TaxTMI 
TaxTMI 
2025 (9) TMI 546
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....their parent company i.e. M/s Albany Molecular Research Institute, USA (AMRI, USA). Department felt that the services being provided by the appellant to the AMRI, USA is Technical Testing and Analysis (TTA) Service under Section 65(105)(zzh) of the Finance Act 1994 and therefore, they are required to pay service tax under the category of TTA service and the said service would not be eligible as export of service in view of the facts of the case and the relevant provision of Export of Service Rules 2005 (Rules). The basis for this belief was that in respect of TTA service, it can be treated only as export of service under Export of Service Rules 2005 only if the said service is provided (a) outside India, (b) partly outside and partly in India, or (c) in respect of goods or materials located outside India though performed in India. Whereas, in the case of the appellant, the appellant provided entire service in India and only the result of analysis and testing were delivered to the AMRI, USA outside India, which was construed as their having not exported the said services outside India and therefore, the activity of TTA, performed by the appellant does not fall within the scope of th....
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....rvice cannot be extended. He has held that delivery of Test Report is not a provision of TTA service and only if any testing or analysis is done outside the country then only above service can be considered to have been performed outside India. He also observed that delivery is being made by the appellant at the port and thus the actual delivery is also not being undertaken by them to claim the benefit of export. 5. Learned Advocate for the appellant is mainly contesting that the activity undertaken by them cannot be classified as TTA service as it is apparent in terms of agreement with AMRI, USA which shows that they are interalia, engaged in Synthetic Chemical Research and Analysis, Chemistry consulting, Medicinal Chemical Synthesis, Computational Chemistry Services, manufacturing services for specialty chemical products, cGMP synthesis, analytical method development and validation and release testing etc. Therefore, essentially, in the present appeal, they are engaged in development of a compound called "lead chemicals", which can be further transformed into various forms of drugs. They are also engaged in development of "analogues". Therefore, they are essentially engaged in....
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....ts have engaged the services of courier agency such as FEDEX for shipping of goods and shipping bill filed by the appellant also bears the name of the appellant alone and since the service tax is a contract based levy, provision of service has to be seen qua the contract entered into between the parties. He relies on the judgment of Hon'ble Supreme Court in All India Federation of Tax Practitioners Vs Union of India [2007 (7) STR 625 (SC)], wherein, interalia, it has been held that service tax is a destination based consumption tax. He also relies on the Vodafone Essar Cellular Ltd., Vs CCE, Pune-III [2013 (31) STR 738 (Tri-Mum)] to substantiate that irrespective of whether the report has been delivered through courier to the AMRI, USA or otherwise, they would be the person who provided service or performed the service qua their customer i.e. AMRI, USA. The Learned Advocate is also contesting invocation of extended period primarily on the grounds that this demand is based on audit of their records and no such irregularities were noticed in the previous audits conducted by the Department and therefore there is an inordinate delay in issuing the show cause notice. Further, they have ....
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....ce, consultancy or scientific or technical assistance rendered in any manner, either directly or indirectly, by a scientist or a technocrat or any science or technology institution or organization, to any person, in one or more disciplines of science or technology". 10. Therefore, we find that the agreement with AMRI, USA is not a standalone activity for carrying out certain testing or analysis rather it is a combination of various activities which is required to develop lead chemical and analogues from various chemicals etc., first keeping in view the requirement of the client. This development itself requires not only research but also various other specialized activities under pharmaceutical science including medical, chemical synthesis, analytical method development, synthetic medical research etc. Without carrying out these activities, research and analysis etc., the lead chemicals and analogues cannot be developed by the appellant. Apparently, once these are developed, they are also subjected to certain testing and analysis in order to prepare the full report in terms of the requirements of the client and in terms of the agreement between appellant and AMRI, USA. These mat....
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....herwise, and whether the activity of delivery in USA could be considered as a service part performed by the appellant outside India. We have also gone through the case laws relied upon by the appellant. 12. We find that in the case of Gland Pharma Ltd., supra, the facts were different in as much as they were developing complete product for sale based on active ingredients supplied by their client and conducting of testing necessary for the product were to be submitted to the US, FDA for approval, which is not the case herein as much as there is no active ingredients supplied by AMRI, USA. Similarly, in the case of Bayer Bioscience Pvt Ltd., supra, the nature of activity which was considered for classification under STC service was very elaborate and in the given factual matrix it was felt that this would be covered under STC service. We do not find from the record that any such detailed activities were performed right from the scratch and therefore we find that the facts are clearly distinguished. 13. As far as the issue whether in the case of delivery of report outside India can be considered as part performance service outside India, the Co-ordinate Bench in the case of Com....
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....in convertible foreign exchange. 8. Reading of the above provisions of Export of Services Rules, 2005 (hereinafter referred to as "the Rules") makes it amply clear that the taxable service specified in sub-clause (zzh) of Clause (105) of Section 65 of the Act is covered under Rule 3(1)(ii) of the Rules. The performance is not complete until the testing and analysis report is delivered to the client. In the present case, when such reports were delivered to the clients outside India, it amounts to taxable service partly performed outside India. The performance of the taxable service has no validity/sanctity unless its report is submitted to the service receiver/client. The clients do not have any value for merely performance if no report is delivered to them. Consideration of the service is received by the appellants only when they deliver the study report and the certificate of the testing and analysis of the clinical trials conducted by them. Thus, delivery of the report is an essential part of their service and the service is not complete till they deliver the report. The report is delivered outside India and the same is used outside India. These facts also fortify the vi....