TaxTMI 
TaxTMI 
2026 (5) TMI 1093
X X X X Extracts X X X X
X X X X Extracts X X X X
.... they had imported "Scientific or Technical Consultancy Services" (STC) from a provider located outside India and therefore appellant was required to pay service tax on RCM basis. In Department's appeal, they have only challenged the waiver of penalty imposed under Section 76 and 77, by allowing the benefit of Section of 80 of Finance Act, 1944 in the facts of the case. There is another small issue of "Management, Maintenance and Repair Service" (MMR), which was not contested by appellant at the stage of adjudication itself, as recorded in the OIO, as also at the time of this hearing by the Learned Advocate for the appellant. Therefore, the only issue left is whether they are required to pay service tax under RCM on the service of STC or otherwise. 3. The brief fact of the case is that the appellant had entered into an agreement with Federal State Unitary Enterprise Rosoboronexport, Moscow, Russia (hereinafter referred to as Rosoboronexport) in conformity with the inter-Governmental agreement (IGA) between the Government of India and the Government of Russia Federation, for transfer of licence and technological documentations for production of SU-30 MKI aircrafts in India and fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....terating the findings has also tried to explain that in this case individual experts and technicians were posted to the unit for imparting various advice, consultancy etc., and therefore it should be covered within the definition of STC. He has also submitted that the agreement referred to in the judgment by the Mumbai Bench, supra, may or may not be similar to the agreement which is covered in the present appeal and hence the judgment may not be on all fours for the present appeal and will have no precedence value. The Learned AR has also argued that Rosoboronexport, Moscow, is a foreign based Scientific or technical organization and helps in operating within Rostechnologies which is an open joint stock company with 100% of its issue owned by Rostechnologies as an open joint stock company. He has also relied on the judgment in the case of National Remote Sensing Agency Vs Commissioner of Customs, Central Excise & Service Tax, Hyderabad - IV, [2020(6) TMI 618 CESTAT Hyderabad] in support that in this case these judgments cited have no applicability. 6. Heard both the sides and perused the records. 7. Since, the issue of 'Management, Maintenance Repair Service' (MMR) has not b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntist or a technocrat. This is the first part of the definition. It is undisputed that the foreign based company "rosobornexport" is not a scientist or a technocrat. 7.4 The 2nd part of the definition indicates that advice, consultancy, or scientific or technical assistance has to be rendered by any science or technology institution or organisation. On perusal of the status of "Rosobornexport" we find that the said status indicates the foreign-based company as a joint-stock company, part of the Russian technologies state Corporation which is responsible for import/export of the full range of defence and Dual use end products, technologies and services. It is also noted that the said "Rosobornexport" only has the right to supply the world market with a full range of arms and military equipments manufactured by the Russian defence industrial complex and approval; the said foreign company is one of the major operators in the world market for arms and military equipments. It is also indicated that the official status of "Rosbornexport" is an exclusive state intermediary agency and provides guaranteed state support of all export import operations. The said status of the "Rosobo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gy, suggestion for improvement in existing technology or process, providing consultation on any technical problem or about new technology etc." We have got to examine the facts of this case in this backdrop. The terms of the relevant agreements indicate that these agreements were intended primarily to cover the following transactions, viz., transfer of brand names/trade marks to Cadila against payment of Rs, 70 crores, transfer of know-how for manufacture of bulk drug against payment of Rs. 20 crores and transfer of technical know-how for make tablets (formulations) against payment of Rs. 5 crores. None of these transactions can be conceptually reduced to mere advice, consultancy or scientific/technical assistance. On the other hand, they involve permanent transfer of intellectual property in one forms or another and are presently covered by "intellectual property service". The Id. JCDRs "essential character test" is not applicable as the service is classifiable only under one sub-clause of clause (105) of Section 65 of the Act, which is sub-clause (zzr). Each agreement covered the transfer of an intellectual property and, therefore, a combination of the agreements (which ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es of science or technology as an institution; or scientists or technocrats. it is on record that the appellants herein are manufacturer or pharmaceutical goods and had their own set up, which they have sold to Universal Medicaments Pvt Ltd. On this factual matrix, we find that the judgment of the Tribunal in the case of Modi Mundipharma Pvt Lt., (supra) squarely covers the issue in favour of the appellants. We reproduce the paragraph 6:- "6. We have carefully considered the submissions from both sides. We also perused the agreement and the show cause notice. In the show cause notice it is alleged that the appellant was granted exclusive right to manufacture, use and sell within the territory, the preparation utilizing the know-how and scientific and technical information and the teachings of the patents on payment of royalty. It is also alleged in the show cause notice that the appellant was receiving know-how during the disputed period. However, from the agreement it is noticed that there is no evidence of continuous providing of information, know-how in relation to the manufacture. Further, it is not disputed that the appellant was manufacturing and selling products in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Vs CST, Bangalore - I [2020 (38) GSTL 75 (Tri-Bang)], inter alia, examined similar issues. However, in this case the agreement was with Rolls Royce Turbomeca Ltd., U.K., as a part of Inter-Governmental Agreement, though the payments were made towards the transfer technology, designs etc. In this case, the demand was made under "intellectual property rights service". The Co-ordinate Bench examined the scope of intellectual property rights service and, inter alia, held that services received by the appellants from Rolls Royce Turbomeca Ltd., UK are not in the nature of intellectual property service. In this case also the Tribunal relied on the judgment of CCE Vs Hindustan Aeronautics Ltd., [2015 (40) STR 289 (Tri-Mum)] and Kopran Ltd., [2011(23) STR 627(Tribunal)]. 10. Therefore, essentially we find that in the appellant's own case, in respect of various agreements entered by them with certain foreign entities including Rosobornexort, Moscow for technology transfer and technical assistance etc for manufacture of aircraft in India under Inter Government Agreement (IGA), the same was the subject matter of demand of Service Tax under various categories, namely Scientific and Technica....