on this ground. 11. Further, we find that on perusal of the Abbreviated New Drug Applications (ANDA) made before the office of the Generic Drugs, FDA by M/s Watson Laboratories, Inc. USA, the service recipient, upon payment of prescribed fees by them and indicating the drug/product manufactured and tested by M/s Watson Pharma Private Limited, the appellants, it is clear that the Intellectual Property Rights (IPR) will accrue only to the foreign service recipients. Hence, we agree w....